Swiss bank UBS has upgraded its investment rating on Purplebricks, raising its price target and urging investors to buy.
In a note to clients, UBS said it was shifting its guidance from ‘neutral’ to ‘buy’ and was raising its price target for Purplebricks shares to 100p.
This is the latest in a series of advice notes over the years from UBS, often in response to its concerns over the agency’s international adventures which have now ended.
In March 2019 UBS cuts its price forecast for Purplebricks’ shares from 305p to 285p but then just two months later in May that lower figure was slashed to only 100p.
By July 2019 UBS advised that it saw Purplebricks growing market share in the UK to only 7.5 per cent by 2024 - actually well below the agency’s own prediction of 10 per cent.
UBS made clear in 2019 that it was concerned at Purplebricks’ activities in Australia and America; 18 months ago the bank forecast that the agency wouldn't break even down under until 2022 and suggested that the US operation would not see a profit until 2025.
Of course since then Purplebricks has closed all its international operations, including most recently Canada.
Earlier this month the company revealed its trading statement covering the first half of 2020, reflecting the problems caused by Coronavirus.
There was an operating loss of £9.4m - much higher than the £1.5m loss a year earlier. Revenue plummeted 10.7 per cent to £80.5m.
At the company's financial year end - so before the sale of its Canadian business last month - it had £31m on the balance sheet, compared with £62.8m a year earlier.
The sale of the Canadian business contributed £30.6m to the agency’s coffers and the firm told its shareholders “our exits from the Australian and US markets have allowed us to concentrate on our key operations.”
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I called this right in 2014 when they first emerged, I have been consistent, correct and accurate.
UBS ought to be asked how 7.5% is going to be possible when the 10% prediction was supposed to have been achieved in 2016. ( 15,000 for 2014, 85,413 instruction for 2015 and 100,849 instructions – equivalent to 10% of all transactions for 2016)
The public are now familiar with the business model, the upsides and the down sides. Their potential contractors know the score too.
6 years in, everything is established and familiar so what is UBS predicting is going to change to take them from where they are now to where they're reckoning?
I'm not having a go at Purplebricks I am challenging the analysis which appears to be words with no support or substance. After 10 years of this nonsense I feel it is about time it stopped.
If anyone is thinking of using their money to buy Purple Bricks shares as an investment.........I have some VHS video recorders to sell at a reduced price and I’m hearing of a bridge in London that might be coming up for sale......get in quick!
That’s genuinely really funny!
This bullishness by UBS may be based on a prediction that, in a much tighter/harder market, with many possible forced sales, sellers will choose a low-cost route. They might, but it will definitely not be an upfront fee/guaranteed payment whether the home sells or not type offering. Sell.
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