The REA Group Ltd (ASX: REA) share price has had a very good time recently – it's up 6% in the last month and up more than 32% in the past year, as the chart below shows. The broker UBS is bullish on what the business can achieve from here.
The business profit generator within the REA Group business is realestate.com.au, Australia's leading property portal. It also has an Indian property portal business, as well as various Australian businesses involved in the property world, such as mortgage broking.
This company is often touted as one of the best businesses on the ASX, and UBS is confident on further gains from here. Let's see why the broker is excited about REA Group's potential after its FY25 results.
FY25 was another strong year
UBS pointed out that in the 2025 financial year, REA Group reported 15% revenue growth, resulting in 23% net profit after tax (NPAT) growth, despite the headwind of the election occurring during this period.
The broker said that business continued to "entrench its market leadership, reporting a 55% increase in seller leads and four times more audience visits compared to the nearest competitor, of which over 50% is exclusive to REA Group".
UBS notes that the business is planning to increase its costs in FY26. Marketing spending will be significantly increased ahead of CoStar's entry into the market, with AI and other cost efficiencies providing offsets.
The broker also noted that management has guided flat year-over-year volume growth, which is what UBS and other analysts are expecting. Still, UBS sees potential positives because of strong buyer demand – the May enquiry levels were the highest in three years – and rising auction clearance rates.
In the longer term, UBS said that REA Group's 'take rate' of 0.21% of the average property value, compared to the overall marketing spending of between 0.8% and 1% of the average property value, means there is still a "significant runway for further growth".
REA Group share price valuation
UBS said that REA Group shares are trading on a two-year forward price-earnings (P/E) ratio of 40x, while offering a compound annual growth rate (CAGR) of earnings per share (EPS) over the next three years of 15%.
The broker has a buy rating on the business and a price target of $290. A price target is where the broker thinks the share price will be 12 months from now, so UBS is suggesting a possible rise of 16% from where REA Group is at the time of writing.
