ASX real estate stock PEXA Group Ltd (ASX: PXA) has been heavily sold in the last two months of trade.
Shares in the digital property exchange business have dropped 9.57% since the start of June and are currently trading at $13.41 apiece.
This includes a 5% decline this past week amid the broader market's volatility.
After such a sharp decline, this raises a key question for investors: Is this ASX real estate stock a bargain buy? Let's dive into what the experts say.
ASX real estate stock a buy?
Zooming out, it's been a downward affair for PEXA since its listing. Although it listed at arguably one of the worst possible times in the recent cycle – right near the end of 2021.
Months later, by January 2022, many investors were fleeced as the inflationary dragon reared its ugly head, and central banks embarked on the most severe and brutal interest rate hiking cycles in modern history to tackle the beast.
Debt-heavy sectors such as real estate were quick to feel the pinch. You can see this on the chart below for PEXA.
Despite these challenges, top brokers see potential in the ASX real estate stock. Goldman Sachs upgraded PEXA to a buy last month, setting a target price of $16 per share.
This suggests a 19% upside from its current level.
Goldman's optimism stems from strong earnings growth expectations, driven by a recovering property market and improved transaction volumes.
It expects the Australian property market to rebound, with property transfer volumes projected to rise by 5% in FY25. This follows a sharp 15% decline in FY23.
A recovery in Australian property is fuel on the fire underneath the ASX real estate stock's earnings, with Goldman projecting the group's operating profit forecast to grow by 30% into FY26.
International expansion potential
PEXA isn't just relying on the Australian market for growth. The company is expanding in the UK, moving closer to achieving its remortgage, sale, and purchase targets.
Its partnerships with NatWest could be something to keep watch over as well, in my opinion.
NatWest manages over 12% of UK mortgage volumes, giving it enormous exposure to the market. Whether this will be positive for the ASX real estate stock remains to be seen, but transactions are expected to begin by the first half of FY25.
Goldman Sachs isn't the only broker with a positive outlook on PEXA either. JP Morgan has also initiated coverage, giving PEXA an overweight rating and a $15 price target.
It, too, highlights PEXA's strong position in the market and the supportive outlook for the Australian real estate sector as key reasons for its bullish stance.
The ASX real estate stock is rated a 'moderate buy' from the consensus of analyst estimates, according to CommSec. From the list, no brokers recommend selling the stock.
Foolish takeaway
With the ASX real estate stock down 9% since June, the question is whether this is a buying opportunity.
Top brokers cite the combination of a recovering property market and potential UK growth as two reasons for their buy ratings.
As always, however, it's essential to conduct your own due diligence. Whether or not the stock is a buy for you depends on a multitude of factors, including a long-term view.
