While REA Group reported a solid FY21 result, Morgan Stanley notes an extended Sydney lockdown will likely lead to negative revisions to both first quarter and first half estimates for FY22. 

Despite this, the broker remains positive and expects quick recovery in listing and revenue following lockdown. 

REA Group closed out FY21 with revenue of $928m, a 13% beat on forecasts, and exceeded expectations for underlying earnings and earnings per share by 13% and 21% respectively.

The broker notes FY22 estimate revisions may weigh on share price in the near term. The Overweight rating and target price of $185.00 are retained. Industry view: Attractive.

Sector: Media.

Target price is $185.00.Current Price is $159.42. Difference: $25.58 - (brackets indicate current price is over target). If REA meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

© 2021 Acquisdata Pty Ltd., source FN Arena