Mizuho initiates Zillow Group stock with Outperform rating, $100 target

Mizuho initiated coverage on Zillow (ZG) with an Outperform rating and a $100 price target, citing its potential as a "product-driven growth story with a call option on housing improvement." The firm forecasts 15% top-line growth through 2025, accelerating to 15-17% by 2027, driven by its mortgage and rental segments, alongside over 30% adjusted EBITDA growth from 2025-2027 through expense discipline and product expansion. This positive sentiment is broadly shared by other analysts, despite Zillow's current valuation trading above its InvestingPro Fair Value.

Analysis

Zillow Group (ZG) has received a significant vote of confidence from Wall Street, led by Mizuho's initiation of coverage with an Outperform rating and a $100 price target, which represents a 30% upside from its current price of $77.98. The core of the bullish thesis, shared by other firms like Bernstein and RBC Capital, is that Zillow is a "product-driven growth story" capable of generating substantial growth even within a challenging housing market. Evidence for this includes its achievement of 15% top-line growth in 2024 and an estimated 15% for 2025, despite flat existing home sales. Mizuho's above-consensus forecast projects revenue growth accelerating to 15% in 2026 and 17% in 2027, driven by the increasing contribution from its faster-growing mortgage and rental segments. This operational momentum is expected to translate into significant profitability, with adjusted EBITDA projected to grow at a compound rate exceeding 30% from 2025 to 2027, supported by expense discipline and higher revenue per transaction. This strong analyst consensus, with price targets ranging from $87 to $105, is balanced by an InvestingPro analysis indicating the stock is trading above its fair value, despite its 21.55% return over the past year.

Key Decisions for Investors

• Given the strong analyst consensus and identified growth drivers in rentals and mortgages, investors could view Zillow as a strategic holding that offers exposure to a housing market recovery while demonstrating resilience in flat conditions.
• Investors should weigh the bullish analyst outlook against the signal that the stock is trading above its InvestingPro Fair Value, suggesting that entry point discipline is crucial and that any pullbacks, like the recent 9% dip, could present more attractive buying opportunities.
• Monitor the performance of Zillow's mortgage and rental segments closely, as their ability to drive the forecasted 15-17% revenue acceleration and 30%+ EBITDA growth is fundamental to the current investment thesis.