Zillow Likely to Post 'Fine' Q2 Results, but Industry Data Points to Deceleration in Q3, RBC Says

MT Newswires Live07-29

Zillow (ZG) is likely to post "fine" Q2 results, but Q3 industry trends indicate deceleration despite the Street guiding for stable sequential growth, RBC Capital Markets said in a Tuesday research report.

Channel checks indicated continued friction in Q2, with Zillow Home Loans generating polarizing feedback, according to the note. The company will report Q2 results on Aug. 5.

The dismissal of a lawsuit alleging Zillow's involvement in a scheme of routing homebuyers to agents paying Zillow referral fees and steering buyers to Zillow Home Loans, inflating home costs, is a bigger structural positive for the company, analysts wrote.

The company is allowing agents to get pre-approval credit from non-company sourced leads, which is helping, but the tension remains where agents value Flex leads and still find it difficult to incorporate into their process, analysts noted.

The brokerage said it reiterated its outperform rating on the stock and price target of $70 per share.

Price: 33.51, Change: +1.52, Percent Change: +4.74

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