The firm reiterated its "overweight" rating for the online real estate information marketplace and said a re-rate is expected on the anti-trust approval of the Trulia (TRLA) merger.
"We believe the most important catalyst for Z-possible anti-trust approval for the TRLA merger-is getting closer, we think sometime in 1Q. At that point, we still expect to see a re-rate in shares," said Barclays U.S. Internet analyst Christopher D. Merwin.
Separately, TheStreet Ratings team rates ZILLOW INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ZILLOW INC (Z) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that net income has been generally deteriorating over time."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Z's very impressive revenue growth greatly exceeded the industry average of 29.4%. Since the same quarter one year prior, revenues leaped by 67.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Z has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 7.95, which clearly demonstrates the ability to cover short-term cash needs.
- ZILLOW INC has improved earnings per share by 13.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ZILLOW INC swung to a loss, reporting -$0.38 versus $0.19 in the prior year. This year, the market expects an improvement in earnings ($0.39 versus -$0.38).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, ZILLOW INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Internet Software & Services industry average. The net income has decreased by 2.4% when compared to the same quarter one year ago, dropping from -$10.23 million to -$10.48 million.
- You can view the full analysis from the report here: Z Ratings Report