The REA Group Limited (ASX: REA) share price has been a strong performer over the last seven weeks.
Since dropping to a 52-week low of $62.05 around seven weeks ago, the property listings company's shares have zoomed approximately 45% higher.
Is it too late to invest?
While REA Group is far from the bargain buy that it was in March, I still see a lot of value in its shares at the current level for long term-focused investors.
I continue to be very impressed with the resilience of its business and the way it can generate earnings growth during very tough trading conditions.
For example, last week REA Group released its third quarter update and revealed a 1% increase in revenue to $199.8 million and an 8% lift in quarterly EBITDA to $119.6 million. This was despite it dealing with a 7% decline in national residential listings during the three months.
And while things are going to be tougher in the current quarter, the company is attempting to offset this with a 20% reduction in operating costs.
Overall, when trading conditions improve, and they will, I believe REA Group will be well-positioned to accelerate its growth again.
Goldman Sachs rates REA Group as a buy.
One broker which agrees that REA Group is a buy is Goldman Sachs. This morning it retained its buy rating and lifted its price target to $107.00. This implies potential upside of approximately 18% over the next 12 months.
It lifted its price target after upgrading its earnings forecasts for the company.
The broker explained: "Given our increased confidence on the outlook for property listings in Australia, given April numbers that were well ahead of our expectations, and a relaxation of auction/open home restrictions in parts of Australia, we see less risk around our listings forecasts."
Goldman is forecasting listings growth of 12% in FY 2021 and then 8% in FY 2022.
"As a result, we revise higher the multiple we ascribe to REA Australia and Domain Digital assets by 1X, with REA increasing to 25X and DHG to 19X."
REA Group remains it preferred option in the space. It has held firm with its neutral rating for Domain Holdings Australia Ltd (ASX: DHG) and has a $2.70 price target on its shares.
