REA – Citi rates the stock as Buy

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The company has informed agents of a new pricing structure effective from July. Citi’s observations suggest an average price increase of 15% for agents on a Premiere-All contract and larger increases for everyone else.

This is significantly higher than the increase the broker had expected. FY18 in forecasts for earnings per share are raised by 1% and FY19 estimates by 5%.

Price target rises to $72.50 from $62.00.. Buy recommendation retained.

Sector: Media.

Target price is $72.50.Current Price is $61.71. Difference: $10.79 – (brackets indicate current price is over target). If REA meets the Citi target it will return approximately 15% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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