Bernstein Shares Perspective on Zillow Group (ZG) RESPA Lawsuit

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

The analyst commented: "Perspectives on the ZHL RESPA lawsuit; While we were all heads down trying to make it through the final week of Internet earnings, Zillow got hit with — you guessed it — another lawsuit. If you are putting Zillow in the ‘too hard’ pile until we get through the mountain of litigation, we don’t blame you. For our takes, please see here, here, here, and Exhibit 1. We’ve been bracing for this filing, and at least it’s finally out now. We’re not alone in that regard, hence why the stock has shrugged off the headline so far. The multiple is arguably capped short-term as we work through the preliminary hearings on these cases, but underneath the headlines is a healthy and well-functioning marketplace compounding earnings, with housing market upside (this matters more than legal).

What now? First, we await Zillow’s rebuttal. We anticipate the defense to be built around Preferred agents having multiple criteria and consumers choosing to receive financing information. While the box is pre-checked, it is fairly clear and upfront. Furthermore, consumers don’t have to use ZHL. The case preempts any use of broker-to-broker referral exemption — based on our read, the tricky part will be applying the exemption to mortgage referrals. Timelines and amounts unclear yet, but agree with the take on settling."

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 $71.87 yesterday.

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