Canaccord Genuity has lowered its price target on Zillow Group (NASDAQ:ZG) to $72.00 from $84.00 and retained a Hold rating, pointing to legal expenses that exceeded prior expectations and pressured profitability.
Zillow reported a mixed set of fourth-quarter results. The company beat revenue forecasts, but profitability measures missed consensus estimates. On the operations side, the Residential business showed sequential acceleration, improving by 60 basis points, a shift Canaccord and the company attribute in part to the continued scale-up of Enhanced Markets. Enhanced Markets now account for 44% of all connections, a figure that is more than double the level from a year earlier.
The Rentals segment also demonstrated solid momentum, with year-over-year growth accelerating to nearly 45%. Zillow highlighted ongoing strength in multifamily units, developed in partnership with Redfin. Product improvements aimed at boosting engagement and connection quality were singled out as contributors to that progress, including in-app messaging, enhancements to Zillow Showcase, and beta-testing of Zillow Pro.
For the first quarter, Zillow set revenue guidance that sits comfortably above consensus expectations. However, the company warned that profitability would come in below forecasts, largely because legal costs are expected to depress adjusted EBITDA margin by roughly 200 basis points. Looking further ahead, management is projecting mid-teens total revenue growth for full-year 2026 and about a 200-basis-point year-over-year expansion in adjusted EBITDA margin.
Canaccord’s note emphasized that while Zillow is generating steady strategic momentum and appears positioned for margin expansion over time, nearer-term pressures - namely challenging housing trends in the first quarter and the uncertainty around ongoing legal matters - justify a cautious stance despite upside implied by the new price target.
Other broker activity has underscored the mixed analyst view on Zillow. Evercore ISI reiterated an Outperform rating with a $95.00 price target ahead of Zillow’s fourth-quarter 2025 earnings report, anticipating what it described as a "Modest Beat & Bracket" based on its analyses. Bernstein likewise maintained an Outperform rating with a $95.00 target following a favorable legal ruling related to Compass; that ruling allows Zillow to continue enforcing its listing rules while Compass’s antitrust suit proceeds.
On the other side of the spectrum, KeyBanc trimmed its price target to $75.00 from $90.00 and cited compression in tech multiples while keeping an Overweight rating. Barclays moved in a different direction on recommendation, upgrading Zillow to Equalweight from Underweight and setting a $72.00 price target, pointing to the company’s improved execution and encouraging revenue and EBITDA growth projections for 2025 and beyond.
Taken together, these actions illustrate a dynamic period for Zillow in which legal developments, near-term housing conditions, and financial execution are driving divergent analyst assessments of the stock.