🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Zillow valuation multiple expected to re-rate higher in H2 2023 - UBS

Published 12/02/2022, 02:14 PM
Updated 12/02/2022, 02:19 PM
© Reuters.  Zillow (Z) valuation multiple expected to re-rate higher in H2 2023 - UBS

By Sam Boughedda

UBS analysts initiated a Buy rating on Zillow Group (NASDAQ:ZG), assigning a price target of $50 per share in a note to clients on Friday.

The analysts said the firm fully expects near-term housing trends to deteriorate but is upbeat on where stocks could end up on a 12- month basis, adding that the current period of maximum uncertainty is a "good entry point for Buy-rated Zillow shares for longer-term investors."

"Shares currently price in 16% revenue growth, and we forecast Zillow to grow revenue at 18.5% in 2024E and 15% in 2025E, which we see driving multiple expansion as the macro environment improves," wrote the analysts. "We think the mortgage funnel is the largest under-appreciated potential driver of Zillow's goal to double its transaction share from 2021 through 2025, and in an upside scenario we believe this funnel alone could drive those gains."

In addition, the firm expects Zillow to see "more tangible progress" towards its goal to double transaction share from 2021 through 2025, and as macro improves and Zillow executes against its goals, UBS "expect the valuation multiple to re-rate higher, likely in 2H of 2023."

"Our agent checks also endorse the notion that Zillow can monetize higher transaction volumes, driving healthy top line growth on the other side of the current environment," the analysts continued.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.