What Happened?
Shares of online real estate marketplace Zillow (NASDAQ: ZG) jumped 3.5% in the morning session after Bernstein upgraded the stock to 'Outperform' from 'Market Perform' and significantly raised its price target.
Analyst Nikhil Devnani boosted the price target to $105 from a previous $75. The upgrade reflected strong confidence in the company's outlook, as the firm cited expectations for mid-teens revenue growth and contributions from new business segments as key factors. This wave of optimism helped push the stock to a new 52-week high, underscoring positive investor sentiment surrounding Zillow's strategic direction.
After the initial pop the shares cooled down to $88.11, up 3.5% from previous close.
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What Is The Market Telling Us
Zillow’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock gained 4.2% on the news that the latest Consumer Price Index (CPI) report came in largely as expected, reinforcing investor hopes for an upcoming Federal Reserve interest rate cut.
Data from the Bureau of Labor Statistics showed headline inflation for August at a 2.9% annual rate, with core inflation, which excludes volatile food and energy prices, holding steady at 3.1%. While inflation remains above the Federal Reserve's target, Wall Street interpreted the figures as not being high enough to prevent a widely anticipated rate reduction at the central bank's meeting next week. Analysts note that the Fed's focus has shifted toward the risks of a cooling labor market. With this report being the last key data point before the meeting, the market's conviction for a rate cut strengthened, fueling a broad rally that pushed major U.S. stock indexes to record highs.
Zillow is up 25.7% since the beginning of the year, and at $88.11 per share, has set a new 52-week high. Investors who bought $1,000 worth of Zillow’s shares 5 years ago would now be looking at an investment worth $918.10.
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