REA Group’s quarterly result has seen a -3.3% revenue decline translate into a 7.7% earnings (EBITDA) increase on the previous corresponding period, enthuses Morgans.
Aggregate listings declined only -2%, despite the Melbourne lockdown and cost containment was well ahead of guidance, explains the broker.
Despite first quarter listing volumes being well above the analyst’s expectations, the broker still sees strong listings growth into a ‘more normal’ second half and further into FY22, with housing churn still well below historic levels.
Morgans sees the acquisition of a majority stake in Indian-based Elara Technologies as a sensible risk, noting large upside potential in this market.
The Hold rating is unchanged and the target is increased to $114.8 from $101.8.
Sector: Media.
Target price is $114.80.Current Price is $127.89. Difference: ($13.09) – (brackets indicate current price is over target). If REA meets the Morgans target it will return approximately -11% (excluding dividends, fees and charges – negative figures indicate an expected loss).
