A new report by international bank Berenberg, states that Rightmove’s current share price does not “reflect reality” – specifically, the difficulties that estate and letting agents are currently experiencing.
Berenberg has cut Rightmove's rating from ‘hold’ to ‘sell’, observing that there are “too many risks”, with agents feeling the heat.
This follows similar advice from UBS, which last month advised investors it was time to take their profits.
Berenberg says that it is “of the view that a business model so reliant on price increases is ripe for disruption”.
In its report, the bank states that it views both OnTheMarket and Zoopla as strong competitors, and although Rightmove has strong pricing power and high recurring revenues, agents’ own margins are under pressure.
It says: “Newsflow over the coming months is unlikely to be supportive, in our view, which could lead to a significant de-rating. With the shares not too shy of all-time highs, and risks greater than we have seen for some time, we cut to Sell.”
Read more here.
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