The REA Group Limited (ASX: REA) share price was unable to continue its impressive run on Thursday and edged slightly lower.
The property listings company's shares ended the day 0.15% lower at $140.55.
Impressively, this means the REA Group share price is still up over 33% since the start of the year.
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Why is the REA Group share price racing higher in 2020?
Investors have been buying REA Group's shares this year thanks to its solid performance in FY 2020 and strong start to the new financial year.
In FY 2020, REA Group overcame the tough trading conditions caused by the COVID-19 pandemic to deliver a far better than expected result.
For the 12 months ended 30 June, the company posted a 6% decline in revenue to $820.3 million and a 5% decline in earnings before interest, tax, depreciation and amortisation (EBITDA) to $492.1 million. This was despite the company being faced with a 12% reduction in national listings.
Pleasingly, the resilient Australian housing market has bounced back since the height of the pandemic and listing volumes are recovering strongly. So much so, in the first quarter of FY 2021, overall national residential listings were down just 2% on the prior corresponding period.
In light of this and a sizeable reduction in its operating expenses, REA Group's EBITDA returned to growth in the first quarter. It reported an 8% increase in EBITDA over the prior corresponding period to $123.8 million.
Management also revealed a further recovery in listings so far in the second quarter. It advised that national listings are down just 1% on the prior corresponding period. This appears to have positioned REA Group to build on its first quarter performance and deliver a solid half year result in February.
Is it too late to buy REA Group shares?
One broker that still sees upside for the REA Group share price is Morgan Stanley.
Earlier this week the broker retained its overweight rating and $150.00 price target on its shares.
Its analysts believe the company is well-placed for growth thanks to improving property listing volumes, larger than normal price increases next year, and flat costs.
