There are three online classified businesses on the ASX: REA Group, CAR Group and SEEK shares.
Australian investors are likely to be familiar with these platforms.
REA Group Ltd (ASX: REA) is a digital advertising company. It operates Australia's leading property website realestate.com, as well as other real estate portals in Europe and Asia. If you've searched for a house to buy or rent lately, chances are you've visited their portal.
CAR Group Ltd (ASX: CAR) provides car buying and selling services. If you've bought a used car lately, you will likely be familiar with its platform carsales.com.
Finally, SEEK Ltd (ASX: SEK) is a leading online employment marketplace that helps people search and apply for jobs. If you've hunted for a new job lately, you're likely to have come across it.
All three companies have a similar business model: online classifieds businesses. Individuals and businesses post advertisements for a fee, and the platform acts as a medium.
Over the past 5 years, REA Group and CAR Group have risen more than 100%, while SEEK has lagged with just a 10% increase.
But, which is the better investment today?
Macquarie recently weighed in on their preference.
Macquarie's online classifieds pick
In an 18 July research note, Macquarie Group Ltd (ASX: MQG) named SEEK its Australian classifieds top pick.
Macquarie has an 'Outperform' rating and a price target of $27 on SEEK shares. With shares closing at $24.19 yesterday, this suggests a nearly 15% upside over the next 12 months (including both capital growth and dividends).
The broker said:
Seek is our Australian classifieds top pick, supported by rate cut benefits to job ad volumes, yield trends (price + depth), and operating leverage – all of which support an FY26E upgrade thesis. There is still time to pass on the Asia freemium strategy, albeit this region supports less than 10% of earnings, and is likely to stabilise at current levels.
Seek will release its FY25 result on 19 August. Macquarie is expecting a 13% decline in net profit after tax (NPAT) to $155 million. This is at the upper end of guidance ($135 million – $160 million) provided on Seek's most recent investor day.
How about REA Group and CAR Group?
After surging more than 100% over the past 5 years, Macquarie appears to believe that REA Group and CAR Group shares are fully valued.
The broker has placed a "Neutral" rating on both companies.
A price target of $260 has been assigned to REA Group shares.
Meanwhile, a price target of $39 has been placed on CAR Group.
If you're looking to add an online classifieds business to your portfolio, SEEK is the pick of the bunch, according to Macquarie.
The post Can you guess whether Macquarie prefers REA Group, CAR Group or SEEK shares? appeared first on The Motley Fool Australia.
Motley Fool contributor Laura Stewart 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 Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended CAR Group Ltd. 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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