Property Industry Eye: Rightmove, Zoopla and Foxtons shares hammered after analyst's warnings
Tue 13 Jan 2015
City analyst Jefferies, which advised Zoopla on last summer's successful stock market flotation, has cut the
portal's shares from 'buy' to 'hold'.
It slashed Zoopla's target share price from 320p to 180p - although the shares are now below that figure.
Separately, Credit Suisse, which advised Foxtons on its stock market launch in 2013, downgraded the agent to a
'neutral' rating, cutting the share price target from 215p to 181p. The price is now 156.5p.
As well as downgrading Zoopla, Jefferies also cut Rightmove from 'hold' to 'underperform', cutting its target share
price from 2177p to 1620p.
Altogether Jefferies downgraded 14 stocks in the residential property sector and now no longer gives any UK
house builder, estate agent or property portal a 'buy' rating.
It also downgraded Countrywide - the UK's largest chain - from 'buy' to 'hold', reducing the target price from 550p
to 465p. The price is now 444.65p
LSL, parent company of Reeds Rains, Your Move, Marsh & Parsons and Davis Tate, was another casualty.
Jefferies cut it from 'buy' to hold', slashing its target price from 400p to 290p - its current price.
The analyst also cut its ratings on a host of house builders including Barratt, Persimmon, Taylor Wimpey,
Bellway, Redrow, Crest Nicholson and Galliford Try.
Jefferies warned that house prices could fall in London and the south-east.
Its report said: "Negative newsflow on UK mortgage approvals, UK housing transactions, weak house-price data
and lower UK GDP growth will lead to share price weakness in the UK residential sector.
"The weakness will continue into the second quarter because of uncertainty caused by the UK national election in
"We also believe that house price growth will slow significantly during the first half and may even decline in some
parts of London and the south-east, while there is uncertainty around the outcome of the election and the
prospect of a new mansion tax should power change hands."
Jefferies' note to investors sent share prices across the housing market sector plunging on Friday.
Taylor Wimpey, Persimmon and Barratt have all been recently promoted to the FTSE 100 index. It was noted
that the last time this happened was in 2007, shortly before the housing market crash.
However, Jefferies' jitters fly in the face of recent statements by all three companies. For example, in November,
Barratt said: "The group expects to deliver a further significant improvement in performance in the full year
2015." Barratt is due to give a trading update on Wednesday.
The downgrading of Zoopla also strikes a very different note to other recent pronouncements by Jefferies,
including a 'flash' note in November claiming that Agents' Mutual had lost momentum and that "now is not the
time, in our view, for agents to sever ties with the most powerful, tried and tested routes to market for an untried
and untested alternative".
Only a month earlier it set a share price target for Zoopla of 325p. At the time, the price was around 201p.
Zoopla's share price ended Friday down 10.2p at 172.2p. This more than wiped out the 20% discount offered to
estate agents at last summer's stock market float when the price was 220p.
Rightmove shares lost 98p to finish at 2157p.