UBS downgrades Rightmove, highlights weak UK housing market
Rightmove was under pressure on Thursday as UBS downgraded its stance on the shares to 'sell' from 'neutral', saying the company is likely to struggle to accelerate average revenue per agent growth amid a weak UK housing market.
FTSE 100
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16:34 24/04/24
FTSE 350
4,419.71
17:09 24/04/24
FTSE All-Share
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Rightmove
515.00p
16:45 24/04/24
The bank, which nudged its price target up to 505p from 500p, said the stock has continued to rise since it downgraded it back in March, and is up 30% year-to-date.
UBS said its valuation model suggests the market is pricing in 7-8% FY18-28E revenue compound annual growth rate.
"Sustaining 7-8% growth rates requires Rightmove to accelerate average revenue per agent growth from £85 per annum (FY19E) toward £120.
"Given a weak UK housing market (low price growth, commission rates under pressure, declining volumes), we think this will be challenging."
UBS said that weak advertiser numbers in 2019 could be a catalyst for a de-rating.
At 1545 BST, the shares were down 3.5% at 534.60p.