Zillow stock gets a downgrade at Wedbush amid 'softer trends' throughout the business
Wedbush analyst Jay McCanless downgraded Zillow Group Inc.'s stock to neutral from outperform Friday, in the wake of the real-estate company's latest earnings report that brought a lower third-quarter outlook than expected and showed the pains the company is experiencing from its exit of the iBuying business. "While we are favorable on ZG's net cash balance sheet and the long term partnership with OPEN announced yesterday (8/4), we cannot avoid the fact that both of ZG's primary business lines, IMT [internet, media, and technology] and mortgage, and ancillary lines like closing and title are facing softer trends in the near term," McCanless said in his note to clients. In his view, Zillow's latest outlook "assumes a consequential slowdown in closings and other ancillary revenues through the quarter." While Zillow's management team indicated better performance in July relative to June, "we believe it was not enough to match our prior estimates." Shares of Zillow were down 10% in Friday morning trading, and they've lost 69% over the past 12 months as the S&P 500 has fallen 7%.
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