Rightmove stock rated Equalweight, target set at GBP6.50

Published 05/11/2024, 20:40
Rightmove stock rated Equalweight, target set at GBP6.50

Tuesday, Morgan Stanley (NYSE:MS) resumed coverage on Rightmove Plc . (RMV:LN) (OTC: OTC:RTMVY), issuing an Equalweight rating and setting a price target of GBP6.50 for the company's shares. The firm's analysis suggests that Rightmove (LON:RMV) is in a strong position competitively and is poised to achieve robust growth.

The new price target reflects a positive outlook on Rightmove's ability to meet its 2028 financial goals. Morgan Stanley believes these targets are attainable and even conservative, primarily due to the company's solid core business prospects. The expectation is that Rightmove's success does not hinge on new revenue streams but rather on the performance of its existing operations.

Morgan Stanley's forecasts for fiscal year 2028 are 11% higher than the market consensus. However, for fiscal year 2024, the forecast is only 2% above consensus. The difference, according to the firm, will be realized gradually over the years through better-than-expected average revenue per advertiser (ARPA) and margin performance.

The analyst's commentary indicates confidence in Rightmove's trajectory, despite the potential risks posed by competitors like CoStar. Morgan Stanley assesses that these risks are already well accounted for in the market's evaluation of Rightmove and are unlikely to significantly disrupt the company's operational progress. The firm highlights Rightmove's leading position as a classifieds portal in the UK as a substantial competitive advantage.

In other recent news, Rightmove, the UK's leading real estate portal, declined a revised takeover proposal from the Australian property listing company, REA Group. The proposal, valued at approximately $8.12 billion, was a combination of cash and stock. It was part of REA Group's strategic plan to expand its global presence, but Rightmove chose to maintain its independence.

InvestingPro Insights

Rightmove's financial metrics and market position align with Morgan Stanley's positive outlook. According to InvestingPro data, the company boasts a market capitalization of $6.14 billion and has demonstrated solid profitability with a 100% gross profit margin and a 69% operating income margin in the last twelve months as of Q2 2024. These figures underscore Rightmove's strong market position and operational efficiency, supporting Morgan Stanley's view on the company's competitive strength.

InvestingPro Tips reveal that Rightmove has raised its dividend for 4 consecutive years, indicating a commitment to shareholder returns that aligns with the company's robust financial health. Additionally, the tip that Rightmove holds more cash than debt on its balance sheet reinforces the company's financial stability, which could contribute to its ability to meet the 2028 financial goals mentioned in Morgan Stanley's analysis.

It's worth noting that Rightmove is trading at a high P/E ratio relative to near-term earnings growth, with a PEG ratio of 6.23. This valuation metric suggests that investors are pricing in significant future growth, which aligns with Morgan Stanley's optimistic long-term outlook for the company.

For readers interested in a deeper dive into Rightmove's financial health and market position, InvestingPro offers 5 additional tips that could provide further context to the company's investment potential.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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