Zillow (ZG) Smashes Q4 Estimates and Q1 Guidance, Announces a ShowingTime Takeover for $500M; Analysts Bulled-Up

February 11, 2021 8:33 AM EST
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Price: $136.14 -4.96%

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    17 Buy, 7 Hold, 2 Sell

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Zillow Group (NASDAQ: ZG) (NASDAQ: Z) saw its shares soar over 12% Thursday after the company reported fourth-quarter earnings and revenue numbers that blew away the analyst consensus.

ZG said it recorded a revenue of $789 million to easily top the $740.5 expected from the market analysts. However, revenues came about 16% lower compared to $944 million reported a year ago.

The company reported a net income of $46.03 million, swinging from a loss of $101.21 million last year. Earnings per share (EPS) were reported at $0.44 to crush Street’s expectations of $0.28.

"Zillow's strong results reflect exemplary execution and continued growth during the scary roller-coaster ride that was 2020," said Zillow Group co-founder and CEO Rich Barton. "Many Americans who had previously dreamed of moving now have the flexibility to do so, and they flocked to Zillow in record numbers. We are investing aggressively in new technology and services to help them move. Our customers are hungry for the kind of seamless experience that we can now provide at Zillow, and we are poised to capitalize on our strong position in 2021."

As for the ongoing first quarter, ZG expects to record total revenue of $1.07 billion to $1.112 billion, easily topping the $892.4 million expected from the Street. The EBITDA for the quarter is expected in a range of $114 million to $138 million, again higher than the market consensus.

In separate news, Zillow Group announced it is acquiring ShowingTime.com, an online scheduling platform for home showings, for $500 million.

“We have been impressed with ShowingTime’s ability to simplify a cumbersome but critical part of the home shopping experience by integrating with MLSs, agents and brokers, and giving buyers’ agents an easier way to schedule showings with listing agents,” said Errol Samuelson, Chief Industry Development Officer at Zillow Group.

Susquehanna analyst Shyam Patil maintained a “Neutral” rating on ZG but raised the price target handsomely to $200.00 from the old $130.00 citing continued strength.

“ZG continues to benefit from the booming real estate market and its strong positioning in the online leads and homes businesses, and it showed again in 4Q with strength across the business. Zillow expects an even better real estate market in 2021, and the 1Q guide demonstrates that, with revenue and profitability excelling in all three segments. We continue to like ZG’s position in the real estate market and its integration strategy across its portfolio of offerings, but maintain our Neutral as we believe the risk/ reward is balanced at current levels,” the analyst wrote in a research note sent to clients.

On the other hand, Truist analyst Naved Khan reiterated a “Buy” rating on ZG and hiked the price objective to $210.00 per share from $158.00.

“We believe mgt's focus on higher-quality connections and targeted rollout of Flex is contributing to higher monetization in housing market that is seeing record growth. At the same time, ZG's cost focus is helping drive impressive EBITDA growth/margin expansion - a trend we expect will continue in 1H. We also view the progress in scaling-up iBuyer along with strong growth in ancillary services (ZCS, Mortgage, etc) positively for LT prospects for the offering,” he said in a note.

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