Rightmove: Return to 10%+ EPS Growth in Sight After H1

Company Update (RMV LN) (Buy)

Highlights

• H1 EPS growth would have been 10%+ except for a tax hike

• Agency revenues grew 5.9% after strong price/mix growth

• New Homes grew 31.9% as developers dialled up marketing

• The P/E is 24.0x; a return to double-digit growth is likely

• We see 64% total return (16.0% p.a.) by end of 2026. Buy

Introduction

We review our Rightmove investment case following H1 2023 results on July 28. Shares have risen 5.2% since their release, but remain 11% down over the past year and 27% lower than at the end of 2021:

Rightmove Share Price (Last 5 Years)

Source: Google Finance (13-Aug-23).

The Rightmove investment case is that the business is capable of generating a 10%+ annual EPS growth and its P/E deserves to re-rate upwards from the current 24.0x, which together generate a high-teens annualized return.

H1 2023 results provided further visibility on a return to 10%+ EPS growth. EPS would have grown 10%+ higher year-on-year except for the rise in U.K. tax rate. Revenue grew 10.3% year-on-year, driven by a p…