The REA Group Limited (ASX: REA) share price is pushing higher on Monday.
In morning trade the property listings company's shares are up 1% to $172.03.
This leaves the REA Group share price trading just a touch short of its record high of $173.11.
Can the REA Group share price go even higher?
One leading broker that believes the REA Group share price can keep on climbing is Goldman Sachs.
According to a note out of the investment bank this morning, its analysts have retained their buy rating and lifted their price target on its shares to $198.00.
Based on the latest REA Group share price, this implies potential upside of 15% over the next 12 months.
Why is the broker bullish?
Goldman Sachs made the move after REA Group announced the completion of its acquisition of Mortgage Choice Limited (ASX: MOC) and a 34% stake in mortgage software company Simpology.
Commenting on the acquisitions, Goldman said: "We believe the increased focus on finance makes strategic sense for REA, as it looks to capitalize on its strong brand, digital traffic and property data to take share of the sizable, but fragmented mortgage broking industry in Australia. This market has strong near-term volume tailwinds, but also faces some potential regulatory headwinds relating to the proposed changes to trailing commission."
Goldman also likes the company due to its "hybrid model", which it expects to support significant market share gains in the future.
It explained: "REA is running a hybrid model, with a strong digital offering (consistent with local and global peers), but combining this with an extensive, offline broker network. This ensures REA can capture the full value of the leads generated on its portal, given a significant share of consumers do not want a digital-only experience."
"We believe that through building out its network and investing heavily into digital tech, REA can substantially improve the overall consumer experience, with its broker network 'competing' for the leads that it generates (similar to Opcity)."
Overall, it feels this "creates an opportunity for REA to grow its share of the A$2.4bn Mortgage Broker pool (FY20). We forecast REA's share to grow from 3% in FY21E (excl. MOC) to 10% in FY25E, and generate A$41mn of EBITDA, or 5% of group EBITDA."
In light of this, Goldman believes the REA Group share price is trading at an attractive level relative to its growth potential.
