The shares are now trading well above Morgans’ valuation and the rating is downgraded to Reduce from Add. REA Group shares have risen 21% since the broker last reported on the stock in May.
Morgans suspects there will be a near-term disappointment if the FY20 outlook commentary at the results on August 9 is subdued, or even negative. The broker likes the longer-term story but considers the valuation stretched. Target is steady at $91.94.
Target price is $91.94.Current Price is $97.42. Difference: ($5.48) – (brackets indicate current price is over target). If REA meets the Morgans target it will return approximately -6% (excluding dividends, fees and charges – negative figures indicate an expected loss).