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City analyst senses "a change of climate" over OnTheMarket

The company of City analysts that worked with Zoopla on its floatation says it now senses “a change in climate” around the future of OnTheMarket.

Jefferies has written to investors increasing its prediction for Zoopla’s full year earnings by 15 per cent to £48m as a result of the recently-reported growth in agent numbers and a strong performance from uSwitch, the utility price comparison website acquired earlier this year by the portal.

On the continuing rivalry between Zoopla and OnTheMarket, Jefferies analyst Anthony Codling has told investors that the recent debate in the industry press has switched from portals criticising each other to some agents criticising OnTheMarket. 

“While we are keen to point out that these critiques are small in number, rather than representative of the industry as a whole, we sense a change in climate and when the soldiers rather than the generals start to complain, strategic intent, in our view, starts to unravel” says Codling.

“Zoopla is currently the UK's number two property portal and OTM intends to be number two in January 2016. If it misses this target, it will be interesting to see if the industry judges it a failure. If targets are missed will the agents be willing to invest more money in OTM to give it a second chance at becoming number two, or will the marketing money switch back to the tried, tested and truly innovative Zoopla's coffers?” he asks.

Codling claims Zoopla has more to gain from OTM’s problems than Rightmove “which had fewer casualties in the OTM war”. 

However, Codling ends his note with risks to his analysis - these remain, he says, “the threat of challenger portal OTM, integration risks relating to the uSwitch acquisition and a downturn in the UK housing market leading to a material reduction in the number of estate agency branches and new build developments.”

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