The team at Bell Potter has released updated guidance on Harvey Norman Holdings Ltd (ASX: HVN) and REA Group Ltd (ASX: REA) shares.
The broker sees one as a clear buy with healthy upside, while the other is listed as a sell.
Here is the latest on these retailers.
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REA Group not out of the woods yet
REA Group shares jumped 6% yesterday, however Bell Potter appears unconvinced of a long term rebound.
Its share price remains down almost 33% in the last year.
Bell Potter said REA's final listings data point for FY26 capped off a strong final quarter for volumes.
National new listings grew 13% for the month of June, supported by 3% and 9% growth in key Sydney and Melbourne markets respectively. Brisbane and Perth outperformed at 22% and 18%. The result lifts our expected FY26 listings to broadly flat from -1.3% previously, with R3m listings performance also strong at 11%.
Bell Potter has increased its price target to $137 due to earnings estimate revisions and rolling the valuation forward to increasingly include FY28. However the broker maintains a sell rating for several reasons:
- Higher expected RBA cash rates are forecast to weaken borrowing demand, reducing activity in the housing market.
- Recent government budget measures are expected to discourage property investment (particularly investors), weighing on house prices and listing volumes despite some support from owner-occupiers.
- Lower dwelling prices and fewer listings are expected to outweigh REA's pricing ("buy yield") benefits.
Bell Potter's updated target is roughly 14% below current levels.
Healthy upside for Harvey Norman
Harvey Norman shares have fallen 32% year to date, however Bell Potter is confident it can recover.
Bell Potter said Harvey Norman concluded a challenging 2H26.
While our FY26e estimates remain unchanged, we apply some conservatism to our forward estimates within our revenue assumptions in HVN's Franchising and Retail divisions across all geographies. However, our estimates for the Property division remain largely unchanged as we view HVN's prime position in Australia's large format retail market given the sub-asset class continues to see highest rental growth in an under-supplied market.
The broker has slightly lowered its price target to $6.00 (previously $6.70) however has maintained its buy recommendation.
From current levels, this indicates approximately 26% upside.
We view FY27 as the cyclical low point for most retailers and see more leading indicators reflecting a tougher year led by the weak Consumer Confidence on a major household item in HVN's key markets.
