Seek Ltd (ASX: SEK) shares closed on Thursday at $23.77 apiece, down 0.59%.
Over the past two months, the ASX communications share has rallied 17%.
Let's find out why.
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Why is the Seek share price rising?
Blackwattle Investment Partners says the recent Seek shares rally strengthened following the company's Investor Day on 21 May.
Seek used the event to announce it is likely to deliver FY25 revenue and earnings in the top half of its guidance ranges.
The revenue guidance is $1.06 billion to $1.1 billion. The adjusted profit guidance is $135 million to $160 million.
Meanwhile, Seek expects no change to its cost guidance of $750 million to $770 million.
Seek explained:
In ANZ, the recent upgrade of our ad tiers will support low double digit yield growth in FY25 vs pcp.
The decline in job ad volumes has continued to stabilise in recent months and this trend is expected to continue.
Asia revenue will be in line with pcp. This includes the early impacts of the freemium launch in Singapore, which has progressed as planned.
Interest costs will be lower than original guidance following the receipt of funds from the SEEK Growth Fund's partial sell down of Employment Hero.
What's next for the online jobs classifieds company?
CEO Ian Narev said:
Our investments to date have built a strong foundation for growth with leading market positions, a well-established customer franchise and a scalable platform.
Significant growth opportunities exist in the core business to continue growth in placements and yield across APAC.
We have a clear plan to capture those growth opportunities and achieve operating leverage.
Mid-Cap Quality Fund portfolio managers Tim Riordan and Michael Teran attended Seek's investor day.
They commented:
… we continue to build our conviction that SEK management have finally shifted to improved cost control and shareholder return focus.
This follows a "significant" underperformance in 2024 compared to technology peers.
Riordan and Teran blamed cyclical volume headwinds that reversed COVID gains and management's "disappointing cost control".
Now, things appear to be changing.
A 'potential turning point'
The analysts said 2025 was shaping up as "a potential turning point" for Seek.
Riordan and Teran said:
FY25 is the first year of many that has not resulted in an earnings downgrade, and into FY26 SEK has the potential to improve earnings with strong pricing power, cost control and listing volume growth (cycling 2 years of negative 15-20% listing volume CAGR).
Riordan and Teran said Seek could also improve its capital structure by partly monetising the Seek Growth Fund in 2026.
We see strong upside for SEK as an 'improving/enduring quality' business with significant earnings and capital optionality combined with a materially cheaper valuation multiple to peers.
Seek shares are up 5% in the year to date compared to a 4% lift for the ASX 200.
