REA Group Ltd (ASX: REA) shares are ending the week reasonably positively.
In afternoon trade, the property listings giant's shares are up slightly to $188.73.
Can the realestate.com.au operator's shares rise further? Let's see what analysts at Macquarie Group Ltd (ASX: MQG) are saying.
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What is the broker saying about REA Group?
Macquarie has been busy looking at industry data and highlights that trading conditions aren't too favourable at present. Following a 4% decline in Australian residential listings volumes in November, the broker estimates that financial year to date listings are down 6%. It said:
Current trends are tracking slightly below expectations – 1H26 YTD listings are down 6%, albeit with the last three months down 4%. Assuming December continues or improves this recent trend (i.e. down 4% to flat), this suggests a 1H26 decline of 5 – 6% (MQe = 5% decline), albeit month-to-month listings can be volatile.
Looking to 2026, the risk of Australian rate hikes could present a headwind, however comparable periods become easier to cycle in 2H26 (1Q-4Q25 = +7% / +4% / 0% / -8%). We are in line with REA's guidance for flat FY26 volumes, last reiterated in early November. Sydney and Melbourne also continue to outperform, which should benefit geographical mix.
The good news is that REA Group is no stranger to tough trading conditions and is able to use its powerful position to drive earnings growth. Macquarie expects this trend to continue. Though, it does have a few nagging concerns. It explains:
We remain confident on REA's ability to deliver +16% three-year EPS CAGR to FY28, more so driven by double-digit buy yield growth (MQe = +12.6%) and positive operating jaws (MQe = +3%pts). However, valuation has been under pressure given the threat of AI/Domain, trading on 36x 12m fwd P/E (vs 47x two-year avg); we remain cautious and are monitoring any potential structural threats to REA and the industry.
REA Group shares tipped to rise
According to the note, the broker has retained its neutral rating with a $220.00 price target.
Based on its current share price, this implies potential upside of almost 17% for investors over the next 12 months.
To put that into context, if Macquarie is on the money with its recommendation, a $10,000 investment would turn into approximately $11,700 by this time next year.
In addition, it trades with a modest dividend yield of 1.4%, which adds an extra $140 cash return to the equation.
