Here's 1 ASX 200 share that could soar in the next bull market

Brokers like the tailwinds behind this company.

| More on:
A man and a woman stand on an external balcony in a dense city environment filled with high rise buildings and commercial properties. The man is pointing up at a high rise building and the woman is looking on.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ASX 200 share REA Group Ltd (ASX: REA) has been a strong performer in 2024, up more than 11%.

The real estate stock has outpaced the broader market so far this year. The benchmark S&P/ASX 200 index (ASX: XJO) has increased 7%.

Brokers are focused on the ASX 200 share, particularly as the company explores ambitious growth opportunities.

This includes its recent moves for a potential takeover of United Kingdom-based property listings company Rightmove (LSE: RMV) and growth in the Australian, United States and Asian markets.

Here's why experts say it could soar in the next bull market.

Created with Highcharts 11.4.3REA Group PriceZoom1M3M6MYTD1Y5Y10YALL1 Sep 202317 Sep 2024Zoom ▾Sep '23Nov '23Jan '24Mar '24May '24Jul '24Sep '24Oct '23Oct '23Jan '24Jan '24Apr '24Apr '24Jul '24Jul '24www.fool.com.au

ASX 200 share poised for growth

Goldman Sachs is bullish on REA Group, reiterating its buy rating in a note to clients last week.

The broker says REA has one of the "best risk/reward profiles" in the domestic media space. It mentions the company's "significant disparity" in revenue share of leads and the "still fragmented" end market.

In particular, we are positive on the pricing power of the real estate classified vertical, given that we believe budgets will rise (at the expense of commissions), and within existing budgets, REA, as a leading player in the vertical, under-monetises its lead generation.

We also see the current negative sentiment around AU property as more a driver of share prices over earnings.

We believe REA is among the highest-quality names in our coverage, given it has the highest ability to continue to drive pricing… We are therefore buy-rated on REA.

Goldman forecasts revenue of $1.6 billion in FY25 for the company, stretching up to $1.79 billion the year after. Earnings per share (EPS) could grow by 12% this year and more than 18% in FY26 if the broker's estimates are correct.

It values the ASX 200 share at a price target of $221 apiece, indicating around 10% upside potential at the time of writing. It also forecasts an average 1.1% dividend yield for the next 12 months, bringing the total implied return to 11%.

Offer rejected – but bullish ratings remain

REA Group's footprint is in the property listing space here in Australia. But the ASX 200 share is looking global. It made an offer to buy UK-listed company Rightmove earlier this month.

The deal was non-binding and included a mix of cash and stock, valuing the UK company at 5.6 billion Great British pounds. This was a 27% premium to Rightmove's share price on August 30. However, Rightmove's board rejected the initial offer.

Bell Potter recently retained its buy rating on the ASX 200 share, setting an improved price target of $226.

The firm liked the prospects of a deal, saying it could result in a 12% EPS growth by FY26.

While the numbers are great, they won't apply for now, given Rightmove's rejection of the initial offer.

Macquarie analysts were also optimistic about this possible takeover. But even without the deal, it rates the ASX 200 share a buy with an increased price target of $229.

One interesting but unrelated takeaway from REA's offer is that it also intends to apply for a secondary listing on the London Stock Exchange (LSE).

According to Goldman Sachs, this gives the "opportunity for a wider array of investors to gain exposure to REA…".

Foolish takeaway

REA Group could be a standout ASX 200 share in the next bull market. Especially if the Rightmove acquisition comes to fruition – although there is no guarantee anything will happen there.

For now, brokers are just as bullish on this company's current operations. The stock is up 27% in the past year.

Should you invest $1,000 in Rea Group right now?

Before you buy Rea Group shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Rea Group wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 7 February 2025

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and REA Group. The Motley Fool Australia has recommended REA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Real Estate Shares

Business people discussing project on digital tablet.
Real Estate Shares

REA shares sink after CEO exit overshadows half-year profit beat

A strong result has been offset by news that the company's CEO is stepping down.

Read more »

Lines of codes and graphs in the background with woman looking at laptop trying to understand the data.
Real Estate Shares

Why is this ASX 200 real estate stock crashing 10% today?

What is making investors hit the sell button today? Let's find out.

Read more »

Three smiling corporate people examine a model of a new building complex.
Earnings Results

2 ASX 300 real estate shares charging higher on half-year results

Did these shares deliver strong results? Let's find out.

Read more »

Mini house on a laptop.
Real Estate Shares

1 ASX real estate stock poised for big growth in 2025

This business has a lot of potential to deliver financial growth this year.

Read more »

Stockland dividend share price man happy at property being sold with arms raised in the air
Opinions

Shares vs. property: Experts reveal hot ASX stocks & suburb picks for investment in 2025

Looking for investment ideas?

Read more »

Happy mum and dad with daughter smiling on couch after relocation to new home.
Real Estate Shares

Should you buy ASX real estate shares before interest rates start to fall?

The real estate sector has suffered in the past three years. Is it time to buy?

Read more »

A man and a woman stand on an external balcony in a dense city environment filled with high rise buildings and commercial properties. The man is pointing up at a high rise building and the woman is looking on.
Real Estate Shares

Why this 'compelling' ASX 200 real estate stock has long-term upside potential

A leading fund manager forecasts brighter skies ahead for this Aussie property developer and investor.

Read more »

Business people discussing project on digital tablet.
Real Estate Shares

What's going on with Lendlease shares today?

An announcement is failing to excite investors. Let's see what is happening.

Read more »