Analysts at international bank Berenberg have cut its rating of Rightmove to from ‘hold’ to ‘sell’, saying that there are “too many risks”, with agents feeling the heat.

It follows similar advice from UBS, which last month told investors it was time to take their profits.

In a new report, Berenberg says that Rightmove’s current share price does not “reflect reality” – specifically, the difficulties that estate and letting agents are currently seeing.

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 says that it sees both OnTheMarket and Zoopla as strong competitors.

It says that while 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.”

The report says that both estate and letting agents are feeling the heat: “One only needs to look at the share prices of listed estate and letting agents to get a sense of the troubles that some players are currently going through.

“Rightmove also admitted at its H1 2018 results last week that sentiment amongst its members is low.”

Berenberg says that Brexit and other uncertainties mean that there will not be any growth in the housing market in the near term.

In addition, hybrids and an over-supply of agents are putting pressure on fees.

It says there are too many agents chasing too few instructions, while the lettings fee ban, due to come into force next year, “can only add to the woes of the industry”. It says that loss of revenue will be a bitter pill to swallow.

Berenberg, which has cut its price target to 4,100p for Rightmove shares, also makes reference to OnTheMarket in its report.

It says: “Our point is not that we believe OnTheMarket can replicate the success of Rightmove, or even materially dent its dominance.”

However, Berenberg says Rightmove investors are “too relaxed” about the impact OnTheMarket could have on the giant portal.

It says agents could leave Rightmove, and/or the portal might have to lower its profit margin.

Of ZPG, it observes that the business might have “materially more firepower at its disposal” after its acquisition by private equity firm Silver Lake and could now compete more heavily with Rightmove.

Berenberg also says that ZPG could change its business model to allow customers to advertise directly – although it does say that this could trigger an uprising from agents.

Of OnTheMarket, Berenberg says OTM’s ‘new and exclusive’ offering is a clear differentiator and that agents still have a vested interest in OTM’s success.

It lists the top 20 estate agency shareholders in OTM, led by Spicerhaart with a 2.6% stake, Savills with a 1.9% holding, and Knight Frank with 1.7%.

Rightmove shares yesterday closed about 2% down at 4,772p. OnTheMarket’s shares fell 0.60%, or down 1p, to finish at 164.5p.