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Analysts said they like the set-up for the real estate tech company due to: “(1) continued Premier Agent share gains, and (2) product optionality & new initiatives, and (3) a bottoming in the housing macro with sequential improvements forecast through ’24.”
The analysts raised their price target by 48% – to $62 from $42 – noting that shares trade at an approximate 25% discount to the 2015-18 period based on EV/NTM EBITDA.
The analysts predict that Zillow has the potential to further increase its share of broker ad budgets. In the first quarter of 2023, the Premier Agent (PA) business experienced its most significant year-over-year share gain (+150 bps) since 2018. Looking back, historical data consistently shows that PA has consistently gained market share before mid-2019. The firm’s assessments of Flex agents are positive, indicating that flex leads have rebounded after a significant slowdown in the latter half of 2022. In addition, Year-over-year comparisons are expected to become less challenging as we progress through 2023.
The analysts added that FY24 estimates look “conservative” and as a result are raising FY24 revenue estimates by about 2% & EBITDA by 14%.
