Speaking at the Sohn Conference in London, Messara said he expects the U.S. online real estate company to reach an enterprise value of $50 billion, calling it the firm's biggest bet ever, according to Reuters. The enterprise value implies a price of $770 a share for the company.
The hedge fund portfolio manager said that Zillow would follow a valuation path similar to market leaders in other markets. The company will be helped by its strong and defensible position, its focus on mobile technology, and its "best in class" management, according to Messaro.
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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Z's very impressive revenue growth greatly exceeded the industry average of 27.8%. Since the same quarter one year prior, revenues leaped by 66.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in 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 7.26, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has increased to $4.48 million or 12.33% when compared to the same quarter last year. Despite an increase in cash flow, ZILLOW INC's cash flow growth rate is still lower than the industry average growth rate of 25.51%.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 1243.7% when compared to the same quarter one year ago, falling from -$1.19 million to -$15.98 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness 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.
- You can view the full analysis from the report here: Z Ratings Report