Barclays upgrades Zillow as it sees improved execution

Investing.com -- Barclays upgraded Zillow to Equal Weight from Underweight, citing improved execution while challenges in the US housing market persist. Its price target was bumped to $72 from $66.

Issues around affordability, legal disputes, policy uncertainty, and competition remain unresolved but much of the downside risk now appears priced into the shares.

Zillow has delivered mid-teens revenue growth and mid to high-20s adjusted EBITDA growth for two consecutive years, despite a weak residential backdrop.

Sentiment around the stock has softened heading into 2026, even after Zillow outlined expectations for mid-teens revenue growth and about two points of EBITDA margin expansion.

Valuation multiples have compressed by about 6%, while earnings estimates have moved little, largely reflecting investor concerns around competition, litigation, and housing policy.

Barclays expects Zillow’s fourth-quarter results to land broadly in line with expectations, with US residential transaction volumes seen rising about 3% year on year, slightly slower than the prior quarter.

The bank said the housing market remains stable but has yet to show a clear inflection, with activity continuing to “bounce along the bottom.”

Investors are likely to focus less on near-term results and more on the building blocks of 2026 growth and margin expansion.

Barclays said faster growth in rentals and newer products such as Zillow Pro could help offset concerns about uneven outperformance versus broader housing trends.

Barclays outlined three reasons for its more constructive view. First, Zillow’s ability to outperform transaction volumes over the past two years has increased confidence in execution. Second, competitive pressure appears to be easing after Costar Group said it would sharply reduce investment in Homes.com from 2026.

Third, valuation looks more reasonable, with Zillow trading at about 17x Barclays’ 2027 EBITDA estimate against expected EBITDA growth of about 22% in 2026.

While Barclays said the path to a housing recovery remains unclear, it noted that prolonged periods of weak existing home sales often lead buyers to adjust to higher interest rates, setting the stage for eventual improvement. Against that backdrop, the bank said Zillow’s risk-reward profile now looks more evenly balanced at the start of 2026.

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