Seek (ASX:SEK) faces both short- and long-term risks, and could see increased competition when it sells its full stake in Employment Hero, which has 300,000 small and medium-sized enterprise customers across its job portal and app, Jefferies said in a Monday note.
Artificial intelligence could result in a broad range of outcomes for Seek, as job ads are text-based and other platforms such as applicant tracking systems can also pair candidates with vacant positions, the equity research firm said.
It noted that the Seek Job Ad Index is down around 2.5% in the fiscal year to date, compared with the company's forecast for relatively stable volumes.
CAR Group (ASX:CAR) remains Jefferies' top pick in the classifieds sector, supported by a resilient and diversified earnings profile that should perform well even under softer macro conditions. The company is insulated from AI disruption due to its market leadership and rich data sets, while its investment investment in an AI hub will help it tackle any AI-native challengers, Jefferies said.
Meanwhile, REA Group (ASX:REA) faces little competitive threat from Domain in the real estate classifieds market. Jefferies sees "a low risk of AI-driven disintermediation for REA, given its metadata advantage, product innovation, and integration into agents' workflows."
The equity research firm cut its rating on Seek to hold from buy and lowered its price target to AU$15.90 from AU$24.80. It maintained a buy rating on both CAR Group and REA Group, but cut CAR's price target to AU$33 from AU$38.50, and lowered REA Group's price target to AU$192 from AU$203.
The changes are part of a process to standardize valuation across the sector.
Seek's shares were down nearly 3% in recent Tuesday trade, CAR Group's shares added about 1%, and REA Group's shares jumped almost 2%.