At a market price of $29.75, shares trade at roughly 12 times its 2015 EBITDA (earnings before interest, tax, depreciation and amortization). That is cheaper than real estate company Move (MOVE), even though Trulia is forecast to grow much faster.
Deutsche predicts Trulia will grow revenue 30% in 2015, versus 11% at Move. Meanwhile, EBIDTA is expected to grow 78%.
"To get to a peer group multiple of 27 on 2015 would imply zero margin expansion for two years!" the analyst noted in a report dated Friday.
"We see Trulia shares as among the most compelling valuations relative to growth in smid-cap Internet. We view recent weakness as sentiment driven, not fundamental," he wrote.
Broad weakness among internet stocks, less liquidity at Trulia, cooling housing data, short-term investors selling into a seasonally slower housing period, are among the various factors that likely explain the recent weakness in the stock. Buying into the stock post this sell-off might offer significant upside, according to the analyst.
Deutsche has a price target of $55 on the stock.
-- Written by Shanthi Bharatwaj in New York.