Canaccord reiterates 'buy' for Foxtons but cuts price target

Shares in Foxtons gained as Canaccord Genuity reiterated its ‘buy’ rating after the UK real estate group reported a solid year of revenue growth.

A trading update from the group, which dropped out of the FTSE 250 in December, revealed that revenue rose 4% to £150 on a 4% increase in volumes and 32% sales growth from mortgage broker Alexander Hall. It came despite an 11% decline in property transactions in its London heartland in 2015.

The final and further special dividend will total 6.23p per share, bringing the full year dividend to 11.0p per share, an increase of 13.4% on 2014.

Foxtons added that the sales pipeline for 2016 was "encouraging".

Canaccord said that while the outlook was positive, the future of the residential property market was uncertain with the prospects of an increase in interest rates and higher stamp duty for buy-to-let investors in April.

“We are mindful that house price growth, according to the Land Registry, in London remains high (annual change of 12.4% over the last twelve months) but that a shortage of properties available for sale will curtail the activities of agents,” said analyst James Ash.

“However, as Foxtons expands to the outer regions with higher transaction numbers, we believe it should continue to outperform its central London peers.”

The broker cut its price target to 220p from 264p.

Shares rose 0.30% to 165p at 1014 GMT.