Increasing Seek FVE to AUD 20.50 on Improving Growth Outlook

Narrow-moat-rated Seek’s fiscal 2019 financial result was broadly in line with our forecasts. However, we have increased our fair value estimate to AUD 20.50 on the basis of higher earnings forecasts and impact of the time value of money on our financial model. At the current market price of around AUD 20, Seek appears fairly valued. Our fair value estimate implies fiscal 2020 price/earnings of 40 and dividend yield of 1.8%, or 2.5% including franking credits. These relatively bullish metrics are justified by our forecast of a strong revenue compound annual growth rate of 11% over the next decade and an accompanying earnings per share CAGR of 15%.