There’s some potentially positive news for the housing market and also for Zillow (NASDAQ:Z) stock today. Analysts with Evercose ISI are preparing for a recovery in home prices. This should give a boost to Zillow stock, if it happens, and today’s traders are already pushing the share price higher.
Evercore ISI analyst Mark Mahaney describes Zillow as “the consistently leading Online Real Estate information/marketing platform for both consumers and real estate agents.” That’s a high compliment, though it’s not unwarranted as Zillow is indeed a popular platform to buy and sell homes.
Mahaney forecasts that Zillow “should fully participate in the real estate market recovery.” But will such a recovery happen soon? The analyst clearly believes so. He expects a “rapid recovery,” and predicts “the housing market is either already beginning to recover or will very soon do that.”
That would certainly benefit Zillow. Hence, Mahaney upgraded his rating on the company’s stock shares. Previously, he issued an “in line” rating, which is similar to hold. Now, Mahaney is raising his rating on Zillow to “outperform,” which is similar to buy.
What’s Happening With Zillow Stock?
The upgrade evidently had a strong impact on Zillow stock as it jumped 5% this morning and approached the $45 level. Shares of Zillow have moved higher this year so far, after a challenging 2022.
Along with the upgrade, Mahaney raised his price target on Zillow shares from $34 to $61. That’s a big difference, and it implies that there’s still a lot of room to run this year.
According to Mahaney, Zillow only controls 10% of a total addressable market (TAM) that’s worth $10 billion or more. The implication is that Zillow could capture more market share.
Mahaney also observed Zillow’s ability to maintain high earnings before interest, taxes, depreciation and amortization (EBITDA) margins. Plus, the analyst noted “the ongoing secular migration of residential real estate to Online channels,” and determined that Zillow “has created optionality for itself through both product development and acquisitions.”
Thus, Mahaney has built a strong bullish argument for Zillow stock. Today’s financial traders are evidently hearing what Mahaney has to say about Zillow and responding with buy orders.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.