RBC Capital analyst Mark Mahaney reiterated a Sector Perform rating and lowered his price target on Zillow (NASDAQ: Z) to $92.00 (from $103.00) following Q2 results ahead of expectations, especially on the EBITDA line, tho much of the EBITDA beat was due to a push out of marketing spend.

The keys to the quarter, according to Mahaney: 1) Across The Board Deceleration – Total revenue pro forma growth decelerated from 35% Y/Y in Q1 to 20% in Q2 (or ex-Market Leader, from 41% to 25%), implying dramatic weakness at Trulia as well as notable deceleration at core Zillow (65% Y/Y Zillow Premier Agent growth in Q1 went to 48% in Q2)…and the Q3 guide implies only 15% total revenue growth…; 2) Mixed Metrics – Z ended Q2 with ~101K agent advertisers (down from 103K in Q1), while APRA rose from $354 to $375. Zillow is somewhat shifting its strategy to focus on higher-quality/spend agents. Total Unique Visitors grew 11% Y/Y to 141MM, with Zillow growing 22% and Trulia, well, perhaps not growing.

The analyst commented, "2015 is a transition year as Zillow works through the integration challenges associated with Trulia. Z is also working through a strategy shift, focusing on generating revenue from higher-quality/spend agents. Competitive industry dynamics might be getting more complex, but this trend is less material vs. the consolidation impact of the Trulia deal. We still believe that Z can again become an attractive investment vehicle: Zillow faces a very large TAM ($10B+ in Online real estate-related advertising) and clear secular shifts with consumers & real estate professionals. Zillow also has a dominant competitive position, the potential for major new revenue streams (Mortgages, Rentals, NYC, Home Improvement/Design), an attractive business model (90% Gross Margins, perhaps 40% l-t EBITDA Margins), and an effective management team. Recovering fundamentals – i.e. a reacceleration in revenue growth, possible in ’16 – would make us more constructive."

The firm reduced 2016 Revenue/EBITDA estimates by 5%/12% to $859MM and $199MM, respectively.

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Shares of Zillow closed at $74.20 yesterday.