Are you wanting to add a new blue chip ASX 200 stock to your investment portfolio?
Well, if you answered yes to that, then Bell Potter thinks it could be worth considering REA Group Ltd (ASX: REA).
It is the company behind the realestate.com.au website, which dominates the Australian property listings market.
What is the broker saying about this ASX 200 blue chip stock?
Bell Potter notes that REA Group has had a mixed start to the year, with its first quarter update revealing softer volumes but stronger than expected yields. It said:
Listings declined by -8% cycling extremely strong comps (1Q25 +10.2% against 5yr avg. according to SQM Research data) with a -4.1% decline in Melbourne outpaced by a -6.0% decline in Sydney. Residential Buy yield growth of 13% (FY26 BPe: 12%) was underpinned by a 7% average national price rise, strong add-on performance via AMax, as well as agent subscription growth. Geo mix was flat YoY.
The good news is that the broker highlights that the ASX 200 blue chip stock's management team believes that this strong yield can be sustained through the whole of FY 2026. It adds:
REA expects 13% Buy yield growth in Q1 to be sustainable through FY26 (BPe: 12%) but flagged geo mix drives both upside/downside risk; strong contribution from Syd/Mel in Q1 presently makes the upside tougher. National listings were reiterated to be flat for FY26 (BPe: 0.6%) following the -8% decline noting a softer 2H25 for volumes to comp versus first half.
Listings for October declined nationally by -3% but still showed improvement versus 1Q. EPS changes include removing Housing Edge contribution and consolidating EBITDA-neutral iGUIDE revenues: -3.4%/ -6.8%/0.0% through FY26/27e/28e.
Time to buy
According to the note, in response to the quarterly update, the broker has retained its buy rating with a trimmed price target of $244.00 (from $256.00). Based on its current share price of $209.20, this implies potential upside of almost 17% for investors over the next 12 months.
In addition, a modest 1.5% dividend yield is expected in FY 2026, which lifts the total potential return beyond 18%.
Commenting on its buy recommendation, the broker said:
Our TP is reduced in-line with revisions. REA's strong FCF profile allows for sustained platform reinvestment to target double-digit yield growth through the cycle, including a next-gen listings platform to drive CX and higher quality leads to vendors/value to agents. REA commands significant balance sheet (net cash, nil debt) and equity firepower at 42.7x FY26e EPS to make most relevant acquisitions accretive globally.
