Zillow Group shares climbed 7% to as high as $24.81 per share after analysts at Canaccord Genuity said their checks indicate that the next earnings report should be a solid one. They point to data from comScore for both Zillow and Trulia during the first quarter.

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Zillow Group estimates look “reasonable”

Analyst Michael Graham and team reiterated their Buy rating and $26 per share price target on Zillow Group. They note that comScore data showed that traffic growth for the company’s web properties was positive in the first quarter and in fact remained strong throughout the whole quarter. The real estate web group’s online properties grew a little faster than Move did during the month of March, marking the first time this has happened since the News Corp acquisition. Further, the Canaccord Genuity team said Trulia’s traffic normalized last month “for the first time in a while.”

Based on the positive data about traffic, they said first quarter estimates for Zillow Group look “reasonable.” They think the company should be able to achieve guidance, possibly with room for upside. They’re projecting a 22% growth rate in Premier Agent revenue in the first quarter following last year’s 33% growth. They note that this year’s first quarter faces a difficult comparison with last year’s strong first quarter, which racked up 56% growth.

However, they said the strong traffic growth, combined with the group’s new conversion tools and, potentially, “some benefit” from the repurposing of more display ads are all key positives.

The Canaccord Genuity team also noted that iSpot.tv data indicates that Zillow Group is running triple the number of ad spots as Realtor.com, and they expect ad spend to speed up in the second quarter but remain within guidance.

Focus on litigation

Graham and team note that a hearing on the litigation involving Move is scheduled for Friday and that the trial is set to begin June 6, and as a result, this case will likely become a major focal point. They think the $1.8 billion in damages Move is demanding is excessive, especially since News Corp paid “only” $950 million to acquire the property in 2014.

They warn, however, that the trial could drag on for a while, and if it does, they believe Zillow Group might end up spending more than the $36 million it has set aside for the court battle.