
The REA Group Ltd (ASX: REA) share price has been one of the ASX’s best shares over the last two decades, but the last few years have seen a lot of volatility. Experts have given their view on whether it’s great value and could deliver good returns.
As the chart below shows, the REA Group share price has dropped by around 30% in the past year.
When valuations fall that much, it could be an opportunity to invest. Is that the case with the REA Group share price?
High-quality economic moat remains
Investors should keep in mind that the company’s competitive advantages with realestate.com.au seem to remain.
In every result, the business tells the market how much ahead of its nearest rival it is.
For FY26, the company said that 12.7 million people visited per month on average, with around half of that total exclusively using realestate.com.au.
It achieved 146.4 million average monthly visits, which was 104.5 million more monthly visits than the nearest competitor on average.
REA Group also reported that 5.2 million unique properties were tracked by their owner on realestate.com.au, up 15% year over year. It also noted 2.5 million average monthly realestate.com.au buyer enquiries, up 8% year over year, as well as a 22% year-over-year increase in realestate.com.au leads.
For another important business that REA Group owns, realcommercial.com.au saw 2.9 million people visit per month on average, 1.8 million more people than the nearest competitor.
It’s with these competitive and numerical advantages that REA Group is able to sustain its leadership. Buyers want to go where the most property listings are, most sellers want to advertise on the property portal with the most buyers â a self-fulfilling circle.
The above market dynamic allows REA Group to generate revenue, regularly increase prices, and earn strong margins.
In FY26, the company reported that core revenue grew 7% (on flat listings growth), thanks to ‘buy yield’ growth of 13%, core operating profit (EBITDA) excluding associates rose 12%, and core net profit rose 15%.
What could the REA Group share price do in the next 12 months?
The company is currently in a tricky situation following tax changes affecting investment properties, and interest rates are considerably higher. Currently, new national buy listings are expected to be “flat to down low single-digits” in FY27.
But the company is targeting operational margin expansion with low-double-digit, controllable residential buy yield growth, driven by an 8% premiere+ price rise and growth in add-ons. Operating costs are expected to increase in the mid-single digits for Australia and mid-to-high single digits in FY27.
According to CMC Invest, there have been 10 ratings on the company in the last three months. The average price target is $187.40, suggesting a potential rise of around 20% over the next 12 months.
If that rise does happen, I think it would likely be an ASX market-beating return. So, at the current REA Group share price, it could be one to consider. However, there may be ASX shares that could produce even greater returns.
The post How much could the REA Group share price rise in the next year? appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

