REA Group Ltd

REA: XASX (AUS)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	A$828.00	Hvtg	Wkpbvqv

REA Group’s Earnings Begin to Recover From the Downturn

Nov 8, 2020

We have maintained our fair value estimate for narrow-moat-rated REA Group at AUD 80 per share following its first-quarter trading update. Although the first-quarter performance was strong, we don’t believe it provided enough evidence to justify materially changing our full-year forecasts. We still expect group revenue to grow by 10% in fiscal 2021, materially higher than the 3% fall in the first quarter. However, subsequent quarters in fiscal 2021 will benefit from the reopening of Victoria, and the second half of the previous fiscal year was heavily impacted by the national lockdown. At the current market price of AUD 128, we continue to believe REA Group is overvalued.

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