SunTrust's Peck Cuts Target On Zillow Ahead Of Q4 Results

SunTrust Robinson Humphrey issued a company note on Zillow Group, Inc. -Class A (NASDAQ: ZG) ahead of the company's 4Q15 earnings results. SunTrust reiterated a Buy rating and lowered their price target from $33 to $26.

Analysts Bob Peck, Matthew Thornton and Rodney Hull wrote, "Zillow remains one of the more polarizing names in our universe, particularly post-merger integration. As we look to 4Q results and the 2016 outlook, we feel there are 5 key debates investors are focused on: agent count, guidance, ARPA/revenue growth, margins, and industry relations... We continue to believe that Zillow is uniquely positioned in the real estate secular shift but concerns remain for growth and margins going forward. We maintain our Buy rating and reduce our PT to $26 from $33 based on the market's re-rating of growth multiples."

SunTrust analysts noted that one of the key positive catalysts for Zillow going forward is that the company has positioned itself as the category leader in the shift to online research, discovery, and action in real estate. Having the capability and infrastructure to support the growing trend to online and mobile based platforms may give Zillow the opportunity to expand its market share, drive revenue growth, and potentially increase profit margins.

While investors have concerns over the third straight quarter of real estate agent decline, SunTrust believes Zillow has the opportunity to drive operational strength based on strong mortgage and rental performance.