Between mid-February and late March, shares in SEEK Limited (ASX: SEK) fell by around 50% to $11.95. However, since then, SEEK has managed to regain most of this share price decline. The SEEK share price is currently trading at $19.29.
During the initial period of the coronavirus pandemic, investors became spooked due to the sharp fall-off in listing volumes. Billings were down by up to 60% during the week ending 29 March, across all regions.
However, lockdown restrictions are gradually easing across Australia and New Zealand. This is leading to increased investor confidence and rising ad volumes. Investors are becoming increasingly optimistic that the worst of the pandemic is now behind us.
Is the SEEK share price a buy right now?
Job ad volumes starting to rise
New job ads on SEEK are still down significantly on what they were during February and early March, before the full impact of the pandemic hit. However, there are early signs of job ad volume recovery. In SEEK’s latest employment monthly snapshot it revealed that new job ads posted on the Aussie employment platform during the fortnight ended 7 June, were up by a very sharp 60.6%. This represented a further increase on the previous three fortnights of 26.8%, 39.7% and 49.2% respectively.
The Australian market is bouncing back from the pandemic much faster than anticipated in late March. Australia and New Zealand have been two of the most successful countries globally in containing the coronavirus outbreak.
Sectors which are seeing strong growth over the past month in Australia include trades and services, healthcare and medical and hospitality and tourism. In addition, manufacturing, transport and logistics and education and training are all starting to see stronger demand.
July also looks promising. Job ad volumes have historically tended to ease off towards the end of the financial year (i.e. the end of June). July and August tend to then see an initial boost as hirers reaffirm their budgets.
Is the SEEK share price a buy?
Lockdown restrictions appear set to be further eased across Australia over the coming months. There also continues to be strong encouragement by the Australian Government for people to return to work. I think that it’s looking increasingly likely that employment ad volumes will continue to improve significantly over the next few months for SEEK. That is assuming there isn’t a second wave of the pandemic.
SEEK’s second biggest market, New Zealand, also looks set to follow a similar path towards recovery.
From a long-term perspective, I believe SEEK appears to be well positioned for continued growth in revenue and profitability. It has an entrenched and dominant position in its local Australian market and is also continuing to grow its international presence.
While SEEK’s share price has bounced back since late March, it is still well below the 12-month peak it saw in late January.
I therefore believe that the SEEK share price offers investors a reasonable buying opportunity right now.
In light of this, two other online classifieds ASX shares you might want to look are: Carsales.Com Ltd (ASX: CAR) and REA Group Limited (ASX: REA).
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Motley Fool contributor Phil Harpur owns shares of carsales.com Limited, REA Group Limited, and SEEK Limited. The Motley Fool Australia has recommended carsales.com Limited, REA Group Limited, and SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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