Zillow: Solid Top-Line but Margin Pressure, Legal Overhangs, and Housing Uncertainty Support a Neutral Rating

William Blair analyst Stephen Sheldon has maintained their neutral stance on Z stock, giving a Hold rating on February 9.

Stephen Sheldon has given his Hold rating due to a combination of factors tied to Zillow’s recent results and outlook. While total revenue modestly exceeded both his and the Street’s expectations, profitability fell short as gross margins compressed and adjusted EBITDA missed estimates, partly because of elevated legal costs and the impact of the Redfin partnership.

At the same time, he acknowledges that growth in the mortgage and rentals businesses remains a bright spot, though rentals momentum appears heavily influenced by the Redfin listing arrangement and may raise competitive questions versus CoStar. With the core residential segment still constrained by weak home sales, limited visibility into a housing rebound, uneven profit trends, and ongoing legal overhangs, he sees the stock as likely to trade in a relatively tight range, justifying a neutral stance rather than a more decisive rating change.

According to TipRanks, Sheldon is an analyst with an average return of -3.5% and a 39.58% success rate. Sheldon covers the Real Estate sector, focusing on stocks such as CoStar Group, Colliers International Group, and Cushman & Wakefield.

In another report released on February 9, KBW also maintained a Hold rating on the stock with a $80.00 price target.