Foxtons has received a strong endorsement from Credit Suisse which has given the controversial London agency chain an outperform status - effectively a recommendation for future investment.
The bank says its expected future target price for Foxtons shares is 400p - some 30 per cent more than their current price.
"We see Foxtons as a compelling investment case on valuation grounds, structural growth and capital returns," says Credit Suisse analysts Eugene Klerk and Harry Goad.
"Between 2014 and 2018 we believe Foxtons will double its branch network, deliver annual average earnings per share growth of circa 23 per cent, return circa 43 per cent of market capitalisation to shareholders in dividends, and maintain a net cash position throughout" they say in a market briefing.
Credit Suisse has added the stock to its Small- and Mid-Cap Focus List' for investors, adding that over a 10 year period Foxtons may well triple the geographical area its offices currently cover.
In April Foxtons reported a 44 per cent rise in earnings in the first quarter of 2014. Sales commissions were up by 41.1 per cent year on year in the first three months of 2014 at £17.6m driven by significant volume growth.
Foxtons' expansion programme is one of the biggest in the residential sector: it has opened five offices this year at Greenwich, Beckenham, Earls Court, Stoke Newington and Harrow, with another planned for Croydon shortly and at least one at an unnamed location in the autumn.
Last week Nic Budden stepped up to become chief executive of Foxtons following the news that Michael Brown was stepping down for personal reasons after 12 years in the firm.
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Comments
The problem with Foxtons is that they are too posh for their own good. They don't cater to anyone other than middle class people looking to pay a lot of money on a posh house, and they really isolate themselves from a large portion of the market. They would do well to think about this before they do anymore expanding, as the further out they expand the fewer people are prepared to pay 'over the odds' for London properties. They may find their experience significantly differnet when the average property price for a 3 bed family home only just creeps over 250,000
Watch those sharks drown in the next 5 years. A further expansion will in every way damage them. Public opinion is on to them and their aggressive tactics. All these big dogs have over inflated the rental market and as a result sale prices.
Hang on, this cant be right, the future is online, I'm telling ya, you lot with offices are mental! Online, online, online!!!!! If I say it enough it will happen, plus I've promised my investors into that fact even though all the other property stuff they've chucked a few quid at hasn't really taken flight.
I'm telling all of you, I've invented something as revolutionary as the ipod, I'm going to shut you all down with my way of getting houses on rightmove (that's my amazing innovation although I don't need RM, I'd be fine without it)
All of you listen to me, I'm off to tweet my massive 200 odd twitter worshipers, I've got this online thing nailed, just look at my command of social media........ You're all mugs!