Investment bank and asset manger, Needham, is recommending buying Zillow Group stock now, stating that the stock price may go up to $40, from it's current trading level between $33 and $34.
According to this piece in StreetInsider, the core revenue growth driver is that agents will use more and more of their marketing budget with Zillow, according to analyst Kerry Rice.
"We believe Zillow’s core addressable market is significant and expanding opportunity with sizable adjacent markets, such as mortgages and rentals layering on additional growth opportunities," Rice added. "We expect margins to expand on solid revenue growth.
Needham isn't the only one to say the company is worth and investment, though HousingWire makes no such recomendation.
RBC Capital also raised its price target to $42, for example.
Notably, Needham also said it views Zillow's “competition as limited and its lead is extending.”
Last year, Zillow CEO Spencer Rascoff talked about the company’s business model is selling ads, not houses.
“We sell ads, not houses,” Rascoff said in a call discussing Zillow Group’s first quarter earnings last year. “We’re all about providing consumers with access to information and then connecting them with local professionals.”
“And we do a great job of giving those local professional high-quality lead, they’ll covert those leads to at a high rate and then want more media impressions from us,” he said. “So we’re not actually in the transaction, we’re in the media business.”
However, Move, which operates Realtor.com for the National Association of Realtors, launched a massive campaign back in 2015, saying it “aspires to be the home for all things real estate.”
However, real estate agents who use Zillow report that their experience leaves their businesses open to potential fraudsters. But Zillow denied these claims, saying it has the best fraud prevention system available.