First half earnings were up 21.4%. Macquarie expects top line momentum will be strong in the second half, tempered modestly relative to the first half by the concentration of depth revenues and reduced listing volumes in Sydney and Melbourne.
The broker recently downgraded to Underperform on valuation grounds but notes valuations have come back to some extent and this becomes a more reasonable entry point.
To turn positive Macquarie would need to witness upside that can be generated from the upcoming price review as well as growth in adjacencies and new products. Upgrade to Neutral. Target is steady at $74.
Target price is $74.00.Current Price is $72.97. Difference: $1.03 – (brackets indicate current price is over target). If REA meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges – negative figures indicate an expected loss).