If you've searched online in the recent past for real estate, either casually or otherwise, chances are you've visited Zillow Group's (ZG -1.84%) (Z -1.72%) web portal. The company operates one of the most-visited real estate sites on the scene, and its stock is also a top title in the sector.
It's also a stock that could surge ahead, according to some of the analysts tracking the company. Let's take a closer look at why.
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An offer it can refuse
According to data compiled by TipRanks, the average 12-month price target of the 14 prognosticators currently following Zillow's A shares is $65.90 per share. That's a hearty 43% over their most recent closing price. As for the company's C shares, the potential is greater -- the TipRanks data shows that they're projecting this stock to hit $78 per share in a year's time, which would represent a 66% gain.
Optimism is coming back to both classes of Zillow stock, and it might be high time for this. Investors sold out of the company late last year when it shut down its Zillow Offers business (through which it scooped up homes in the hopes of selling them relatively quickly at a profit). Many consider iBuying to be a juicy opportunity for big real estate players to pad their top and bottom lines.
However, Zillow never found its sea legs with Zillow Offers, as it frequently lost money doing it. But there are obviously investors out there who still consider it to be a rich opportunity abandoned -- neither class of Zillow stock has fully recovered from the hits they took after the Zillow Offers announcement.
Zillow's core competency
Yet they are recovering, and there's good reason why. Zillow's Q4 results reveal that revenue from the core of its business, known as Internet, Media, and Technology, is growing at encouraging rates, with a 14% year-over-year improvement during the period.
And without the Homes segment, which is basically occupied by the winding-down Zillow Offers, the company would have booked a nearly $83 million pre-tax profit instead of the recorded $259 million loss.
Going forward, Zillow is guiding for $3.12 billion to $3.44 billion in revenue for this current quarter. Given that the collective analyst forecast for the metric is $3.25 billion, the company has a fine chance of notching a top-line beat.
More encouragingly, it's expecting earnings before interest, taxes, depreciation, and amortization (EBITDA) to land well in the black at $124 million to $174 million. That would pound the average prognosticator estimate of a $17.5 million loss into the ground.
Potential for profits
As for Zillow's future, those collectively bullish analysts are forecasting that the frequent losses on the bottom line will soon flip. On average, they're modeling a leap into profitability for full-year 2022 to the tune of $1.81 per share, which should rise a chunky 55% to $2.80 the following year.
This is a fine growth rate by any standard, but it shines when matched with the competition. Fellow online homeslinger Redfin isn't expected to reverse its loss-making ways either this year or in 2023. In fact, for the current year, its bottom-line deficit is expected by analysts to deepen to nearly $2 per share from the preceding $1.12.
So all in, Zillow looks like a still beaten-down stock that probably deserves a little more love from investors. Bargain hunters should consider snapping up a few shares of it.
