Earlier this week, Zillow chairman Rich Barton declared how the Seattle online real estate company is leading a revolution.
Wall Street seems to be buying into that vision. Not only has the stock doubled in value in the past three months, several analysts have raised their price targets on the company. The stock is now trading at about $54 per share.
The most bullish came from Citigroup, which boosted their price target from $50 per share to $70 per share, according to TheStreet.com. (Note: Citigroup was the firm that led Zillow’s IPO). Goldman Sachs analysts also boosted their targets to $60 per share this week, and RBC Capital initiated coverage with a $60 target. In total, DailyPolitical notes that four analysts have a hold rating on the stock, while six recommend a buy.
Zillow has been flirting with a $2 billion valuation on Wall Street, about double that of its closest rival, Trulia.
The recent stock surge, coupled with the analysts’ ratings, come even as some have warned that Zillow is overvalued. Last September, Citron Research said in a report that the ”willowy story Zillow has been telling Wall Street is completely inconsistent with company’s underlying business metrics.”
Since then, however, the stock has soared. It is now trading near a 52-week high. Zillow went public at $20 per share in July 2011.
Some of the tech stock watchers I’ve spoken to have said they’ve been surprised with Zillow’s strong showing on Wall Street, though the company seems to be benefitting nicely from the uptick in the overall housing market. Zillow’s revenue grew by 73 percent during the fourth quarter to $34.3 million. For the year, it had revenue of $116.9 million, and net income of $5.9 milion.
What do you think? Is Zillow overvalued at its current stock price? Or is there still room to grow?