Now could be the time to buy the blue chip ASX 50 stock in this article.
That's the view of analysts at Bell Potter, which are tipping its shares to rise strongly from current levels.
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Which ASX 50 stock?
The ASX 50 stock that is being tipped as a buy by Bell Potter is Seek Ltd (ASX: SEK).
It is an online employment marketplace platform operator across the Australia and New Zealand region and internationally. The latter includes leading platforms in eight markets throughout APAC, and minority interest exposure to China, South Korea, and Bangladesh.
In addition, Seek has Early Stage Ventures (ESVs) across HR SaaS, Online Education, and Contingent Labour verticals through its Growth Fund.
Bell Potter is feeling positive about the company's medium term outlook thanks partly to its recent investment in capex. It explains:
SEK recently completed a A$180m capex project to centralise its ANZ and Asian employment marketplaces onto one platform, which is designed to allow new products/updates to be deployed across all markets at scale. The unified platform is anticipated to facilitate 50% Group EBITDA margins (+670bps v. FY24), representing a significant EBITDA opportunity against a ~A$2bn revenue aspiration by FY28.
Combined with interest rate cuts, which are expected to boost job ads, the broker believes this ASX 50 stock is destined to deliver strong earnings per share growth through to FY 2028. It explains:
SEK's Job ad index has been declining YoY in its core Australian market since Oct' 22, in-line with +215bps of RBA tightening, though volumes appear to be recovering with the decline reducing to -7% YoY in Jan '25. We forecast EPS CAGR of 19% FY24-28e, largely due to improving operating conditions in ANZ and improved platform scalability driving revenue and margin growth through Asia.
Time to buy
The note reveals that Bell Potter has initiated coverage on the ASX 50 stock with a buy rating and $27.00 price target.
Based on its current share price of $22.53, this implies potential upside of 20% for investors over the next 12 months. It also expects a modest 1.8% dividend yield in FY 2025, growing to 2% in FY 2026.
Bell Potter concludes:
We initiate on SEK with a Buy recommendation and $27.00 Target Price. SEK's largest marketplace (Aus) can potentially see ad volumes increase from macro tailwinds driven by an RBA cutting cycle, while also driving Group yield and margin improvements through its unified platform. We expect share price volatility near-term from sensitivity to both local and global economic indicators impacting outlook for jobs growth and ad volumes on platform.
