Zillow (ZG) Stock Forecast & Price Target

Zillow Group Inc. demonstrated strong revenue growth in various segments, with rentals revenue increasing by 25% year-over-year in Q4 and residential revenue up by 11%, reflecting robust market demand and effective partnerships. The company also experienced a significant boost in mortgage revenue, which soared by 86% year-over-year, driven by a 90% increase in purchase loan origination volume. Furthermore, Zillow's management anticipates steady margin improvement through the leveraging of fixed costs, positioning the company favorably for continued profitability as it returns to normalized transaction levels.

Zillow Group Inc. faces a negative outlook due to persistently low inventory levels and a significant slowdown in its core residential business, particularly within the Premier Agent segment, which has not shown signs of recovery or growth acceleration. Furthermore, the company's projected EBITDA of $125-140 million falls short of consensus estimates by 16.5%, and it anticipates only low single-digit to mid-single-digit revenue growth, indicating fundamental weaknesses in its revenue-generating segments. Additional risks include rising interest rates affecting transaction volumes, declining lead conversion rates, and increased ad spending that does not yield adequate returns, further complicating the company's financial prospects.