Zoopla Property has fallen back after the impact of newly launched rival On the Market appeared worse than expected.
Zoopla claimed record numbers of consumer visits in January, with “robust” current trading. But it said:
The number of agency members has been impacted in the short term by the launch of Agents’ Mutual [On the Market] and its restrictive ‘only one other portal’ rule. The number of total advertising members at the end of the period [the four months to the end of January] has fallen 11% over the past year to 16,967.
Whilst we expect some limited further UK agency churn, this is likely to be partly offset by the return of some members who have found the Agents’ Mutual... rule damaging to their business.
On the Market says estate agents may only use one other portal, effectively meaning they have to choose between Zoopla and Rightmove.
The news has sent Zoopla shares - which floated last year at 220p - down 7.4p to 178.6p. Analysts at Canaccord moved from buy to hold, while Jefferies said:
Zoopla today announced the impact of On the Market on its membership numbers. We now expect agent numbers to fall by 18.4% in 2015 to around 13,400, previously we estimated the fall to be around 10%. As a result we are downgrading our estimates as follows: 2015 EBITDA by 16.7% to £36.6m and our 2016 EBITDA by 14% to £45.8m. Our price target moves to 165p [from 180p] and we retain our hold rating
Meanwhile Peel Hunt said:
Estate agent client numbers down 11% year on year, worse than expected. Zoopla is the clear loser in the property portal wars so far. Expect a widening range on market forecasts. Zoopla’s site traffic is very impressive, but the core IPO proposition is looking unlikely.
The IPO was opportunistic, with no new money raised. The shares now trade around 20% below the offer price. In the near term, we believe the risk/reward for the shares is firmly on the downside. However, further down the line Zoopla could be a very interesting, more broad-based portal, given ongoing levels of site traffic.
