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REA Group Ltd (ASX:REA) has shown impressive performance in 2024, with its share price rising more than 11% year-to-date, outpacing the broader market's 7% increase as measured by the S&P/ASX 200 index (ASX:XJO). Brokers are particularly bullish on this ASX 200 share, highlighting its robust growth trajectory and potential for future gains.
Growth Ambitions and Global Expansion
REA Group is not resting on its laurels; it is actively exploring significant growth opportunities. Recent strategic moves include a potential takeover of UK-based property listings company Rightmove (LSE:RMV) and expansion plans into Australian, US, and Asian markets. These ambitions reflect REA’s commitment to expanding its footprint and capturing a larger share of the global real estate market.
Expert Opinions and Market Predictions
Goldman Sachs has a positive outlook on REA Group, maintaining a buy rating and emphasizing the company’s strong risk/reward profile in the domestic media sector. According to Goldman Sachs, REA Group benefits from a “significant disparity” in revenue share of leads within a still fragmented market. The brokerage believes REA has substantial pricing power in the real estate classified vertical, expecting that increased budgets will favor leading players like REA.
Goldman Sachs forecasts a revenue of AU$1.6 billion for FY25, with an increase to AU$1.79 billion in FY26. The brokerage anticipates an EPS growth of 12% this year and more than 18% in FY26. With a price target of AU$221 per share, Goldman Sachs sees around 10% upside potential, along with a 1.1% dividend yield over the next 12 months, suggesting a total implied return of 11%.
Takeover Attempt and Future Prospects
Earlier this month, REA Group made a non-binding offer to acquire Rightmove, valuing the UK company at 5.6 billion Great British pounds—27% above its share price on August 30. Despite this, Rightmove’s board rejected the offer. However, the proposed deal highlights REA’s aggressive expansion strategy and its commitment to scaling its operations globally.
Bell Potter, another key analyst, has retained its buy rating on REA Group, setting an improved price target of AU$226. The firm believes that a successful acquisition of Rightmove could drive a 12% EPS growth by FY26. Despite Rightmove’s rejection of the initial offer, Bell Potter remains optimistic about REA’s future growth prospects.
Macquarie analysts share a similar optimistic view, maintaining a buy rating with an increased price target of AU$229. They too see potential benefits from the Rightmove deal, even though it has yet to materialize.
Secondary Listing Plans
In addition to its domestic and international expansion efforts, REA Group is considering a secondary listing on the London Stock Exchange (LSE). Goldman Sachs views this move as a strategic opportunity to attract a broader range of investors, potentially increasing REA's market visibility and investment appeal.
