Rightmove still on the right track for more growth, says City analyst

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.

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11 Comments

  1. Ouch18

    Growth???
    It isn’t growth though is it?!
    Growth is attracting new business!
    Rightmove aren’t?
    Theyre losing Agents left right and centre due to their greed!
    Their ‘growth’ is increasing everyone’s fee that’s left, until it comes to a point where remaining agents say enoughs enough!!!!
    The growth therefore isn’t growth, its false growth powered by pure greed and on borrowed time!!!  

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    1. Typhoon

      Enough is enough is long overdue!

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  2. PeeBee

    Mr Packer

    You don’t seem to mention that the losses you refer to are NETT losses – that in addition to the 981 stated to have dropped off Rightmove, the portal also lost a number equivalent to the sum of each and every ‘new’ branch they signed up in the year.

    Maybe this indeterminate (but pretty mahoosive) number of agency branches are down the back of the same sofa that Purplebricks ‘lose’ stuff…?

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    1. PeeBee

      Hmmm…
       
      I wonder if that’s where their Facebook page has disappeared to…?

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  3. GPL

    Rightmove? …….It’s like watching “The Great Illusionist” perform to gasps of amazement from the audience at the astonishing magic being performed before their very eyes …….yet, if you turn the house lights up you’ll see empty seats and audience members leaving.

    How long can this charade go on?

     

    The trickle of Rightmove Subscribers leaving is a flow …….its simply not true to portray those leavers as “small agents leaving the industry”.

     

     

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  4. Property Pundit

    These analysts reside in the same bubble as most of Rightmove’s employees. Remember it’s all about pleasing the City fat cats and not about giving your clients the most comprehensive marketing program you can while keeping your office financially viable.

    Only you as Rightmove subscribers can change the record.

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  5. Robert_May

    “There are no American tanks on the streets of Baghdad….?”

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  6. B Mills

    We are not uploading to Rightmove for one month, only Zoopla and OTM to see if the leads that may have come through RM go through the others now they are not listed there. Existing stock will remain only.

    If the results are satisfactory we are off, if not then we have a decision to make.

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  7. debbiedoesalot

    I’ve just sent a lengthy email to Mr Packer explaining where he has got it wrong – please feel free to join me, his email is william.packer@exane.com

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  8. Property Money Tree

    Rightmove’s hold is waning.  I now will not complete my search until I’ve also searched on Zoopla because there are many listings on there that aren’t also on Rightmove.  That never used to be the case.

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  9. PeeBee

    Rightmove have literally just ‘Liked’ a Tweet stating

    “Anyone else class ‘looking at properties I can’t afford on Rightmove’ as a hobby?”

    “Like” it?  They bl00dy LOVE it!  Every #PropertyPerver clicking away like a steroid-fuelled knitting granny is another excuse to put monthly subs up.

    They are a virtual dialysis machine – and it’s YOUR p*** they are taking, folks!

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