Zillow rallies 14% after strong earnings beat - and analysts say the stock has further upside ahead

• Shares of Zillow jumped after the online real-estate site reported strong fourth quarter earnings.
• Zillow's $789 million Q4 revenue exceeded expectations, while the traffic to the site hit a record.
• Analysts expect the stock to jump as much as 45% higher than Wednesday's close.
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Shares of Zillow jumped 14% on Thursday after reporting strong fourth quarter earnings amid the US housing boom.

Zillow's consolidated fourth quarter revenue of $789 million exceeded the high end of the company's outlook, while full year 2020 revenue grew 22%.

Meanwhile, traffic to Zillow's mobile apps and website exploded in 2020; the site reached a fourth-quarter record of 201 million monthly unique users, an increase of 16% year over year. The company also reported a record 9.6 billion site visits for the full year 2020, up 19% year over year. It's a sign of growing popularity for online real-estate browsing during the pandemic.

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Analysts from a number of firms upgraded price targets for Zillow following the earnings beat. Citi upgraded Zillow from buy to neutral, raising its price target from $130 to $250, a 45% upside from Wednesday's closing price. According to Bloomberg, Citi sees a positive macroeconomic backdrop for 2021, given low interest rates and high demand for existing homes.

"In light of ZG's strong cost control and ability to reduce inventory amid COVID-19 pressures, followed by a rapid increase in home buying, we have more confidence in ZG's ability to execute," Citi said, as cited by Bloomberg.

Meanwhile Jefferies upped the price target from $175 to $215, citing the robust US housing market as a tailwind for continued growth.

Wedbush Securities maintained its outperform rating while upping Zillow's price target to $218 from $167 on higher estimates and multiples.

"We expect the housing market to remain strong in 2021 driven by the high velocity of home sales (the average time on market in December was 17 days). We also expect to see a rebound in listings driven by higher prices and those that waited it out to sell last year coming back into the market this year," Wedbush said. "We remain Outperform rated with Zillow's opportunity driven not just by macro (which remains strong), but also on a secular offline to online shift in the real estate transaction that is hardly underway."

Shares of Zillow traded at $197.02 as of 9:43AM E.T. on Thursday.