Zillow stock rallied Thursday to break out after Q3 results cleared estimates late Wednesday. Two analysts logged significant price target hikes, as the real estate data platform's earnings swing into a year of increased expectations.
Zillow late Thursday reported a 6% increase in earnings to 35 cents per share, topping FactSet views for 31 cents. Total revenue jumped 17% to $581 million, also beating forecasts for $555 million.
Residential revenue rose 12% to $405 million. Rentals revenue increased 24% to $123 million, driven by a 38% increase in multifamily revenue. Mortgage revenue increased 63% to $39 million, with an 80% increase in purchase loan origination volume.
Zillow noted that traffic to its mobile apps and sites was up 1% year-over-year to 233 million average monthly unique users.
"We expect that the housing market will continue to bounce around at current levels, implying modest year-over-year growth in the fourth quarter," CEO Jeremy Hofmann said in the earnings call. "While there continues to be pent-up desire to move, affordability remains a challenge."
For the fourth quarter, Zillow expects residential revenue to range from $364 million to $374 million, while total revenue ranges from $525 million to $540 million. FactSet expects total Q4 revenue will increase nearly 13% to $535 million.
Zillow forecasts double-digit revenue growth for 2024, with the midpoint at a 14% increase in total revenue. Analyst forecast see Zillow's quarterly earnings upshifting into above 20% gains beginning in Q4. Sales upshifted in the first quarter of 2024, and are seen running at low double-digit gains though 2025.
Analysts React To Zillow Results
Benchmark hoisted its price target on Zillow stock after the report, calling it "a quarter that we think the bears are going to have a very difficult time refuting," according to The Fly. The firm said that metrics regarding mature enhanced markets doubled the company's all-in revenue per total transaction value. That has "cemented the point that Zillow's wallet share and conversion gain strategy is working," Benchmark wrote, adding "perhaps the most impressive fact is that the company is doing this while reducing fixed costs." The firm hiked its price target on Zillow stock to 80 from 65 and kept a buy rating on shares.
JPMorgan on Thursday also lifted its target on Zillow, noting the strong Q3 results and better-than-feared Q4 guidance. Zillow's strong execution, demonstrated by its performance in recent quarters, gives JPMorgan the confidence in its ability to continue outperforming the industry. The firm raised its price target on Zillow stock to 71 from 68 and maintained an overweight rating.
Zillow Stock
Z stock, the company's Class C shares, rallied 23.8% Thursday to 72.63.
The stock made an actionable move as it spiked above its short-term high of 62.82, and jumped above its 50-day moving average and break a downtrend.
Investors could use 64.82 as another possible early entry.
Zillow stock is up 25.5% in 2024. It has rallied nearly 89% from a low in May, and broke out from a cup-with-handle base pattern in September.
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