Why Citi Remains Bullish on Zillow
Reacting to the results, Citi (C) reaffirmed its Buy rating on Z stock and set a price target of $68. The price target implied about 108% upside at the time.
The banking giant argued that while the development might create headline risk — that is, negative publicity for Zillow — it does not see any material impact on the company. It pointed out that 80% of Zillow’s website visitors come directly to the company’s website rather than through Google search results.
Furthermore, Citi noted that Zillow’s offer of an integrated platform for home buying will continue to drive traffic to the company’s platform. The banker sees Google’s expansion into the sector as similar to that of Homes.com, News Corp’s (NWS) Realtor.com, and Redfin (RDFN).
Zillow’s rival CoStar Group (CSGP) operates Homes.com, which focuses on helping home sellers connect with listing agents. These agents represent property owners. The other two platforms also connect home buyers and sellers with real estate agents.
