Zillow shares have even more room to run despite their hot start to 2023, according to Piper Sandler. The firm upgraded shares of Zillow to overweight from neutral Tuesday and lifted its price target to $62 per share from $42. Piper Sandler's forecast implies about 33% upside for the stock from Monday's $46.60 close. Zillow stock has soared 49.3% in 2023. ZG YTD mountain Zillow stock has skyrocketed more than 49% in 2023. "We like the setup for ZG driven by: (1) continued Premier Agent share gains, and (2) product optionality & new initiatives, and (3) a bottoming in the housing macro with sequential improvements forecast through '24," wrote analyst Thomas Champion. Champion said Zillow's Premier Agent product, which allows real estate agents to create their own profile and track industry metrics and clients, will help drive the stock further as the overall housing market stabilizes after a tough start to the year. Champion noted estimates from ratings agency Fannie Mae show existing home sales will improve to a 2% year-over-year decline in the fourth quarter from a 32% drop a year earlier. "We think an improving macro & share gains on top of easy compares sets up ZG well into '24. We raise '24 revenue by ~2% & EBITDA [earnings before interest, taxes, depreciation and amortization] by 14%," Champion said. Champion also noted that the first quarter of 2023 saw Zillow's Premier Agent gain the most market share since 2018. Meanwhile, other firms on Wall Street are being conservative in their revenue outlook for Zillow, which Champion thinks could signal an opportunity for investors. "The Street is modeling just ~$2.5BN in '25E revenue versus the company target of $5BN," he said. "Confidence is low. But, we think software can be increasingly important for ZG." — CNBC's Michael Bloom contributed to this report.
