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 May.
“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.
Comments (10)
How much credibility can this chump have now ? Somewhere between zero and nil, I suggest. "Jitters" is exactly the right word as he moves in manic mode re Zoopla shares from 'fill your boots' to 'dump'. Many commentators have been predicting a housing market correction in 2015. Not many have been forecasting the devastating impact a new property portal entrant (OTM) might have on the market value of the duopoly. Jefferies is just one of those – but with the high profile he chose to adopt on this issue, he was always riding for a fall. After hubris, nemesis. Would love to be a fly on the wall at Zoopla's upcoming AGM !
If you had Zoopla shares, you would be allowed to attend, wouldn't you?
Typhoon – 'Reality is that Onthemarket was always going to cause a disruption'
1 – Share prices go up and down.
2 – The public will use a site that provides less than their existing site?
Big businesses, long trading histories, savvy management and big turnovers……………I wonder what easy property could be worth? – Jonnie
Used to be indecisive not they not so sure. It's time people stopped making predictions about issues for which they have no true foundations. to base comments. Reality is that Onthemarket was always going to cause a disruption, based on the sheer "disrespect" that Zoopla and Righmove have shown their customers, without whom they would have no business. And Rightmove are rewarding those who choose to stay with them over Zoopla with huge (I have heard of 8%) price hike(inflation is running at what 1.35%?) for 2015. Will Jefferies refund the investors who acted on their advise to buy RM and ZPG shares last year I wonder.? Me thinks not.
"And Rightmove are rewarding those who choose to stay with them over Zoopla with huge (I have heard of 8%) price hike(inflation is running at what 1.35%?) for 2015"…….This is not correct as branches in our group have received a discount and fixed prices for staying with Rightmove. Further evidence that they will charge whatever they can get away with…..and they wonder why their shares price is declining?
How did you manage to get a "group" discount then? RM point black refused to meet our group of agents to discuss a group rate. Their loss – our group is now signed up with Z. Or do you mean a group as in a collection of branches for one firm?
Sorry Taff, I meant branches within our firm…we are a multi branch agency. It will be interesting if Z do try and increase at the end of your next term whether RM will discount to have you back. If RM try and increase at the end of our fixed term with no negotiations I straight off to zoopla for a quote from them, which I'm sure will be cheaper.
@Typhoon – 10 points to you for using the 'disrupt' word so quickly!, lots of new entries to the market saying they are going to disrupt it and http://www.onthemarket.com seems to be the only entry that will, city is commenting on it, media is all over it, the industry is divided and talking about it, disruption seems to be its thing, onliners haven't achieved it and have really just put the centuries old FSBO vendors on line / provided a path to the portals, easyjet have had a good stab at touting the 7 odd thousand private ads (might be more) on Gumtree and there is a new onliner popping up in back bedrooms across the land every day nibbling into a small share of the market…………and the only disruptive thing that's happened is where real estate agents club together – Jonnie
So an anticipated stagnation in the economy and housing market (in the south east) causes a city analyst to reduce the outlook on all businesses related to property.
That sounds sensible.
So why do I read this as an anti-portal news story?