REA Group: Volumes volatile but trending in the right direction

About the author:

Author name:

By Steven Sassine

Job title:

Associate Analyst

Date posted:

14 November 2023, 7:00 AM

Sectors Covered:

Diversified Financials

• REA Group’s (ASX:REA) 1Q24 trading update highlighted the upside of the recent strength seen in key markets (Sydney/Melbourne), helping national new listings grow 1% on the strong pcp. 1Q24 revenue of A$341m was up 12% on the pcp, with operating EBITDA (ex associate losses) up 13% on pcp to A$198m.
• We make only minor changes to our FY24 forecasts (details below). Our DCF-derived price target remains unchanged at A$155. REA remains one of the highest quality franchises in our coverage with a dominant market position, however given it is currently trading on ~47x FY24 PE (MorgE) and <10% TSR upside, we believe it is fair value and maintain our Hold recommendation.

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