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Rightmove and ZPG downgraded to 'hold' by Liberum

ZPG is trading on or around the offer price from private equity firm Silver Lake while Liberum thinks anyone hoping for a bidder emerging to drive up Rightmove's share price will be disappointed
Zoopla app
Allez Zoopla! ZPG's share price shot up more than a quid when the Silver Lake bid emerged

With the Rightmove PLC (LON:RMV) now adjacent to its 5,000p share price, Liberum Capital Markets has downgraded the property listings web site operator to 'hold'.

“There is now very little upside to our £50 target price and, in our view, no catalysts such as M&A [mergers & acquisitions] that justify increasing the TP,” the broker explained.

READ Rightmove reports 10% profit rise and ‘record number’ of customers

Shares in Rightmove were up 3p at 4,963p this morning.

Liberum is still a fan of the company, saying it has an excellent and dominant position in the market but the company is probably reluctant to drive its average revenue per agent (ARPA) up too quickly for fear of attracting regulatory attention.

“We see a bid for Rightmove – as happened with ZPG [Zoopla] - as unlikely. Margins at c. 75%-76% offer little scope for cost-cutting and we do not see bids from other classified groups,” Liberum said.

As for Rightmove rival  ZPG PLC (LON:ZPG), which runs the Zoopla web site, Liberum has also downgraded it to 'hold' from 'buy', despite the target price (TP) rising to 490p from 460p.

READ What’s next for internet property portals after Zoopla parent ZPG’s £2.2bn takeover?

The target price equates to the offer being made by Silver Lake and reflects the fact that Liberum expects the bid to be approved and that no counter-bids will emerge.

Zoopla currently trades at 488.8p, up 0.6p.

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Article
February 12 2015

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