27th Nov 2023 10:50
(Alliance News) - Rightmove PLC's upgrade to a key revenue metric was "reassuring", as it suggests the property portal is successfully navigating a tricky period for the UK housing market.
Shares in the company shot up 6.4% to 542.00 pence each in London on Monday morning. The stock is up 13% over the past month, eating into some of the hefty 14% share price loss it suffered back on October 19, after peer OnTheMarket PLC agreed to a GBP99 million takeover from CoStar Group Inc. The possible OnTheMarket takeover led to investors fretting over what it could mean for Rightmove's dominance in the property portal sector. Rightmove shares are down 5.7% since the OnTheMarket news.
Aiding its share price recovery on Monday, Rightmove said revenue growth has "continued to track marginally ahead of consensus expectations" since it reported first-half results back in July. This is despite "uncertainty in the housing market".
It has seen better-than-forecast average revenue per advertiser. Its ARPA is set to grow between GBP112 and GBP116 in 2023, better than its previous forecast of GBP103 to GBP105. In 2022, its ARPA amounted to GBP1,314. Its overall revenue growth outlook is at the 8% to 10% range.
It predicts underlying operating profit growth of 7% to 8%. In 2022, it achieved underlying operating profit of GBP245.4 million, on revenue of GBP332.6 million.
Analysts at UBS commented: "There has been substantial uncertainty in the market around the impact the wider property market slowdown is going to have the agency space. At the HY the group cited resilience and strength, today they have done the same. With their agent subscriptions numbers 'stable'. We find the commentary reassuring on ARPA side and think it implies that H1 resiliency has likely continued in H2."
Rightmove set a 2028 revenue target of over GBP600 million, with underlying operating profit targeted at over GBP420 million.
Shore Capital Markets analyst Roddy Davidson commented: "This is a very encouraging update in the context of the significant macroeconomic headwinds impacting the UK property market and provides another illustration of the strength of Rightmove's proposition to both agents, developers and consumers. The latter remains a key feature as conditions seem unlikely to improve over the coming months. It is also good to see the company highlighting explicit growth targets around the next phase of its development."
By Eric Cunha, Alliance News news editor
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