Rightmove faces rising competition from OnTheMarket's new owner, says Citi

3rd Nov 2023 09:35

(Sharecast News) - Citigroup has reiterated its 'sell' rating and 445p target price for online property platform Rightmove, highlighting rising competition from US group CoStar.

CoStar, a leading commercial property marketplace in the US, announced in mid-October that it was acquiring Rightmove competitor OnTheMarket, the third-most visited residential property portal in the UK.

"Facing well capitalised CoStar in commercial and residential changes the predictability of Rightmove's earnings," Citi said in a research report on Friday.

The bank acknowledged that Rightmove has a "clear lead" in the residential sector, boasting three times the online traffic as the second-biggest marketplace in the UK, which has helped it come through previous competition challenges "unscathed".

However, "the firepower and ambition of CoStar means it could be trickier this time," Citi said.

"We currently factor in limited impact but see asymmetric share price risk of >-30% in a bear case scenario and +20% in a bull case scenario."

Meanwhile, the commercial industry landscape is more complex, with Rightmove lagging others in data services offerings. There is potential for the group to improve revenues in the area but it will come at a higher cost, Citi said.

The stock was down 1% at 468.43p by 0946 GMT.