Zillow Group: Hold Rating Amid Mixed Segment Performance and Macroeconomic Challenges

Morgan Stanley analyst Matthew Cost maintained a Hold rating on Zillow Group Class C (Z – Research Report) today and set a price target of $75.00.

Matthew Cost has given his Hold rating due to a combination of factors influencing Zillow Group’s performance. While the company reported a strong first quarter with revenue and EBITDA exceeding expectations, the growth was primarily driven by the Rentals segment, which saw a 33% increase. This segment’s success is attributed to the multifamily strategy, which is gaining momentum, but it still represents only 22% of the total revenue, overshadowed by the larger Residential segment.
Despite the positive developments in Rentals, the Residential segment continues to face macroeconomic challenges, growing at a modest 6% year-over-year, albeit outperforming the market. Additionally, while the company maintains a positive outlook for revenue growth and margin expansion by 2025, the current guidance for the second quarter shows EBITDA slightly below expectations. These mixed signals contribute to the Hold rating, as the market awaits a more definitive recovery in the housing sector.

Cost covers the Communication Services sector, focusing on stocks such as Electronic Arts, Yelp, and Zillow Group Class C. According to TipRanks, Cost has an average return of -5.0% and a 53.95% success rate on recommended stocks.