Market Overview

Guggenheim Says Zillow's Home Segment Off To 'Strong Start' In 2019

Guggenheim Says Zillow's Home Segment Off To 'Strong Start' In 2019

Zillow Group Inc (NASDAQ: ZG) started a new business unit called Home, which actively buys homes with the purpose of remodeling them and flipping the home for a profit.

The Analyst

Guggenheim Partners' Jake Fuller maintains a Neutral rating on Zillow with no price target.

The Thesis

Guggenheim's checks and surveys suggests the real estate database company bought 249 homes across the small handful of markets it operates in through Feb. 9, Fuller said in a research report. Checks so far point to 73 homes successfully sold over the same time period and another 36 homes show a pending contract to sell. As such, the company could guide its first-quarter revenue for the business to be more than $60 million if not close to $70 million.

Since the launch of the Homes business, the analyst's checks found 245 sales with an average price tag of $300,422 versus an average cost to buy of $292,943. Assuming an average seller fee of 8 percent and an average appreciation in value of 2.6 percent, the company likely recorded an average profit per home of around $31,000. However, this is unlikely to be large enough for the company to fully cover all of its costs, including renovation, financing and commission costs.

The Home segment is showing encouraging traction so far but any visibility towards long-term profits is "murky," the analyst wrote.

Price Action

Shares of Zillow closed Wednesday's session at $34.90, down 3.6 percent.

Related Links:

Wait Out Zillow's 'Transitional' Phase, Raymond James Says

The Street's Mixed Reaction To Zillow's Q3, One Analyst Says 'Game Over'

Latest Ratings for ZG

Aug 2019MaintainsBuy
Aug 2019MaintainsHold
Jul 2019Initiates Coverage OnBuy

View More Analyst Ratings for ZG
View the Latest Analyst Ratings

Posted-In: Guggenheim Partners Jake Fuller Zillow HomeAnalyst Color Analyst Ratings Best of Benzinga


Related Articles (Z + ZG)

View Comments and Join the Discussion!

Latest Ratings

ELMDDougherty & Co.Initiates Coverage On12.0
MRNSCantor FitzgeraldAssumes7.0
MNRLCapital One FinancialInitiates Coverage On23.0
SONVertical GroupUpgrades
UNPMorgan StanleyMaintains136.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

Constellation Brands Projects 10-Cent Hit To Earnings From Canopy Growth Investment

Could One Job Change Be At The Heart Of Amazon's $600 Million Decision To Yank XPO Business?