REA Group (ASX: REA) has continued its recent slump, falling almost 2% today.
REA Group operates Australia's leading residential and commercial property websites –realestate.com.au and realcommercial.com.au – along with Flatmates.com.au.
Its stock price has been hotly covered in recent weeks as it has continued to fall.
In late August, REA Group shares were trading for approximately $263.
Today, shares are hovering around $200 each.
That represents a 24% fall.
What has influenced the drop?
On paper, REA is still operationally strong. The share price drop appears to be more about sentiment and future growth expectations than a collapse in fundamentals.
In its Q1 FY26 release, the company reported revenue of $429m, up 4% YoY, and EBITDA excluding associates of $254m, an increase of 5%.
There's a few reasons investors might be selling REA Group shares.
The company's earnings are still growing, but the "easy growth" may be behind it, and the market is anticipating that slowdown.
REA Group also reported softer listings in Q1. It reported an 8% decline in national new listings, which consisted of large swings in listings declines through July-September.
Additionally, competitor Domain was acquired by CoStar Group Inc (NASDAQ: CSGP) in August.
The team at Bell Potter said late last month competitive threats from CoStar are rising but remain limited given REA's entrenched market dominance.
Brokers have confidence in REA
Looking at recent valuations, its clear brokers see the current share price as compelling value.
Morgans has an accumulate rating and $247.00 price target on REA Group shares.
Bell Potter analysts have retained an outperform rating and $244.00 price target.
TradingView has a 12 month price target of $250.26.
Using these price targets as guidance, brokers are tipping between 22% and 25% upside for REA Group shares.
In my opinion, this is rare upside for a blue-chip stock.
If a $10,000 investment were to increase to these price targets in the next 12 months, it would be worth between $12,200 to $12,513.
