Wells Fargo initiated Zillow (NASDAQ:ZG) (NASDAQ:Z) at Equal Weight with a $50 per share price target in a note to clients on Tuesday.
Analysts told investors in a note that the firm thinks Zillow is positioned "extremely well" to dominate the online residential real estate space, but it is currently overshadowed by macro factors.
"Zillow is the most trusted and visited platform in online residential real estate, with a material lead over competitors," they wrote.
"The company's portfolio of brands (incl. Zillow, Trulia, StreetEasy) attracts on average over 200MM unique visitors per month, with more than 80% of traffic visiting the platform directly. A broad portfolio of patented proprietary IP backs Zillow's core assets—a database of 140MM U.S. homes and automated valuation models for real-time home values and rental price estimates."
Addressing the macro issues, the analysts said it "casts a deep shadow" and Zillow is "highly levered to the economic cycle and its operating results are overly sensitive to the macro environment and the level of interest rates."
"The residential real estate space where the Co. operates is highly competitive and fragmented. We remain tactically on the sidelines until the macro-economic uncertainty goes away and the interest rates start moving down, or until we see more revenue diversification," they concluded.