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The analysts, who maintained a Buy rating and $55 price target on the stock, said in a note to clients Thursday that large productivity and margin gains could be on the move for Zillow.
“The tone was positive on recent market outperformance, improved execution and strategic focus, competitive positioning, and potentially material upside from efforts to increase productivity for the core residential business as well as scaling the mortgage and rental segments,” they wrote.
They explained that 90% of the online real estate marketplace’s site traffic is organic, with higher time per visit vs. peers, according to SimliarWeb.
In addition, recent quarters have seen ZG achieve “higher share gains through ‘meat & potato’ improvements such as stronger buyer segmentation and coverage, quicker connection with agents and better touring integration.”
“ZG reiterated confidence in hitting 45% EBITDA margins (~20% now) and 6% transaction share (now 3%) by the end of 2025 and believes that 2025/26 could be years of material volume growth on market normalization and the release of pent-up demand (on improved affordability, Millennial home formulation and aging Boomers),” the analysts concluded.
