Key Takeaways
- Mortgage rates fell to a 19-month low, which Wedbush analysts say is a likely catalyst for Zillow Group.
- Shares of the real estate company are up about 50% since the company named a new CEO in early August.
- Wedbush is bullish on the company’s software and services initiatives.
Zillow Group (Z) is well positioned to benefit from lower U.S. mortgage rates, Wedbush analysts said Monday.
The firm upgraded the online real estate marketplace to “outperform” from “neutral,” and raised its price target to $80 from $50.
Shares of Zillow rose more than 4% to $62.34 Monday afternoon and are up about 50% since Aug. 7, when it named a new Chief Executive Officer (CEO), former Chief Operating Officer (COO) Jeremy Wacksman, alongside better-than-expected second-quarter results.
Mortgage Rates Have Been Falling Since 2024 Peak in April
U.S. 30-year mortgage rates have fallen to 6.03% from their 2024 high of 7.52% on April 25, Wedbush noted, and Zillow’s software and services (S&S) initiatives are a potential growth catalyst.
“We believe the S&S offerings, along with Zillow’s core brokerage revenues, have allowed total revenues to grow faster than the national existing home market for several quarters now,” the analysts said. “We anticipate adoption of Zillow’s S&S tools may increase as brokers look for ways to reduce payroll expense.”
Of the four analysts surveyed by Visible Alpha, two rate Zillow a “buy” and two rate a “hold.” They have an average price target of $57.50.