Rightmove shares rise to yet another record high – but downgraded by hedge fund

Rightmove shares edged up yesterday to yet another record high.

This was despite being downgraded by analysts at hedge fund Blue Sky Capital.

It said that its concerns were about valuation, and said Rightmove had “limited customer growth”.

Blue Sky Capital initially gave Rightmove shares a ‘Buy’ rating in March, since when the shares have returned 30% in eight months, easily out-performing the FTSE’s All Share index rise of 4%.

Rightmove’s share price has also risen 17% from early October.

However, Blue Sky Capital said that agents are facing a weak housing market, and developers are doing less well than a year ago.

The analyst said that during the first half of this year, Rightmove achieved an overall revenue growth of 9.8%. The new homes segment grew 29%, but the core estate agency segment by 5.5%.

However, while Blue Sky Capital thinks Rightmove can grow its earnings another 10% “over time”, it sees some near-term risks.

It has lowered the shares from ‘Buy’ to ‘Neutral’.

Despite the downgrade, Rightmove shares closed yesterday at about 611p, up some 1%.

Meanwhile, other property businesses also enjoyed a positive day on the stock market yesterday.

Countrywide shares went up over 9%, although from such a low base that it put only 0.4p on the price, which finished at about 4.8p.

Purplebricks’ share price put on almost 4%, closing at about 110p.

Even OnTheMarket shares, while still bumping along the bottom, managed to put on almost 1% to close at about 68.5p.

While Foxtons shares were unchanged at 66p, LSL shares were up 2% to close at 242p, and Belvoir closed 2% up at 125p.

The biggest winner was The Property Franchise Group (see separate story) with a 10% gain.

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10 Comments

  1. Ostrich17

    “However, Blue Sky Capital said that agents are facing a weak housing market, and developers are doing less well than a year ago.”
     
    Clearly, Blue Sky don’t have a clue about the RM business model !
     
    Their opinion would be more credible if they cited the recently announced departure of the FD as a reason for the downgrade 🙂  

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  2. LandlordsandLetting

    We sell landlord insurances and have nothing to do with selling or letting properties but I must say that although I am no fan of agents, they really are being shafted by the major portals such as Rightmove and Zoopla.

    And the reason of course is that with the rise and rise of the internet as a house marketing medium these portals have an absolutely unacceptable market dominance. As the old adage goes – the portals are now effectively a licence to print money. I wish the industry luck in bringing them down somehow.

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    1. Property Pundit

      As a fellow ‘outsider’ agree 100% with your comments. Just as agents educated the general public that the portals were the way forward, at the cost of local newspapers, a 360 degree turn is now required. A concerted effort should be started to tell said general public that said portals are now taking the ****, that their fees can no longer be justified and then explain your action plan to sooth even the wobbliest of existing/potential clients. Got to be a start, surely?

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      1. AgencyInsider

        To paraphrase the odious Dominic Raab – ‘No member of the public gives a t*ss about portal charges’.

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      2. James Wilson

        Why would a member of the people care in the slightest what fees estate agents pay to be on RM?   If you don’t like the fees, leave.

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  3. padymagic

    “limited customer growth”.

    Says it all.

    The only way RM could increase it’s market is by taking on new markets in other countries they’ve run out of UK agents to mug !!

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  4. Typhoon

    In life you can choose to be the passenger or the pilot. If you don’t like the circumstances you are currently in, then  become the pilot and change the direction you are travelling.

    The industry needs to stop moaning and wallowing in the ‘wo is me” mode it’s currently in, about Rightmove pricing and take some action. If enough agents leave RM, so too will the public who will seek out  the properties wherever else they are being displayed.

    So industry stop being “victims”. Fight back . Take action. Enough is enough with RM.

    Fear is what is holding people back from stepping away from RM. They know that and are milking it for all its worth whilst they can. And the industry is rolling over every time and being spanked

    RM are only powerful because of individual agency firms. Without critical mass, they have no business. You watch, it will not be long before they start to allow “sale by owner” And the industry will have helped create them as a household name to allow them to do this successfully.

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    1. Property Pundit

      Great post. Will agents EVER wake up and smell the coffee? You don’t control your business, Rightmove does. You do ALL the work to supply its content, you give it YOUR data (for them to monetise and further enrich their share price/dividends to shareholders) and, to add insult to injury, you pay them £10,000 – £40,000 per year per branch of YOUR hard earned cash for the privilege. You realise how absolutely bat s$it crazy that sounds, right?

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  5. padymagic

    I wonder rightmove write stories like this: https://www.zoopla.co.uk/discover/selling/can-you-negotiate-estate-agent-fees/#57qi9FxWVZVJYhrm.97

     

    How to negotiate a lower fee from your estate agent.

    I find it a bit laughable that they are prepared to bite the hand that feeds to willingly

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  6. HIT MAN

    It obvious that Rightmove prices aren’t high enough for many agents no matter how high they go up they won’t leave until they go bust.. RMEXIT..

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