REA Group (REA) - Market underestimating growth

REA Group is an online property portal operating in Australia, India, the US, Malaysia, Singapore, Thailand, Vietnam and other countries. The company was formerly known asrealestate.com.au Ltd. and changed its name to REA Group Limited in December2008. REA Group was incorporated in 1995 and is headquartered in Richmond in Melbourne, and is majority owned by News Corporation.

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Ord Minnett has reviewed its FY25 forecasts and the corresponding consensus estimates for online classified advertising companies under coverage, although this has not resulted in any changes to our full-year EPS forecasts for REA Group (REA).

We have also made no changes to our operating earnings (EBITDA) estimates for the property portal but note that our FY25 EBITDA forecast sits marginally above the broader market’s number, most likely due to differences in revenue assumptions for the first half. In Ord Minnett’s view, consensus expectations for revenue growth in the six months to 31 December are too low given the latest available listings data – October and November, with December numbers still to come. We maintain our Hold recommendation and target price of $240.00 on REA Group.

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