The Seek Ltd (ASX: SEK) share price has been very consistent over the last few months, as the chart below shows, but the number of job ads has been declining. Investors may be wondering whether this is the right time to invest or sell.
As the leading employment portal in Australia, Seek's shorter-term success is linked to the Australian job market.
With an uncertain economic situation locally and globally, it's worthwhile analysing the situation for the company.
Weakening jobs market
In a recent note from Macquarie Group Ltd (ASX: MQG), the financial institution highlighted that Australian job ad volumes declined 5% year-over year in June. This suggests a 10% decline for FY25, which is in line with Macquarie's expectations. The decline was 1% month-over-month. However, the broker did say that "trends have stabilised throughout the period".
Macquarie also pointed out that applications per ad in May reached a record high of 222, which was up 2% month-over-month and up 88% compared to the 10-year average. The applications per ad is 1% above the previous record in April 2020 when volumes were at 20-year record lows.
Seek's senior economist said that the rise of applications is because of an increased candidate pool, with competition extremely strong for most available roles.
Macquarie said that for Seek, actual volume growth tends to correlate with growth within this report, but with some adjustments, mostly around the weighting of Australian and New Zealand volumes.
However, Macquarie is currently forecasting Australian job ad volumes to grow 3% in FY26 because of three factors.
First, there was a relatively weak period of job ads in FY25, so it should be relatively easy to beat them in FY26. Second, RBA cash rate cuts are expected to be supportive for the economy. Third, there's a tight labour market – despite the recent uptick in the Australian unemployment rate, it still remains around 1% below pre-COVID levels.
Is the Seek share price a buy or a sell?
Macquarie has an outperform rating on the business, which equates to a buy.
The broker currently has a target price of $27 on the business. This is where the expert thinks the share price could go in 12 months from here. That price target suggests a possible rise of 11% from yesterday's closing price.
Macquarie explained why it's optimistic on the business:
Seek remains our top classifieds pick… Product developments announced at the May Investor Day have benefited ANZ yield (price + depth) which could see upside to consensus expectations for FY26 ANZ revenues, especially if volumes return to growth. Accordingly, FY26 should resolve debates on Seek's ability to realise operating leverage following Platform Unification, with successful execution supporting a rerating.
