Berenberg upgrades Rightmove, says selloff overdone

Berenberg upgraded Rightmove on Monday to ‘buy’ from ‘hold’ as it said the selloff since the OnTheMarket/CoStar deal was announced was overdone.

The bank noted that Rightmove has traded down 17% since OnTheMarket announced on 18 October that it had agreed to be taken over by US commercial real estate information group CoStar in a £99m deal.

"We think this is an overreaction, so we upgrade our rating to a buy as we retain our conviction that Rightmove will remain the number one property portal in the UK and will be largely unaffected by the new market dynamic," it said.

Berenberg said the share price weakness provides an attractive entry point, with the shares trading on 19.6x FY24 price-to-earnings.

"We think the fears that CoStar would be able to take share away from Rightmove are overdone for three key reasons: 1) the barriers to success are high given the impact from network effects; 2) Rightmove’s ability to retain its leading position from its UK competitors; and 3) evidence of failed attempts from other international companies attempting to enter the UK portal market suggest the status quo will remain."

Berenberg maintained its 605p price target on the shares.

At 1205 GMT, the shares were up 2.3% at 490.30p.