A continued rebound in REA group’s domestic listing during the third quarter was above Morgans’ expectations. This was offset by slightly increased cost growth and lower depth penetration, explains the broker.
With a dominant position, the company is increasingly looking to monetise on the consumer side (Financial Services, other leads) and also on the agent side (Agent Match, Connect), highlights the analyst. The recent acquisition of Mortgage Choice is one such example.
The Hold rating is unchanged and the target is increased to $139.4 from $131. Morgans considers the near-term earnings growth and longer term optionality is adequately balanced by a full valuation.
Sector: Media.
Target price is $139.40.Current Price is $156.05. Difference: ($16.65) – (brackets indicate current price is over target). If REA meets the Morgans target it will return approximately -12% (excluding dividends, fees and charges – negative figures indicate an expected loss).
