Seeking Alpha

Fresh highs for Zillow; Canaccord ups PT, sees plenty of growth

  • Following meetings with Zillow's (Z +3.4%) CFO, sales chief, and mortgage head, Canaccord thinks the company's Premier Agent business remains strong, and that its mortgage and rentals businesses are making nice progress. The firm's PT has been upped by $15 to $130.
  • Canaccord observes only ~53K of the 675K+ real estate agents with Zillow profiles have thus far advertised on the site, leaving plenty of room for growth.
  • Likewise, it believes less than 25% of the ~350K "thought-leading, high-producing agents" out there are on Zillow or Trulia (TRLA +3.8%), and that Zillow only captures 2% of real estate ad budgets and 4% of available transaction sides.
  • The firm sees more dynamic pricing boosting Zillow's growth. It also see a Zillow/Trulia merger as possible down the line, arguing it "could be quite accretive to Zillow even before factoring in any revenue synergies from pricing power."
  • Zillow and Trulia rose last Friday after Trulia released positive May traffic data.
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Comments (6)
  • gnadedotcom
    , contributor
    Comments (7) | Send Message
     
    Zillow's revenue depends on real estate agents. Most of them have thrown in the towel when it comes to doing their own online marketing. But most of the same agents still hate Zillow's guts.
    16 Jun 2014, 02:51 PM Reply Like
  • vv234
    , contributor
    Comments (8) | Send Message
     
    Wooowww...crazyyy insane value...i don't remember when was the last time i've checked this website...ive bought my house thru the local agents and easier to work with plus i don't trust the agent that they've referred ....and am using craiglist for rental...hmm...
    16 Jun 2014, 04:41 PM Reply Like
  • Zoomiesa
    , contributor
    Comments (68) | Send Message
     
    Glad I stayed with my instincts on this stock. Long from 32.50, 40's, 50's, and up to 89. The programs are useful and LOVED by those brokers using Zillow.
    So sick of hearing the shorts opine and lose their shorts.

     

    Can't wait til the next quarterly reporting increase of unique new users, and continued accelerated growth. The brilliant mavens will be back authoritatively predicting the imminent deline and death of Z.
    16 Jun 2014, 04:51 PM Reply Like
  • PChan444
    , contributor
    Comments (514) | Send Message
     
    Chan's wife's cousin was fired by the post office for incompetence. He is now analyst at cannacord covering Z
    16 Jun 2014, 05:07 PM Reply Like
  • mmclean362
    , contributor
    Comments (3) | Send Message
     
    Very optimistic from Canaccord. I have heard the "we only have 2% of a x billion $ market and if we only get to 15% we will be in the money" so many times now. Never seems to work out, maybe I'm just jaded... I do not see how Z can ever be profitable - I see their cute little ads on TV but I also see no insider buys and insiders selling as soon as they can and lining their pockets at the expense of shareholders. I am short and thinking of doubling down when it reaches $130.

     

    Anyone out there tell me I am missing something? Is a stock trading at 40X sales with no profits ok?
    16 Jun 2014, 06:50 PM Reply Like
  • dsim
    , contributor
    Comments (18) | Send Message
     
    Take a look at Rightmove (the Z of the UK) Ebitda margins, apply those on the revenues Z can conservatively make 5-7 years out and do the math. That will give you an impression of the potential profitability Z can achieve and what multiple you are paying for that right now.
    17 Jun 2014, 04:28 PM Reply Like
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