Rightmove share price forecast: riding the UK’s housing boom?
By Rob Griffin
05:49, 28 September 2021
The UK property portal Rightmove is widely used by traditional and online estate agents, as well as new home developers and letting agencies. The popular website lists properties for sale and rent across the UK. It receives more than 2 billion visits every year.
It has benefitted from a booming housing market fuelled by the need for more space and government incentives, such as the reduction in stamp duty earlier this year.
The 21-year-old company, which is a leading name in the sector, also produces its own widely-read monthly house price index that gives an insight into property valuations. According to its September overview, the UK is in the middle of the “hottest ever competition to buy a home and highest ever prices”.
However, while it has scope to continue upselling estate agents onto higher priced packages, it is also facing competition from rivals such as Zoopla and OnTheMarket.
Here we examine the company’s recent results, highlight the views of industry analysts and gauge whether its shares are likely to rise or fall from their current level.
Rightmove share analysis: technical view
Shares of Rightmove have risen 16.5% year-to-date (YTD). The stock’s lowest point came in March when shares stood at £5.55, before the easing of the Covid-19 restrictions helped trigger a strong demand for properties.
Eventually, the stock moved up from £6.51 at the start of the year to £7.46 in mid-September. The RMV stock didn’t manage to move further up and plunged to £6.92 as of 27 September 2021. It broke through its 20- and 50-day moving averages (MA) at £7.28 and £7.07 respectively.
Does it mean that the upward trend is over? Investors will be watching to see if the stock manages to hold within its support area ranging from £6.47 to £6.49. This zone is formed by several trend lines in the daily time frame.
In the opposite direction, if the stock manages to resume its positive movement this year, it should break through the resistance area from £7.07 to £7.28, formed by its MAs, and potentially retest its 52-weeks high of £7.46 from 10 September 2021.
The relative strength index (RSI) stands at 39, which can indicate that a downtrend might continue. However, bulls might argue that investors could pile around the RMV stock as the company is to go ex-dividend on 30 September 2021. It means that investors might want to buy Rightmove’s shares in order to be eligible for dividends.
Rightmove stock news: latest results
Rightmove’s most recent results, which covered the six months ending 30 June 2021, revealed revenue up 58% to £149m.
Of course, the first half of 2020 was adversely affected by Covid-19 lockdowns. However, this year’s revenue was still 4% higher than the £143.9m achieved in 2019.
The company also revealed that its operating profit came in at £114.9m this year, up 86% on 2020 (2020: £61.7m) and 6% on 2019 (£108.2m).
Interim dividend for 2021 of 3p per share was announced (2020: nil; 2019: 2.8p), while £128.3m of cash was returned to shareholders through share buybacks and dividends in the first half of 2021.
Crucially, the average revenue per advertiser (ARPA) was up 63% to £1,163 per month. This is its highest ever figure and compares with £712 in 2020 and £1,077 in 2019.
Rightmove also said there had been a strong uptake of its premium Optimiser 2020 package, with 16% of agents now subscribing to the package, up from 9% in December 2020.
Rightmove (RMV) share price forecast: analyst sentiment
So, are Rightmove shares a buy or sell? Analysts are divided on the stock. While some highlight economic headwinds, others believe there is further upside.
The Rightmove share price could go up to £7.89 over the coming year – an increase of 12.5%, according to Wallet Investor.
Meanwhile, the consensus analyst rating – based on eight analysts – is ‘Hold’, according to MarketBeat. The website suggests that the highest price target is £7.10 and the lowest £5.35. This means the average is around the £6.05 mark at present.
The company itself also provided in-house consensus on Rightmove stock price prediction and price targets (as of 3 September 2021), based on the analysis of 17 analysts covering the RMV stocks, including Lisa Yang from Goldman Sachs, Catherine O'Neill from Citi and Andrew Ross from Barclays.
According to Rightmove, seven analysts recommend a ‘Hold/Neutral’ stance, six suggest ‘Sell/Reduce’, and four say ‘Buy/Add’.
Rightmove share forecast: analysts’ commentary
According to Ciaran Donnelly, an analyst at Liberum, Rightmove’s “dominant market position” underpins its ability to drive consistent long-term growth.
Donnelly pointed out that property portal market dynamics are driven by network effects.
“Estate agents and their customers want to have their properties listed on the portal with the largest consumer audience,” he explained. “This in turn attracts more estate agents to the platform, which in turn attracts a bigger audience; a virtuous circle that reinforces Rightmove’s leadership position.”
Despite already having around 90% of online traffic, Rightmove saw traffic increase even further in 2020, pointed out Donnelly.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, pointed out that new home developments are selling out before they are even built.
On the flipside, however, the company’s core estate agent customers appear to be rebounding strongly.
That gives Rightmove enviable revenue visibility, she suggests, although a decline in the number of estate agents may limit new business opportunities.
“Economic headwinds could blow the company’s performance off course, with growth not expected to be robust amid ongoing supply chain issues,” she said.
Of course, the extent to which this could feed into consumer confidence and demand for housing is unclear. “If demand for new builds slides, that could lead to developers opening their wallets once again,” added Streeter.
Housing market backdrop
A UK property portal obviously benefits when there’s a housing boom and people are desperately searching for a new home.
Rightmove’s own house price index recently revealed that buyer demand had pushed average values up to an all-time high of £338,462 ($463,321).
However, this new record only marginally beat the previous high set in July this year by a mere £15, which suggests house price rises could be stabilising.
Elsewhere, HM Land Registry data showed UK house prices had risen 8% over the past year, but echoed concerns that they were starting to slow down.
Rightmove future: company outlook
CEO Peter Brooks-Johnson declared that the nation relied on Rightmove to help them in their search for a new home, with “a record 10.4 billion minutes” spent searching and researching on the site.
Brooks-Johnson pointed out that customers expected the platform to deliver the best exposure for their brand, provide extremely effective advertising and to help them grow their businesses.
“The strong take-up of our premium Optimiser 2020 package shows agents’ continued belief in the Rightmove platform, as they invest in our digital products and innovative algorithms to help them to identify more opportunities to succeed,” he added.
He highlighted the company’s plans – including its new digital mortgage and rental journeys – as well as reaffirming the company’s focus on recruiting the best people.
Company history
Rightmove.co.uk was formed in 2000 by the top four corporate estate agencies at the time: Countrywide, Connells, Halifax, and Royal & Sun Alliance.
The company was floated on the London Stock Exchange in 2006 and is now a FTSE 100 company with a market value of around £5bn.
“Over 20 years, our focus has been to make home moving easier in the UK by bringing together the UK’s largest and most engaged property audience with the largest inventory of properties,” it stated on its website.
Edited by Alexandra Pankratyeva
FAQs
Is Rightmove a good buy?
Whether Rightmove is a suitable investment for you will depend on your personal research and trading strategy. You need to perform your own due diligence and decide if the RMV stock meets your needs and appetite for risk.
Why has Rightmove’s share price gone up?
The UK has enjoyed a housing market boom since lockdown restrictions started to ease with increasing numbers of people looking to move.
Will Rightmove stock go up/down?
This depends on a number of variables. It’s crucial to do your own research to form an opinion of a company’s performance and likelihood of achieving analysts’ targets. Remember that markets are volatile and past performance of the stock does not guarantee future gains.
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