In a research report published on Friday, RBC Capital analyst Mark Mahaney reiterated a Market Perform rating on shares of Zillow Group Inc (NASDAQ:Z) and updated the price target to $31 (from $92) to reflect the 3:1 stock split the company recently implemented. The updated price target represents a potential upside of 23.5% from where the stock is currently trading.
Mahaney wrote, “Our PT moves to $31 given the 3:1 stock split and remains based on a 7X P/S multiple on our 2016 Revenue estimate of $859MM and a 30X EV/EBITDA multiple on our 2016 EBITDA estimate of $199MM. We believe these multiples are justified given Zillow’s outlook for 26%/89% Revenue/EBITDA CAGRs between 2015-2017.”
“2015 is a transition year as Zillow works through the integration challenges associated with Trulia. Z is also working through a strategy shift, focusing on generating revenue from higher-quality/ spend agents. Competitive industry dynamics might be getting more complex, but this trend is less material vs. the consolidation impact of the Trulia deal,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mark Mahaney has a total average return of 21.5% and a 62.3% success rate. Mahaney has a 30.0% average return when recommending Z, and is ranked #9 out of 3741 analysts.
Out of the 14 analysts polled by TipRanks, 7 rate Zillow stock a Buy, 6 rate the stock a Hold and only one recommends to Sell. With a return potential of 395.5%, the stock’s consensus target price stands at $124.36.