The REA Group Limited (ASX: REA) share price has raced 29% higher over 2019 to $96.70 today on the back of a surprise Federal election win for the Coalition government and after the RBA handed property buyers an interest rate cut this June.
Moreover, the RBA this week indicated that it's "more likely than not" that further easing in the form of rate cuts comes the way of property investors.
Clearly falling interest rates are a positive for REA Group given they encourage both buyers and sellers to participate in the property market which should translate into increased listings for REA Group after a soft 12 months.
Despite the challenging markets, for the nine months to March 31 2019 REA Group managed to grow free cash flow 23% to $227.9 million, with revenue up 13% to $667.8 million. This in part is due to recent acquisitions as it moves into the mortgage broking space, but it's still an impressive result given the conditions.
The analysts at Goldman Sachs took a look at the latest numbers after REA Group reported its March 2019 quarterly results and remain generally optimistic on the outlook in part due to the group's ability to force through price rises and increase its sales of 'depth' or 'premiere' advertising slots that promote a property more prominently.
As a result Goldman's put a $90.30 12-month share price target on the business, which is around 7% below where shares change hands for today.
However, it might be worth noting Goldman's note came out before the Federal election result and RBA's rate cut.
Another business it has taken a look at recently is digital classifieds rival Carsales.com Ltd (ASX: CAR) a $13.60 share price target on after reviewing its latest news.
