There are three online classified businesses on the ASX: REA Group, CAR Group and SEEK shares.
Australian investors are likely to be familiar with these platforms.
REA Group Ltd (ASX: REA) is a digital advertising company. It operates Australia's leading property website realestate.com, as well as other real estate portals in Europe and Asia. If you've searched for a house to buy or rent lately, chances are you've visited their portal.
CAR Group Ltd (ASX: CAR) provides car buying and selling services. If you've bought a used car lately, you will likely be familiar with its platform carsales.com.
Finally, SEEK Ltd (ASX: SEK) is a leading online employment marketplace that helps people search and apply for jobs. If you've hunted for a new job lately, you're likely to have come across it.
All three companies have a similar business model: online classifieds businesses. Individuals and businesses post advertisements for a fee, and the platform acts as a medium.
Over the past 5 years, REA Group and CAR Group have risen more than 100%, while SEEK has lagged with just a 10% increase.
But, which is the better investment today?
Macquarie recently weighed in on their preference.
Image source: Getty Images
Macquarie's online classifieds pick
In an 18 July research note, Macquarie Group Ltd (ASX: MQG) named SEEK its Australian classifieds top pick.
Macquarie has an 'Outperform' rating and a price target of $27 on SEEK shares. With shares closing at $24.19 yesterday, this suggests a nearly 15% upside over the next 12 months (including both capital growth and dividends).
The broker said:
Seek is our Australian classifieds top pick, supported by rate cut benefits to job ad volumes, yield trends (price + depth), and operating leverage – all of which support an FY26E upgrade thesis. There is still time to pass on the Asia freemium strategy, albeit this region supports less than 10% of earnings, and is likely to stabilise at current levels.
Seek will release its FY25 result on 19 August. Macquarie is expecting a 13% decline in net profit after tax (NPAT) to $155 million. This is at the upper end of guidance ($135 million – $160 million) provided on Seek's most recent investor day.
How about REA Group and CAR Group?
After surging more than 100% over the past 5 years, Macquarie appears to believe that REA Group and CAR Group shares are fully valued.
The broker has placed a "Neutral" rating on both companies.
A price target of $260 has been assigned to REA Group shares.
Meanwhile, a price target of $39 has been placed on CAR Group.
If you're looking to add an online classifieds business to your portfolio, SEEK is the pick of the bunch, according to Macquarie.
