Brokers remain bullish on the SEEK share price

The SEEK Limited (ASX:SEK) share price could be going a lot higher from here according to a couple of brokers. Here's what they think…

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The SEEK Limited (ASX: SEK) share price has come under pressure this week following the release of its full year results.

Since the start of the week, the job listings giant's shares have fallen a disappointing 8.7%.

What happened in FY 2020?

For the 12 months ended 30 June 2020, SEEK delivered a 2.6% increase in revenue to $1,577.4 million but a 9% decline in earnings before interest, tax, depreciation, and amortisation (EBITDA) to $414.9 million.

While this result was largely in line with expectations and reasonably robust considering the tough trading conditions it is facing, its outlook for FY 2021 appears to have spooked investors.

For FY 2021, SEEK has suggested that its revenue could come in at ~$1,470 million and its EBITDA could be in the region of ~$330 million. This represents a decline of 6.8% and 20.5%, respectively, year on year.

Beyond this, management remains positive on its long term outlook and continues to target revenue of $5 billion later this decade.

Should you invest?

There's no doubt that FY 2021 will be tough for SEEK because of the pandemic. However, I believe it is well worth sticking with the company and focusing on its very positive long term potential once the crisis passes.

One broker that agrees with this is UBS. This morning the broker put a buy rating and $22.00 price target on SEEK's shares. This price target represents potential upside of 12.5% for its shares over the next 12 months.

According to the note, the broker has reduced its estimates to reflect its outlook but remains very positive on its prospects once trading conditions return to normal.

Another broker that is positive on the company is Credit Suisse. It has an outperform rating and $23.20 price target on SEEK's shares currently.

I agree with both UBS and Credit Suisse and would suggest investors take advantage of the recent weakness in the SEEK share price to buy shares.

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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