Zillow Group ( NASDAQ: Z ) ( NASDAQ: ZG ) stock rallied as much as 5.2% in Monday morning trading after Evercore ISI analyst Mark Mahaney upgraded shares of the online home-buying platform to Outperform from in line on expectations that residential real estate will trough in Q1 in terms of existing home sales and home prices.
"We would anticipate top-line trends for ZG starting to positively inflect in Q2:23," Mahaney wrote in a note. "And given ZG's relatively robust business model, that positive top-line inflection should quickly translate into a bottom-line inflection."
Some other key factors behind the upbeat coverage is the company's investments in product initiatives and offerings, such as Touring and Seller Solutions, which "could potentially set up Zillow for stronger growth and profitability in a post-recovery market."
And despite Z's 34.1% surge year-to-date, "we still believe there is reasonable valuation upside from current levels," with the stock still down over 22% from a year ago and roughly 80% off its 2021 high.
Seeking Alpha contributor Richard Durant, though, expressed caution with Zillow ( Z ) shares, citing an "underappreciated risk of an extended downturn."
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Zillow stock climbs after upgrade to Outperform at Evercore on housing comeback