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UPDATE: Canaccord Ups Zillow Price Target, Cites Consolidation Potential

David Johnson

Canaccord Genuity boosted its price target on home real estate concern Zillow (NASDAQ: Z) to $130 from $115 a share, citing its earnings potential and possible consolidation with competitor Trulia.

Zillow traded recently at $126.70, up 3.03 percent and shares have more than doubled in the past 12 months.

Canaccord analyst Michael Graham said "despite its lofty valuation" he believes its core business is strong and sees a "strong technical picture."

Graham noted that 34 percent of the shares are held as short interest while "seemingly highly convicted" top shareholders own an additional 42 percent.

"We note that six investors own 52 percent of Zillow and also hold 42 percent of Trulia, potentially reflecting their desire to see consolidation," Graham said in a research note.

Zillow boosted its marketing by 62.5 percent to $65 million for this year, and its number of unique visitors in the first quarter rose 52 percent from a year earlier.

Graham said along with a strong core business, Zillow's ancillary mortgage and rental segments are "evolving nicely."

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