Keefe, Bruyette & Woods (KBW) reduced its 12-month price target on Zillow (NASDAQ:Z) to $65.00 from $80.00 on Monday, but left its Market Perform rating unchanged.
The downgrade in target price came after a court declined to grant Compass’s request for a preliminary injunction that would have stopped Zillow from enforcing its listing access standards. KBW described the decision as favorable to Zillow, but added that it was "not very surprising considering the high bar for preliminary injunctions."
KBW noted that Zillow’s current market price sits almost exactly at its InvestingPro Fair Value estimate, implying that the stock is not clearly under- or overvalued at prevailing levels. The firm also attributed the lower target in part to "recent weakness" in Zillow shares.
Despite the court decision, KBW cautioned that the final result of the broader trial remains uncertain. The firm highlighted that Zillow faces continued pressure from growing adoption of off-MLS listings, which it views as a competitive threat. KBW observed a "muted reaction" in Zillow’s share price following the court ruling, suggesting the market may not be fully pricing in significant downside risk from this particular case.
The note arrives as Zillow prepares to report quarterly results tomorrow, February 10. Analysts expect the company to return to profitability this year, even though Zillow reported a loss of $0.13 per share over the last twelve months.
KBW reiterated that legal exposure extends beyond the Compass matter. The firm identified several ongoing lawsuits that challenge different elements of Zillow’s operations, including claims tied to Zillow Home Loans, disputes over agent referral fees, and litigation related to Zillow’s partnership with Redfin on rentals. These cumulative legal risks underpin KBW’s neutral view on the stock.
Other analysts continue to express divergent perspectives. Benchmark raised its price target for Zillow to $110 from $95 and maintained a Buy rating, attributing the higher target to potential housing-market catalysts over the coming year despite legal and competitive headwinds, including Compass’s acquisition of Anywhere. Keybanc reiterated confidence in Zillow, suggesting recent market responses may have been overstated. Keybanc pointed to Zillow’s strong direct traffic and its ability to withstand complexities in the real estate ecosystem.
The industry commentary reflects a range of views: KBW’s action underscores caution tied to legal uncertainty and recent share weakness, while Benchmark and Keybanc see upside potential driven by market catalysts and underlying traffic strength. With earnings imminent and multiple lawsuits unresolved, investors will likely weigh short-term legal developments alongside broader housing-market dynamics when evaluating Zillow stock.
Contextual note - The company’s upcoming earnings release and the unresolved legal cases are central to near-term investor attention. Market participants will be watching how analysts’ differing outlooks reconcile with the company’s reported results and any further legal developments.