LONDON (ShareCast) - (Sharecast News) - The market continues to overvalue Rightmove, with the shares pricing in another takeover offer from REA Group that's unlikely to materialise, according to Jefferies, which reiterated an 'underperform' stance on the stock.
The broker, which cut its rating from 'hold' just last month, said "recent news flow supports our view".

Australian real estate information giant CoStar is continuing to make moves in the UK through its OnTheMarket business, while real estate sentiment towards Rightmove is continuing to sour - as evidenced by a recent petition for a CMA investigation into pricing practices at the firm.

"At the time of writing, signatories to the petition total 1,359 (vs an independent agency base of c.15k)," Jefferies said. And while the broker acknowledged that the petition is unlikely to succeed in getting the CMA to intervene, exasperated agents could look to switch to new providers as competition picks up.

Meanwhile, last week's speculation that CoStar is interested in buying Australia's number-two property marketplace Domain - second only to REA, which was rebuffed in a takeover attempt of Rightmove last year - means that REA is unlikely to attempt another takeover of the UK company, Jefferies said.

"Alongside the risk that REA now faces with a potential new entrant in its domestic market, we also consider the 6 Feb news that REA's CEO, Owen Wilson, intends to retire in 2H25. He is highly regarded in the industry and, crucially, was a key architect of the Rightmove bid," the broker said.

Despite the negative newsflow, Rightmove's shares are still trading at an 18% premium to the level prior to the REA bid in September.

Jefferies has a 495p target price on the stock, indicating 24% downside to the current price.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE