Zillow (ZG) management is broadly constructive amid emerging Preferred market monetization momentum and a solid rentals upsell path with runway into 2027, despite a marginally negative macroeconomic landscape, RBC Capital Markets said in a research note emailed Friday.

The company hinted that preferred connection penetration is tracking to 75% to 80% by year-end, with full penetration by Q2 of next year, analysts wrote. Zillow Preferred is a performance-based partnership program for real estate professionals that replaces the earlier Flex model.

Despite an incrementally harder macro backdrop where rates remain a headwind and traffic is modestly down, the brokerage said it believes the company is undervalued on the long-term view of growing monetization ahead of the market.

The company is yet to see substantive evidence of AI hindering the business, and believes that the legal and competitive overhang from Midwest Real Estate Data and Compass (COMP) antitrust lawsuits present no systemic read-through, according to the note.

The brokerage said it reiterated its outperform rating on the stock and price target of $55 per share.

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