Zillow Group Inc. (NASDAQ: Z) was the beneficiary of a very solid analyst upgrade on Tuesday. Its shares were last seen up by over 5% on the upgrade.

RBC Capital Markets raised its rating on Zillow to Outperform from Sector Perform. While many analysts rate Zillow with a Buy or Outperform, the reality is that the RBC price target of $34 is through the roof. The consensus analyst target is $23, and $34 is now the highest price target.

RBC previously had a $21 price target on Zillow. After the shares closed at $23.96, RBC’s target would imply upside of roughly 42%.

What RBC is keying off of here is that Zillow could see gains from a resurgence in the housing market. If this occurs, it would drive agent advertising online faster than what has been expected in most analyst models today.

Another benefit here is that RBC sees clear evidence that consumers are turning ever more to the online channels to help them make more informed decisions about shopping for and buying real estate.

One thing that investors should keep in mind is that Zillow’s earnings were only $0.07 per share in 2015. The Thomson First Call consensus estimates are $0.09 in earnings per share (EPS) for 2016 (with a high estimate of $0.18) and $0.46 EPS for 2017 (with a high estimate of $0.63). That being said, Zillow’s valuations on a price-to-earnings (P/E) basis remain in the nose-bleed category here. RBC sees untapped value, but the market multiples keep Zillow from being anything even remotely close to being a classic value stock.

One question is whether Zillow’s own words may slow down or pick up some enthusiasm. On March 9, Zillow released its Negative Equity Report for the fourth quarter of 2015. Its data were as follows:

• Fewer homeowners were underwater as the negative equity rate fell to 13.1% in the United States.
• More than 820,000 underwater homeowners still owe over twice as much on their mortgages as their homes are worth.
• Six million homeowners were underwater in the fourth quarter of 2015, down from a peak of nearly 16 million in the first quarter of 2012.
• The negative equity rate dropped 0.3 percentage points from the third quarter to 13.1%, the slowest pace in a year.

Zillow shares were last seen up 6.9% at $24.34 on Tuesday, in a 52-week trading range of $16.45 to $35.47.

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