There are a number of blue chip ASX 200 stocks to choose from on the Australian share market.
But one of the best could be REA Group Ltd (ASX: REA) according to analysts at Goldman Sachs.
They believe the realestate.com.au operator is one of the highest quality names under its coverage.
According to a note out of the investment bank, its analysts were impressed with the company's performance during the first quarter of FY 2025.
Commenting on the quarter, the broker said:
Very strong quarter and outlook, highlighting the strength of its market position. Key positives: (1) Buy-Yield growth expectations upgraded for FY25 – with REA now explicitly expecting double digit growth (GSe +11.5%, +15% in 1Q25) given strong product attach, depth penetration, lower geo-headwind & low value exception usage; (2) REA now expects full year listings growth (GSe +1%, from +0%) given the strong Jul-Oct performance.
However, Nov trends are unclear (given unwind of extra day benefit in Oct) and 2H25 will be impacted by timing of pub holidays/Fed Election; (2) Despite the challenges DHG is facing, REA re-iterated its view it can deliver double digit buy-yield growth across the next 5yrs, while indicating vendor marketing budgets have been increasing in recent yrs – with Luxe a key enabler of REA increasing share; (3) Seller leads growth accelerated materially in 1Q25 (+80% vs. +37% in FY24); and (4) Rental (>16%) and Finance (>10%) revenue growth was strong.
In response to the update, Goldman has reiterated its buy rating on the blue chip ASX 200 stock with an improved price target of $249.00.
Based on the current REA Group share price of $234.19 this implies potential upside of 6.3%.
As mentioned at the top, the broker continues to believe that REA Group is one of the highest quality companies under its coverage. It said:
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. We are therefore Buy rated on REA.
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