There are a number of blue chip ASX 200 stocks to choose from on the Australian share market.
But one of the best could be REA Group Ltd (ASX: REA) according to analysts at Goldman Sachs.
They believe the realestate.com.au operator is one of the highest quality names under its coverage.
What is Goldman saying about this blue chip ASX 200 stock?
According to a note out of the investment bank, its analysts were impressed with the company's performance during the first quarter of FY 2025.
Commenting on the quarter, the broker said:
Very strong quarter and outlook, highlighting the strength of its market position. Key positives: (1) Buy-Yield growth expectations upgraded for FY25 – with REA now explicitly expecting double digit growth (GSe +11.5%, +15% in 1Q25) given strong product attach, depth penetration, lower geo-headwind & low value exception usage; (2) REA now expects full year listings growth (GSe +1%, from +0%) given the strong Jul-Oct performance.
However, Nov trends are unclear (given unwind of extra day benefit in Oct) and 2H25 will be impacted by timing of pub holidays/Fed Election; (2) Despite the challenges DHG is facing, REA re-iterated its view it can deliver double digit buy-yield growth across the next 5yrs, while indicating vendor marketing budgets have been increasing in recent yrs – with Luxe a key enabler of REA increasing share; (3) Seller leads growth accelerated materially in 1Q25 (+80% vs. +37% in FY24); and (4) Rental (>16%) and Finance (>10%) revenue growth was strong.
Buy rating reiterated
In response to the update, Goldman has reiterated its buy rating on the blue chip ASX 200 stock with an improved price target of $249.00.
Based on the current REA Group share price of $234.19 this implies potential upside of 6.3%.
As mentioned at the top, the broker continues to believe that REA Group is one of the highest quality companies under its coverage. It said:
We believe REA is among the highest-quality names in our coverage, given it has the highest ability to continue to drive pricing, with: (1) significant disparity between lead share and revenue share; (2) the lowest cost relative to overall vertical transaction; (3) a profitable and still fragmented end market; and (4) the existence of Vendor Paid advertising, with strong valuation support with current trading multiples in-line with historical levels. We are therefore Buy rated on REA.
