REA Group’s FY21 result was slightly ahead of Morgans and consensus expectations at the revenue and earnings (EBITDA) lines, with a higher effective tax rate leading to a -3% EPS miss.
Given the broker has increased its long-term forecasts, there’s considered a buying opportunity on any further share price weakness. The near-term outlook is thought to be clouded by the impact of eastern seaboard lock downs and a second half federal election.
The analyst maintains a Hold rating despite a valuation upgrade and the negative share price reaction, due to a low single digit estimated total shareholder return. Morgans lifts its target price to $160.4 from $139.4.
Target price is $160.40.Current Price is $159.42. Difference: $0.98 – (brackets indicate current price is over target). If REA meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges – negative figures indicate an expected loss).