Rightmove: Strong Business, Undervalued Due To U.K. Macro Concerns

(Preview) Company Update (RMV LN) (Buy)

Summary

• Rightmove shares have fallen 26% from their December 2021 peak, de-rating to a 28x P/E, likely due to concerns about U.K. macro.

• It is one of the highest-quality listed businesses in the U.K., and earnings have quickly recovered from the disruption by lockdowns in 2020.

• Rightmove remains dominant in U.K. residential property listings, and trends are positive in average revenue and customer numbers.

• We believe EPS can grow at 10%+ sustainably, the stock's P/E should re-rate from 28x to 30x and, and the Dividend Yield is 1.3%.

• With shares at 597.8p, we expect a total return of 65% (15.8% annualized) by 2025 year-end. Buy.

Introduction

We review our Rightmove PLC investment case ahead of H1 2022 results scheduled for July 29. Rightmove’s share price is currently 26% below its peak last December and 10% lower than a year ago.

We upgraded our rating on Rightmove to Buy in October 2021. Since then shares have lost 10% (after dividends). (Our Buy ratings during parts of 2019 and 2020 were mo…