Shares in OnTheMarket are forecast to rise to 249p, says a broker which has given a ‘buy’ recommendation on the stock.
Eddison said yesterday, as OTM released its results for the 12 months to the end of January, that the shares “have good potential upside”.
A second broker, Stockdale, said that OTM’s results “slightly beat our assumptions”. Stockdale, which acts as a broker to OTM, maintained its own ‘buy’ recommendation and raised its projections for next year.
It said its more positive outlook reflected stronger than anticipated take-up by agents, offsetting lower average revenue per branch.
The Eddison report said that in view of OTM’s recruitment success to date and its site traffic, it would not need to spend as much on marketing as expected.
It had anticipated OTM would have to spend £22.5m on marketing, but now thinks this will be £18.5m, “accelerating the move back to profitability”.
It believes OTM will be in profit in 2021.
Eddison said: “New branches are coming on to the roster on free or discounted fees, rather than in exchange for equity.
“The group is achieving the quantum of scale needed to make it a credible alternative to the two main UK incumbents, Rightmove and Zoopla.
“It will also be extending its remits to include new home developers and online agents, as well as advertisers of commercial and overseas properties.”
Eddison said that OTM’s share price has recovered close to the 165p issue price and believes it should hit 249p.
Eddison also forecasts that OTM’s revenue per branch will grow from £163 in the current year to £193 in 2020, and £297 in 2021.
Its previous assumptions were, respectively, £176, £198 and £303.
Eddison suggests that lower spends on portal advertising will be welcomed by agents in a property market under pressure from fewer transactions and low house price inflation.
It compares OTM’s likely advertising rates with Rightmove’s £879 and ZPG’s £484.
Yesterday, OTM shares closed at 162p.
Comments (8)
I second all the above SJEA; agents need to grow a pair, at present they are happy to be the victim of the business bully.
Beano200062
“I second all the above SJEA; agents need to grow a pair at present they are happy to be the victim of the business bully”
Fair comment. Raises a question or two, though, which I sincerely hope you answer.
How’s your pair doing?
Happy to be free of the business bully yet?
Bless You, how can you not have an issue on price with Rightmove ? 10% year on year increases, through good times and bad, 75% profit margin at our and our clients’ expense. How happy can anyone be to have their marketing choices dictated by such an agent unfriendly leviathan ?
Scruffy,
Fully agree with your comments. I analysed the cost per lead with RM and it has just gotten out of control. More expense and fewer leads delivered year-on-year.
I made the brave decision a couple of months ago to drop RM and move back to Zoopla whilst continuing my support of OTM.
OTM are continuing to deliver at least as many leads, and often more than RM were delivering to me and certainly of a higher quality.
In respect of Zoopla, since our return, they are generating 2-3 times as many leads at 1/5th of the cost !!!!
If this continues, I cannot be the only business owner that is seeing this – all of the small business owners must be looking at a cost per lead ratio and just need to justify this to the sellers and landlords.
It was probably a little easier for me to explain to my sellers as we sent a RM activity report weekly (this should be available via your feed provider). When sellers and landlords notice that thousands of people are seeing their property each week and you get very, very few enquiries on a competitively priced property, it clearly shows that there are clearly too many browsers on the longest established portal of RM.
When OTM started, I wanted to drop RM but was afraid to do so. I can assure you, OTM and Z combined are certainly helping drive viewers to my properties and so far, dropping RM has has no effect on my business !!
Would they really allow purplebricks to join or have they got systems in place block them.
My issue with rightmove is no longer the price.its the pay any way agents allowed on it that is the problem.
Bless You
“My issue with rightmove is no longer the price.its the pay any way agents allowed on it that is the problem.”
So… say the NSPR portal listing facilitators were for some reason ‘barred’ from RM.
How much extra would you be prepared pay the behemoth to list your register on their pages at that point?
“It compares OTM’s likely advertising rates with Rightmove’s £879 and ZPG’s £484”
so the reason they’re positive is because they see OTM eventually charging what RM charge…
For me, better the devil you know than the devil you don’t…
Rightmove know how to charge, but at least they deliver, and I do not believe they have plans to go direct to consumer.
Same cannot be said of ZPG, and who knows what OTM will look like once agents (customers and board members) sell shares and get out of dodge.
Eddisons like Hardmans for Purplebrick’s reports are paid for by the client to sell the story. They state
“New branches are coming on to the roster on free or discounted fees, rather than in exchange for equity.” However this can be of course construed as a lack of commitment by agents perhaps understandably so.
£18.5 m rather than £22.5 m spend on marketing which is in excess of annual income as some sort of success is a pretty low bar ! A half chance of a profit in 2021 .Gratification deferred!
The shares have potential if a white knight investor arrives on the scene .The current background shapes well for that and Springo making all the right noises.I suspect that Springo and his senior management are keen to encourage that outcome and cash in their not insubstantial stake asap..Thanks very much for the cheque and enjoyed the ride ,Hope all goes well, goodbye and good luck! So definitely worth a punt on that basis alone .Seems to me Springo is working in overdrive to hook in some new fish to paint a pretty picture with whatever tempting offers.All aboard the train !.