5 Analyst Takeaways As Zillow Group's Stock Remains Volatile After Q4 Print

Shares of Zillow Group Inc ZG remained highly volatile after the company announced a revenue beat but disappointing guidance.

KeyBanc Capital Markets

Analyst Justin Patterson said in a note that Zillow's fourth-quarter results were “largely consistent with our expectations and above consensus, reflecting a combination of a slightly better housing market, Zillow over-indexing to first-time buyers, and the Company's intrinsically high incremental margins.”

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The first-quarter EBITDA guidance was softer than expected, mainly due to “a conservative view of the housing market recovery” and “product investments aimed at building a more integrated and seamless consumer experience,” he added.

Stephens

John Campbell reiterated an Overweight rating and price target of $49.

“It was same song, second verse for ZG as the Company posted 4Q22 results that were well-ahead of muted consensus expectations across-the-board highlighted by an ~8% PA rev. beat and ~18% core IMT EBITDA beat,” Campbell wrote.

“However, like the last few quarters, next Q guidance was mixed with the PA rev. range holding serve but total company EBITDA expectations falling well-short of consensus (missed by ~37% at the midpoint),” he added.

RBC Capital Markets

Analyst Brad Erickson maintained an Outperform rating, while raising the price target from $42 to $50.

“Positively, the market appears more stable/likely to accelerate, the company's results/guide imply share gains, management is seeing positive proof points on new products and Street EBITDA estimates will finally see cuts the buy-side had been waiting for,” Erickson said in a note.

“Less positively, share gains appear to be transitory, new products seem unlikely to move the needle P&L wise in '23 and the Q1 EBITDA guide was substantially below Street,” he added.

Benchmark

Analyst Brad Erickson reiterated a Buy rating and price target of $60.

Zillow’s quarterly results were “strong,” with higher-than-expected revenues flowing through to EBITDA upside, Erickson said.

“The 1Q EBITDA guide was below the Street, as we think consensus is failing to properly account for the drag created by Premier Agent (PA) revenue declines on IMT EBITDA,” he added.

JMP Securities

Analyst Nicholas Jones maintained a Market Perform rating.

“Revenue guidance came in lighter than anticipated as macro conditions continue to create headwinds and volatility — though we believe top-line guidance was better than feared,” Jones wrote. “EBITDA outlook came in lower than expected due to increased costs related to the VRX Media acquisition and ZG's new ShowingTime+ products,” he added.

“Overall, we view 4Q results and guide favorably, as ZG's platform remains fairly resilient in the face of tough residential real estate dynamics,” the analyst further stated.

ZG Price Action: Shares of Zillow Group had declined by 3.28% to $45.13 at the time of publication Thursday.