A financial analyst frequently quoted by OnTheMarket has warned that it is set to remain “a significant number 3” portal - but behind Rightmove and Zoopla.
BNP Paribas, an investment bank much quoted by OnTheMarket in its analysis of portal performance, has now upgraded Zoopla from ‘underperforming’ to ‘neutral’. This is ahead of Zoopla’s annual figures, to be reported to the City on Wednesday.
William Packer of the media equity research division of BNP Paribas has written to investors saying that his firm’s analysis of Zoopla had consistently been cautious because OnTheMarket’s “lasting asymmetric operating impact” and Rightmove’s “must-have status” would limit Zoopla’s future performance.
Now he writes: “Threat of another tranche of member losses to Agents' Mutual reduced in our view. Based on conversations with our network of estate agent contacts, and with Agents Mutual at under 1k letters of intent after 7 months of recruitment we remain cautious on its prospects for success and expect the challenger to be unsuccessful in reaching its 7.5k letters of intent target. We expect the status quo to hold, with Agents Mutual remaining a significant #3.”
Packer says “inventory and traffic loss will remain a drag” on Zoopla but the portal group’s acquisition of uSwitch will improve its overal financial performance.
“We remain cautious on Zoopla's longer term pricing power with inventory still >25% below Nov-14 levels and Rightmove gaining traffic share. However, reassuringly, traffic vs AM has been resilient and uSwitch's prospects are improving as regulatory headwinds recede” says Packer.
Meanwhile the asset management consultancy and bank Investec says Zoopla’s financial figures later this week are likely to reveal £44m in pre-tax profits on £107m in sales, increases of 15 and 33 per cent respectively.
Over the weekend the Sunday Times’ Inside The City column also previewed the Zoopla figures. Of OnTheMarket the column’s author said “Don’t worry, I’ve never heard of it either” and went on to describe it this way: “A juggernaut it is not.”