Zillow Rentals Stay Hot As Residential Business Cools: Analyst

Bank of America Securities analyst Curtis Nagle reiterated the Neutral rating on Zillow Group, Inc. ZG on Thursday, lowering the price forecast from $72 to $70.

On Wednesday, the company reported first-quarter revenues of $598 million, up 13% year over year.

The analyst noted that management pointed to better-than-expected momentum from its Redfin Rentals partnership, guiding to 35% growth in Q2 Rentals compared to the Street’s 30% estimate.

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The company expects rental revenue to accelerate further in the second half, with full-year 2025 growth forecasted above 40% year-over-year. Zillow also highlighted strong share gains among property managers, as multi-family rental revenue in Q1 climbed 47%, outpacing the growth in property listings.

Given that three times more movers are seeking rentals over purchases, Nagle highlights that rental revenue is less sensitive to macro pressures. The analyst added that a growing Rentals segment may provide Zillow with steadier, more predictable growth, which could support a higher valuation over time.

Nagle slightly increased revenue forecasts to reflect stronger-than-expected momentum in Zillow’s Rentals segment, though this is partly offset by weaker trends in the Residential business, which appears to be underperforming relative to the broader real estate market.

The analyst is also adjusting expense projections higher due to increased cost of goods sold—mainly from lead payments tied to the Redfin Rentals partnership—and stepped-up sales and marketing efforts.

For 2025, Nagle now expects revenue of $2.6 billion (up 1%) and EBITDA of $610 million (down 5%).

For 2026, revenue is also raised by 1% to $2.9 billion, while EBITDA is trimmed 2% to $805 million.

Price Action: Zillow shares are trading higher by 1.29% to $67.30 at last check Thursday.

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