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Zillow Stock Jumps On Revenue Outlook, Litigation Costs Rise

Zillow ( Z ) stock jumped after the online real estate portal reported first-quarter revenue that topped views and raised its full-year, 2016 sales forecast. The Internet company posted a loss of 13 cents a share, excluding items, compared with earnings of 2 cents a share a year earlier. Zillow stock, which has been highly shorted, jumped nearly 13% in premarket trading in the stock market today . The online real estate data provider said quarterly revenue rose 14% from a year earlier to $186 million vs. consensus estimates of  $177 million. Seattle-based Zillow forecast second-quarter revenue in a range of $203 million to 208 million. Analysts polled by Thomson Reuters had modeled $193 million. Zillow upped full-year 2016 revenue guidance to $830 million at its midpoint, from its earlier forecast of $810 million vs. consensus of $806 million. “ Zillow has meaningful opportunities for upside to both estimates and multiple as it better monetizes the massive, high value audience that it has built around its platform,” said Heath Terry, a Goldman Sachs analyst in a report. “Aggregated unique visitors across Zillow properties reached 156 million in Q1 vs. 124 million in Q4.” Zillow said it expects litigation expenses to reach $50 million to $55 million for the full year, compared with prior expectations of $36 million. It’s involved in litigation with News Corp. ( NWS ) and the National Association of Realtors. “Zillow appears to have pricing power. We have lingering concerns about this name, including valuation, the ultimate total addressable market, and potential fallout from litigation,” said Thomas Champion, an analyst at Cowen & Co. “However, Zillow appears to have re-established a cadence of beat-and-raise results while hitting the seasonally strong period of the year.” Zillow has an IBD Composite Rating of 65 out of a possible 99. IBD’s Internet-Content group is ranked No. 59 out of 197 industry groups.

Zillow Has Nothing To Fear From Facebook; Acquisitions Planned?

Zillow Group ( ZG ) does not face a serious threat from Facebook ( FB ), and the online real estate market leader might be getting ready to make acquisitions in 2016, said Cowen and Co. “Competitively, management is not seeing much impact from Facebook and there was no mention of pressure from ( News Corp. ( NWS )-owned rival) Realtor.com,” wrote Cowen analyst Thomas Champion in a research report Thursday, following a meeting this week with the head of Zillow’s investor relations unit, RJ Jones. “At this point, management seems focused on capitalizing on the audience growth established with the Trulia merger.” Champion said merger and acquisition opportunities “remain on the table” as Zillow “is actively on the lookout for unique assets.” The digital real estate company is likely interested in “regional tuck-ins,” including New York-based apartment search website Naked Apartments or “niche technology products” such as DotLoop, a collaboration platform for real estate professionals that Zillow bought last year . Zillow’s return on ad spend per agent is rising, said Champion, with the online real estate company posting $3.2 billion in commissions generated from $470 million in agent revenue for 2015. “This is up from $2.3 billion in commissions and $350 million in spend as of 2014,” he said. With the reclassification of some of its display ad revenue, Zillow’s full-year display revenue guidance of $54 million to $56 million, down from $96 million in 2015, “is not as severe as previously thought,” said Champion. Zillow is counting on continuing growth in areas including rentals, mortgages, DotLoop, and StreetEasy — the residential real-estate website for shoppers in the New York region — to drive growth, he said. Zillow stock jumped last week after the No. 1 online real estate listings company got a price-target boost and rating upgrade from RBC Capital Markets, which cited strong online traffic trends. RBC upgraded Zillow to outperform from sector perform, and hiked its price target on Zillow stock to 34 from 21. Zillow stock was up 4% in afternoon trading in the stock market today , near 24. Zillow now holds an IBD Composite Rating of just 47 out of a possible 99. Seattle-based Zillow completed its $2.5 billion purchase of top competitor Trulia in February 2015. The union put the two most-visited real estate websites under the same ownership and formed the Zillow Group in a move designed to expand reach, forge efficiencies and cut costs. Both the Zillow and Trulia websites remain in operation, targeting homebuyers and renters, as well as real estate agents who pay to advertise alongside the home listings on the sites. Move Inc. is the parent of rival online real estate site Realtor.com, which is an official website of the National Association of Realtors. Media empire News Corp. bought Move in 2014.

Zillow Group Stock Turbocharged By High-Spending ‘Super Agents’

Zillow Group ( Z ) stock jumped on Tuesday after the leading online real estate listings company got a price target boost and rating upgrade from RBC Capital Markets, which cited strong online traffic trends. Zillow stock was up almost 3% in afternoon trading in the stock market today , near 24, off earlier highs of the session. RBC upgraded Zillow to outperform from sector perform. The investment bank increased its price target on Zillow stock to 34 from 21. Zillow holds an IBD Composite Rating of just 46 out of a possible 99 at moment. The stock has been trading above its 50-day moving average since late February, but by Tuesday afternoon it was only at the level where it closed 2015. RBC analyst Mark Mahaney wrote in an industry report on Tuesday that 40% of agents in their latest survey indicated they would increase their spending on Zillow, compared to 34% on Realtor.com and 33% on Zillow-owned Trulia. The percentage of real estate agents who advertise online using Zillow rose to a record-high 38% in 2016, up from 27% a year earlier and 32% in 2014, according to RBC’s 4 th Annual Online Real Estate Agent Survey, according to Mahaney. “Trulia’s share slipped modestly (29% from 32% in 2015), while Realtor.com maintained a leading 50% position,” Mahaney said. Zillow also scored well with high-spending “super agents,” he said, with Zillow’s share of agents who shell out more than $500 per month in online advertising coming in at 57%. “Further, a large majority (62%) of $500 monthly spenders plan to increase spend on Zillow,” Mahaney said. Seattle-based Zillow completed its $2.5 billion purchase of top competitor Trulia in February 2015. The union put the two most-visited real estate websites under the same ownership and formed the Zillow Group in a move designed to expand reach, forge efficiencies and cut costs. Both the Zillow and Trulia websites remain in operation and attract homebuyers and renters, as well as real estate agents who pay to advertise alongside the home listings on the sites. Move Inc. is the parent of rival online real estate site Realtor.com, which is an official website of the National Association of Realtors. Media empire News Corp. ( NWS ) bought Move in 2014. New ad products, including video ads, could bring $40 million to $90 million to 2016 revenue, JMP Securities analyst Ronald Josey wrote in an industry research report on Oct. 21, 2015. The new ad products “can drive pricing gains into 2017,” he said. A record high 44% of U.S. buyers found their home using the Internet in 2015 vs. 43% in 2014, said RBC, citing National Association of Realtors trade group research.