Credit Suisse sees limited threat from Agents' Mutual at Rightmove and Zoopla

21st Oct 2014 09:41

Credit Suisse has highlighted an "attractive entry point" for potential investors of Rightmove and Zoopla, downplaying concerns about the threat to the UK estate agent portal industry from newcomer Agents' Mutual.The bank slashed its target price for Rightmove from 3,100p to 2,655p and for Zoopla from 290p to 270p after a recent sell-off in the shares, but reiterated its 'outperform' rating for both.Agents' Mutual, a new agent-owned, agent-controlled web portal, is due to launch in January 2015."We conclude that Agents' Mutual membership is growing, the risks are real and will impact Rightmove and Zoopla 2015 numbers, but that with the stocks down 13% and 17% respectively over the last month the risks are priced in," Credit Suisse said.Agents' Mutual's member numbers have grown to 4,100 from 3,000 in July, and the bank expects the company to reach its 5,000-member target by its scheduled launch.However, funding for Agents' Mutual may be "insufficient", analyst said. They estimate £9.4m of funding in 2014 and £22m in 2015 for Agents' Mutual, compared with Rightmove and Zoopla's £42m-£46m annual spend.While newsflow will continue to be negative for Rightmove and Zoopla in the short term as Agents' Mutual membership continues to grow, things will improve in the medium term and the latter will only likely have a limited impact on its two rivals, the bank believes."Around launch, newsflow will likely shift as the venture actually has to deliver on the promises made to agents. We flag launch delays, poor site usage, weak early traffic and a lack of leads as potential issues."Rightmove was trading 1.5% higher by mid-morning on Tuesday, while Zoopla was down 0.4%.