If you are looking to invest in the highest quality companies you can find (which is never a bad idea), then you ought to check out the ASX 200 share in this article.
That's because analysts at Goldman Sachs are raving about its quality and are tipping it as a buy.
The share in question is property listings company REA Group Ltd (ASX: REA).
Goldman has been looking at the classifieds space and was pleased with what it saw. It said:
We view recent data-points as broadly positive for REA/SEK, but negative for CAR: (1) Strong start to AU property listings, with volumes (+7%) including favorable mix (i.e. MEL/SYD ahead of AU avg.) – we leave our flat FY25 listings forecasts unchanged, given this assumes a -10% 4Q25 decline to reflect the expected Fed Election, but increase our REA yield forecast to reflect the better Geo mix.
In light of this, the broker has reaffirmed its buy rating on the ASX 200 share with an improved price target of $245.00 (from $221.00). This implies potential upside of approximately 8% for investors.
As I mentioned at the top, the reason the broker likes REA Group is its quality. It believes the realestate.com.au operator has strong pricing power and a positive growth outlook. It explains:
We believe REA Group, a leading real estate classified business with strong market positions across Australia, Asia and the United States, has one of the best risk/reward profiles in our domestic media coverage. In particular, we are positive on the pricing power of the real estate classified vertical, given that we believe budgets will rise (at the expense of commissions), and within existing budgets, REA, as a leading player in the vertical, under-monetises its lead generation. We also see the current negative sentiment around AU property as more a driver of share prices over earnings.
We believe REA is among the highest-quality names in our coverage, given it has the highest ability to continue to drive pricing, with: (1) significant disparity between lead share and revenue share; (2) the lowest cost relative to overall vertical transaction; (3) a profitable and still fragmented end market; and (4) the existence of Vendor Paid advertising, with strong valuation support with current trading multiples in-line with historical levels.
All in all, the broker thinks this makes this ASX 200 share one to buy and hold onto.
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