The respected investment advice website Motley Fool has poured cold water on the stock market fortunes of Purplebricks, despite a huge surge in the hybrid agency’s share price in recent weeks.
The firm’s share price ended Friday up 1.0 at 147.0 after several weeks of near constant improvement.
Motley Fool contributor Peter Stephens says the agency has posted a return well in excess of 50 per cent since the turn of the year. “This may lead many investors to question whether a correction is now on the cards” he says.
It was only in January that articles on Estate Agent Today commented on substantial falls for the agency’s share price.
Stephens says his pessimism about a possible correction “seems to be somewhat justified since Purplebricks is set to remain a loss making business in the current year.” He adds that while it’s expected to move into the black from next year, it “now seems to be fully priced-in by the market.”
He concludes: “With the outlook for the UK property market being rather uncertain, the lack of a margin of safety for new investors could lead to sub-optimal investment returns over the medium-to-long term. So it may be prudent to wait for a keener valuation before piling-in.”