Rightmove: 10%+ EPS Growth, But Only After 2023
(Preview) Company Update (RMV LN) (Buy)
Summary
2022 results showed the strength of Rightmove’s business, with a 10% EPS growth achieved on a flattish customer count.
The 2023 outlook implies a flat EPS, due to lower ARPA growth, cost increases, and a higher tax rate.
10%+ EPS growth will likely resume in 2024, helped by growth in Other Revenues and small improvements in EBIT margin.
Shares have a 24.5x P/E and a 1.5% Dividend Yield. There is an additional upside if the U.K. housing transaction volume starts growing again.
With shares at 570.8p, we expect a total return of 44% (14.1% annualized) by 2025 year-end. Buy.
Introduction
Rightmove PLC released 2022 results on Friday (March 3). Shares fell 1% on the day but rebounded 2% on Monday, though they are still down 12% in the past year and nearly 30% below their December 2021 peak.
We upgraded our rating on Rightmove to Buy in October 2021. Since then shares have lost 14% (after dividends). (Our Buy ratings during parts of 2019 and 2020 were more successful, generating gains of 30…