Why big brokers think the REA Group Ltd (ASX: REA) share price could go higher or lower after its third quarter results
The post Brokers weigh in on the REA (ASX:REA) share price after third quarter results appeared first on The Motley Fool Australia. –
The REA Group Ltd (ASX: REA) share price is climbing higher today, up 2.13% to $159.38 at lunchtime on Monday.
This follows a fairly positive reaction after releasing its third quarter results last Friday, with REA Group shares finishing the week in the green, up 1.4% for the session.
Alongside Goldman Sach’s review of REA shares, here’s what other big brokers are thinking.
Big brokers weigh in on the REA share price
REA’s third quarter results came in slightly ahead of Credit Suisse’s estimates, largely driven by better-than-expected growth in residential listings.
More recently, the Australian property market has experienced a significant deficit in listing volumes. CoreLogic reports that total listings have remained tight in April due to the strong absorption from sales, leaving listings volume 26% below the 5-year average.
Credit Suisse expects a rebound in residential listing volumes, forecasting a 20% year-on-year increase in volume in the second half. The broker expects the company’s earnings to continue to benefit from a cyclical recovery in residential listings and developer volumes.
Credit Suisse increased its REA share price target from $136.70 to $148 with a neutral rating.
UBS was another broker that was surprised by REA’s 13% increase in revenues and 10% increase in earnings for the March quarter. Looking ahead, the broker expects the June quarter to cycle a significant jump in year-on-year listings.
The broker retained its neutral rating for the REA share price but provided the most upbeat target price of $160.
It was a mixed reaction from Morgans as the strong rebound in domestic listings was offset by slightly increased cost growth and lower depth penetration.
The broker was hold rated on REA shares, citing that its current valuation adequately balances both short and long term growth. The broker increased its target price from $131 to $139.4. However, this represents a downside of more than 10% compared to the current REA share price.
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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.