A City analyst has said that OnTheMarket is “long on rhetoric, short on numbers”, and that it barks rather than bites.
Investment bank Jefferies made its remarks in upgrading its forecasts for Zoopla on the back of its acquisition of uSwitch.
Jefferies raised its revenue estimates for this year by £6m and its earnings before costs (EBITDA) by £1.5m.
The bank says this more accurately reflects uSwitch’s contribution to group earnings this year, with the transaction having completed one month earlier than initial assumptions.
Jefferies says that because of this, “we are tidying up our estimates ahead of the Group’s September year end”.
However, Jefferies – which advised Zoopla on its stock market flotation in summer 2014 – also says that ‘housekeeping’ aside, Zoopla is doing well.
In a note to investors, it says that the threat posed by OnTheMarket is waning as Zoopla grows: “Membership trends reported at the half year continue, the Group is therefore increasing its number of members, which suggests to us that the threat of On The Market (OTM) continues to wane.”
The bank goes on to say that OTM is long on rhetoric and short on numbers, adding: “In our view, OTM continues to make a lot of noise in the trade press, but it is often that empty vessels make the most noise.
“Despite the noise we have not seen OTM reporting actual member numbers for some time, which suggests to us that its bark is worse that its bite.”
Jefferies goes on to say that if Zoopla members “continue to grow, so will our estimates”.
It says: “It is our belief that if Zoopla continues to grow member numbers we could be close to the start of an upgrade cycle at Zoopla on member numbers alone.
“If we couple this with a touch of ARPA growth and enhanced performance at uSwitch, the potential upgrades are, to our mind, very interesting indeed.
“While we believe it is too early to speculate on the quantum of any changes to estimates, it is our assertion that the next few movements will directionally be up not down.”
Last week another analyst, Goldman Sachs, hoisted its price objective for Zoopla from 250p to 276p, although keeping its neutral rating for the stock. Zoopla has a 12-month low of 150.80p and a 12-month high of 286.15p.
Zoopla last year announced its full-year results in late November, and so a similar date is expected this year. It has its AGM on October 1.
Comments (22)
Can’t we all just be friends?
Haha, I like this…… and indeed!
All we need is some sort of Mutual Agreement by Agents……. Mutual Agents we could call it. Nah wouldn’t work, I reckon there is only about 5 to 6,000 agents who want to be friends.
Or we could take the opposite approach – pistols at dawn? Winner takes all.
Whilst I love reasoned argument (whether I agree or not with the subject) some comments make me feel like pulling my hair out in frustration. Take Ehenderson for example.
‘Your silly little project is failing’ she states. Hmmm…. I state for the record I am not an OTM member. It’s main aim, to challenge the big 2 and effectively cap ongoing portal charges (amongst other worthy aims) is laudable (hardly silly)and would benefit every agent should it succeed. Whether it ultimately fails is debatable. However to call it a silly little project (with over 5000 members) is patently ridiculous. OTM has had an impact on our industry and seems to have brought out both passionate supporters and nay sayers. These polar opposites only serve to alienate the rest of us.
Along with others who contribute to this forum I do feel that OTM’s strategy is misguided and seemingly inflexible and that it will fail if it doesn’t adapt.
To rubbish the concept? Well in Ehendersons words that ‘is stupid beyond comprehension.’
Hi @EHenderson is there ever a comment from you that isn’t negative, unconstructive or just plain hating?
Take a breath – If OTM isn’t going to work then you have nothing to worry about. If you feel the people who have chosen OTM to list their properties are strengthening RM then perhaps YOU should come up with a better idea an implement it to the industry….?
Easy to criticise, harder to do something about it, so some people just take the lazy option Mark. E fits into that category nicely.
You moan when portals keep coming back to you for more and more money, and then moan when they grow by other means.
Your silly little project is failing and I fully expect to hear lots more of this petty lashing out over the next few months as your embarrassment grows. Probably the worse thing about Paul’s comment above is the celebration that some have had over the strengthened position that Rightmove enjoys as a result of OTM.
It is stupid beyond comprehension to view this as a good thing.
I think you’ve misunderstood my point, I’m not celebrating Rightmove winning a deal over Zoopla, I’m questioning why Jefferies are advising people to buy Zoopla shares on the same day this deal is announced. It seems slightly odd to me.
Because of that very reason Paul, they don’t want anyone to focus on the Rightmove deal, just there bullish report.
With respect Eileen you possibly ought to find out why there might be very good reason to complain about growth through other means.
You might have very strong and justified reasons to dismiss OTM but unless you are fully up to speed with the whole landscape and all events it might not be Agent Mutual agents who are embarrassed by their rhetoric.
Eileen? …..I remember when you starred as Mutley along with Dick Dastardly…. all that suckering suckatash and moaning…. I think there may be a new opportunity for you in the next Dr Who Series…. that line “your silly little project is failing” ….it should get you a walk on part somewhere.
Sadly you’re not at the level of Bond & Goldfinger yet …. “Noooooooo Mr Duopoly I only expect you to die!”
Hello Ros please could you find out who exactly at Jefferies reckons all of this? Given the connection of Jefferies to Zoopla I think it is important that the individuals doing all the recommending of this, the knocking of that are actually identified so that both investors, the general public and financial regulators can regard stories such as this in a fully informed light.
Agreed. I’m surprised this isn’t commented on in the original article.
3 months ago it wouldn’t have been mentioned at all, the press releases don’t include such detail so it is down to the integrity of the publication to be aware of such detail and if aware think it worthy of inclusion.
The same story has been reported on a pro Zoopla/ anti Agents Mutual site and that important influencing factor was omitted.
“long on rhetoric, short on numbers” say Jeffries then they follow it up with “Membership trends reported at the half year continue, the Group is therefore increasing its number of members etc”. Pots and kettles spring to mind.
From what I can see the only “new” bit of news from Jefferies here is the extra £6m of revenue generated from Uswitch.
As a company that supplies independent trading reports and information surely they should also have a duty of care to mention that Zoopla lost out to Rightmove yesterday over the Evening Standard portal deal.
Zoopla no longer Property Focused Portal, as we see it diversify so it continues to become less & less relevant in the real future of our industry.
On the contrary, it will become more relevant to a wider group of consumers more often. Increased touchtime with homeowners means they are well positioned to engage with homeowners as soon as they even think about selling. Something Estate Agents used to tell me they valued about the free local press. Unless the real future of Estate Agency doesn’t involve people buying and selling properties…. 😉
…..as I say…. less relevant in our industry.
The contrary is Zoopla Portal being used to sell/generate/pester potential homebuyers with a myriad of related/unrelated products & services…. their portal and Rightmove are becoming the Virtual Car Showroom where the potential car buyer comes in to talk about a car and instead is bombarded with other profit/commission generating products/services….. a slow-burning turn-off for those consumers sick n’ tired of being unable to view/discuss what they came in for without unwanted distraction!
Blurred Property Portal Lines in NOT what The Property Sales Industry needs….. it’s what suits The Duopoly, however it weakens the focus of our industry… however, what do I know? ….nearly 30 Years as an estate agent thru every type of market and still successfully working in our industry today.
oh please….. you think Z and their acquisition of uSwitch was tactical for the good of the property industry (namely The High Street Estate Agent).
Any of their “wanting to capture the moving publics attention at the first hurdle” will simply be to direct them to what Z want them to see and it will be ALL about saving money just as you would expect! After all what is uSwitch all about?
The message will be clear “uSwitch Estate Agent and could save £1,000’s” only one type of agency model can sign up to that space on uSwitch! What colour is Z? all things purple make me slight sick now! I could do with NFOPP changing colour, before Z own them too.
Less relevant, you mean in the same way Amazon became less relevant to selling books, or Google to search…?