Zillow Group Inc. managed to beat high expectations for fourth quarter results by a wide margin, prompting investors to send the shares up to double digits to another record high and a string of Wall Street analysts to push their price targets. . The real estate trading and information website reported adjusted fourth-quarter earnings and earnings Wednesday night that were well above consensus analysts’ expectations. In the post-earnings conference call with analysts, the CFO said first-quarter revenue was expected to be around $ 1.1 billion, compared to expectations of around $ 889 million at the end of January.
“” Surfing at Zillow has ushered in a whole new level of pop culture as ‘Saturday Night Live’ did a fun and daring sketch about it last weekend, with Dan Levy at the helm. Rich Barton, CEO of Zillow
The big post-earnings rally comes despite stocks having already soared 23.8% to date through Wednesday. But Zillow has gotten used to big gains, as before Thursday’s rally, stocks were up the day after the last five quarterly results were reported, by an average of 12.8%. On Friday, the stock rose 1.2% to another record. It has quadrupled (up 293.1%) in the past 12 months to increase its market capitalization to $ 47.2 billion, while the S&P 500 SPX Index has gained 16.6% during the same time. .
A big reason for the enthusiasm of investors? “We believe that the Zillow Offer business, and iBuying in general, is reaching a significant inflection point,” wrote Lloyd Walmsley, an analyst at Deutsche Bank, in a note to clients. He said the cost of selling a Zillow Offer is now comparable to a traditional real estate agent, but for much more value. “Stop and think about that for a second. Why would someone with a more ‘commercial’ type of home use the traditional home sales process instead of getting cash from Zillow? “Walmsley wrote.” Zillow may be on the verge of becoming a true residential real estate market. “He reiterated his purchase rating on the stock, but raised his price target to $ 225 from $ 202, just three days after raising his target to $ 202 from $ 160. Zillow CEO Rich Barton said in the post-earnings conference call with analysts that the results received a boost from “Zillow navigation,” as participation in our Mobile apps and websites reached levels in 2020 that we “never thought possible before.” last weekend, with guest host Dan Levy at the helm, “Barton said, according to a FactSet transcript. Another boost to traffic comes from the new cultural trend that Bar ton has been calling it “the Great Reorganization,” which has been driven by changes in the workplace resulting, if not accelerated, by the COVID-19 pandemic. “Fantasizing about real estate is not new,” Barton said. “What has changed is that more of these people now have the freedom to move. Many Americans, unfettered by their commutes and offices, have begun to reevaluate how and where they want to live. ” Don’t Miss Out: Mortgage Rates Hold Record Lows – Will They Fall? Wedbush analyst Ygal Arounian raised his price target from $ 167 to $ 218, while reiterating the superior performance rating he has had on the stock since January 6. the real estate transaction is starting to materialize, ”Arounian wrote. “But we think Zillow is just scratching the surface.” Shyam Patil, an analyst at Susquehanna, kept his rating at neutral, citing valuation concerns given the recent rise in share prices, but raised his target to $ 200 from $ 130. “Zillow continues to benefit from the burgeoning real estate market and its strong positioning in the online home and lead businesses, as demonstrated again in Q4, with strength across the business,” wrote Patil. In total, no fewer than 18 of the 24 analysts surveyed by FactSet have raised their price targets following the fourth quarter results. The average price target is now $ 205.60, up 44.5% from $ 142.30 at the end of January.
And CEO Barton said Zillow economists are calling for an even stronger housing market in 2021 as they project 21% growth to a near-record 6.8 million home sales, plus a percentage increase of double digits in home prices. He believes those higher prices will help address concerns about low inventory by bringing more inventory to market, similar to the “just-in-time” inventory management used by warehouse operators. “The millennial generation is entering prime home buying years and mortgage rates are historically low,” Barton said. “In addition to those macro factors, in the past year members of all generations have reconsidered where they live with a new lens of flexibility and possibility, as the Great Reorganization continues to take hold.”