Zillow Group could be on the verge of a strong year, according to Bank of America. Analyst Curtis Nagle double-upgraded shares to buy from underperform, and roughly doubled his price target, noting: "While real estate fundamentals remain very challenged given the macroeconomic environment and rates pressure, we believe the market may trough in early 2023 and are more confident that growth can return to double-digits in 2024 on improving affordability." Shares of Zillow have underperformed the last two years, with the stock price roughly halving in 2022, and tumbling by 54% the prior year. Nagle said Monday expects that transactions will drop by 21.3% year over year in 2023, compared to a decline of 8.1% in 2022, with home affordability at its lowest level in 40 years, according to the note. Still, he noted that that declines in mortgage purchase applications have eased since October, which could signal an improvement in home volume trends starting in the second quarter of 2023. "We forecast that home transactions will accelerate to 10% in 2024 (+11% for ZG revenues) on lower home prices and mortgage rates as well as some mean reversion as volumes are 24% below the historical average," Nagle wrote. What's more, the analyst said that several large initiatives could reaccelerate growth at Zillow. These initiatives include assets such as ShowingTime for online tour scheduling, 3D virtual tours, and a greater focus on financing to find high intent home buyers. The analyst's $42 price target, up from $22, implies more than 20% upside for the stock. Shares were up more than 4% in Monday premarket trading. —CNBC's Michael Bloom contributed to this report.