Bernstein Sees Recent Negative Headlines as a Potential Buying Opportunity for Zillow Group (ZG)

Bernstein SocGen Group analyst Nikhil Devnani reiterated an Outperform rating and $105.00 price target on Zillow Group (NASDAQ: ZG).

The analyst commented: "Quick thoughts on the lawsuit and Compass deal; At first glance, we believe the lawsuit is less of an issue. We are obviously not lawyers, and our view here could change as we learn more. However, our first read of the primary points is as follows: (1) consumers are ‘misled’ to believe they are contacting listing agents when they are in fact contacting buyer agents and this introduces more commissions; (2) Zillow’s Flex fees are ‘hidden’ to consumers; and (3) Zillow’s fees ultimately ‘inflate’ the cost of home buying. We feel the lawsuit may be making a big leap to assume individuals would not use buyer agents outside of Zillow (not supported by national data) and doesn’t provide concrete evidence that Zillow’s Flex program leads to higher costs for home buyers relative to like-for-like industry transactions. That said, Zillow could probably take steps to improve transparency.

Two negative headlines back-to-back, but in recent years such events have proven to be good buying opportunities. The Compass deal may have more LT industry impact, but even here the deal will take time to close (2H26) and for market dynamics to evolve. If Zillow can continue to deliver value for agents (leads, transactions), it should grow through any changes."

For an analyst ratings summary and ratings history on Zillow Group click here. For more ratings news on Zillow Group click here.

Shares of Zillow Group closed at $76.47 yesterday.

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