The REA Group Limited (ASX: REA) share price has come under pressure on Tuesday morning.
At the time of writing, the property listings company's shares are down 1.5% to $153.65.
This means the REA's shares are now trading flat in 2021.
Is the REA share price good value?
While 2021 has been underwhelming for the REA share price, one leading broker appears to believe this could be a buying opportunity for investors.
According to a recent note out of Goldman Sachs, its analysts have a buy rating and $190.00 price target on the company's shares.
Based on the current REA share price, this implies potential upside of over 23%.
What did the broker say?
Goldman is expecting REA's listings to fall in FY 2022 because of lockdowns and the Federal Election.
Nevertheless, the broker remains very positive on the REA share price due the prospect of positive jaws (when income grows quicker than sales) and margin expansion.
It explained: "We now forecast FY22E listings to decline -3% (from -1%) given: (1) SYD/MEL lock-downs in 1H22 – although these listings will likely just be deferred to 2H22; (2) Federal Election in 2H22, albeit this will be a less significant impact than prior Elections given no proposed changes to Negative Gearing; (3) Strong 2H21 comps, with REA believing listings volumes were above average in this period. They also acknowledged cost inflation (but still guided to positive jaws in FY22) given the ongoing war for talent. We outline staff cost (as share of total costs) and forecast margin expansion across our classifieds coverage – with consensus forecasting > 100bps expansion for SEK/DHG in FY22E."
All in all, Goldman believes the company is well-placed to deliver solid earnings growth in the coming years. It expects REA's net profit to grow 13.7% in FY 2022 to $373 million and then 18.2% to $441 million in FY 2023.
Based on this, the broker feels the REA share price is trading at an attractive level for investors.
