Rightmove is still on the right track – despite losing almost 1,000 agency offices last year, with further losses possible.
In a new report to investors, analyst William Packer of Exane BNP Paribas said that the losses – 560 offices in the first half of last year and 420 in the second half – had been broadly expected following Rightmove commentary last July.
He added: “More negatively, management suggested weak trends would continue into H1 2020.”
However, Packer said that Rightmove had emphasised that the fall in agency subscribers “reflected agents leaving the industry”.
Rightmove delivered its full-year results last Friday, showing 8% rises in profits and revenues as it charges agents more.
The decrease in agency membership was, it said, due to smaller businesses leaving the industry.
The new Exane report gives Rightmove an out-perform rating and a target price of 680p for its shares.
In it, Packer forecasts 6% organic growth for Rightmove this year, accelerating to between 9% and 10% next year.
The report says that on the upside, a more resilient estate agency industry could drive less churn and greater spend with Rightmove; on the downside, there could be a marketing war “with existing peers or new entrants”.
A slowdown could also result in estate agents closing or reducing enhanced product spend.
However, the report tells investors that Rightmove offers sustainable double-digit structural growth, “a rarity in European media”.
It adds that Rightmove is “under-pinned by its must-have status with estate agents”.
However, another analyst, Nigel Frith of asktraders, said that Rightmove had “failed to impress” investors with its results, despite a 10% rise in the dividend.
Frith said that investors were concerned about Rightmove’s suggestion that a pick-up in activity could take some time to trickle down to the cashflow of its smaller branches and as a result the downward trend in agency branch numbers could continue in the short term.
However, Frith said that investors dumping shares in Rightmove could be less concerned with the portal’s “solid numbers” and more worried about the potential impact coronavirus could have on the housing market.
In its coverage The Times raised the issue of agents “rejecting the online property portal’s fees”.
The Times report, under the headline ‘Agents take shine off Rightmove’s rising profit’, claimed that Rightmove has been facing “competition from rivals, including OnTheMarket which offers listings for free”.
Rightmove shares ended Friday at 619p, down 2.5% on the day, after hitting a new high on February 11 of 701p.