Zillow stock rises amid housing market reversal, analyst upgrade

Yahoo Finance Live checks out Zillow shares following a stock upgrade from Evercore analysts and changeups in the housing market.

Video transcript

DAVE BRIGGS: I also want to take a look at Zillow today. Closing in the green after a bullish note from Evercore ISI highlights the first quarter of this year will be trough quarter for housing data, and there are tentative signs of a rapid recovery.

Now, key to this note, they do still suggest that Q1 could still have a rough patch ahead, that that again, to remind you, could be, in their eyes, the trough, and the positive-- the turnaround happens in Q2 2023. So there is still a little bit of a gray area between those who feel that the worst is totally entirely behind us and Evercore who still sees some rough road ahead. It does look like the housing sector has survived a lot better than many, many feared.

SEANA SMITH: Yeah, it has survived a lot better than many feared and also seems to be maybe turning a quarter more quickly than maybe some had anticipated if we go back several months ago in terms of the predictions that we were getting out from the Street.

This is similar to what we heard from Redfin CEO Glenn Kelman, who was on with us not too long ago. And he pointed to the fact that he thinks that the housing market is going to be stronger, that there are signs of a turnaround that are emerging much earlier than maybe he had initially anticipated.

It is important to point out, though, like you said, in this Evercore note that they pointed to tentative signs of a recovery. They're not fully bought in that we're going to see a huge, tremendous turnaround right away. It's going to take some time.

Also keeping into account that Zillow has performed pretty well year to date. It's up, what, 30 something percent--

DAVE BRIGGS: More than 30%.

SEANA SMITH: --since January 1. Obviously it was under a tremendous amount of pressure last year. But that momentum, at least it points to Evercore's recent note. They think that momentum is going to continue.

DAVE BRIGGS: Well, you would look at that chart right there and think, gosh, maybe all the positive has been taken out of it. But again, according to that note, they think there's still 40% upside. Where the stock is today, though, still-- again, sorry to give you the ups and downs of it all but still off 80% from its 2021 high. So there's a lot of different elements to this housing market.

We're going to get a much better picture this week. We're going to get NAHB data. We're going to get building permits and housing starts. That's Wednesday into Thursday, I think. So the picture in terms of housing will be much clearer Thursday afternoon.

SEANA SMITH: Yeah, Evercore's new price target--

DAVE BRIGGS: And we'll have rates as well.

SEANA SMITH: Yeah, rates. And then Evercore's price target, $61. So even though we have seen that momentum, they see it headed much higher than where we are today.