Zillow (ZG, Z) updated its market strategy, targeting strong revenue and profit growth in 2025 and beyond despite a slow housing market, RBC Capital Markets said in a note Wednesday.

The company raised its 2025 revenue forecast but slightly lowered earnings before interest, taxes, depreciation and amortization estimates due to higher-than-expected variable costs, mainly in advertising, the investment firm said.

Residential revenue in Q4 grew 11%, trailing the industry at 13%, partly due to a lag in capturing market challenges with first-time home buyer conversions. On the flip side, rental growth showed strength, with 25% growth in Q4 and expectations for further acceleration to 30% in Q1, supported by increased ad spending and a new partnership with Redfin, according to the note.

Enhanced market penetration is projected to rise from 21% in Q4 to 35% by the end of 2025, aiming for a 75% long-term target, RBC said.

Despite short-term setbacks, analysts remain bullish on the company's strategy to gain market share and drive sustainable long-term growth, RBC said.

RBC reiterated an outperform rating and $88 price target for Zillow.

Shares of the company were down 11% in recent trading.

Price: 74.60, Change: -9.24, Percent Change: -11.02