industry

Relegation danger for Rightmove


Since hitting an all-time high in June, the stock has fallen 7 per cent due to fears over the health of the property market and pressure from rivals such as Zoopla and Purplebricks.

Helal Miah, investment research analyst at The Share Centre, said Rightmove has suffered a “tumultuous year”, with intense competitive pressures leaving it in a “vulnerable position”.

He added: “A weak housing market in London and the South-east and what the group describes as a ‘muted sentiment towards the UK property market’ continues to weigh.”

Worries over its prospects failed to ease despite interim results in July revealing a 10 per cent rise in revenues to £131.1million at the property portal and operating profits up 12 per cent at £98.2million.

Analysts cautioned that with estate agents under pressure, Rightmove’s future growth outlook might be limited. Surveyors warned earlier this year the housing market was seeing a decline in demand from buyers.

Data from the Office for National Statistics last month showed house prices in London dropped 0.7 per cent in the year to June, the lowest annual growth rate since September 2009 when they fell 3.2 per cent.

“It could be that the bad traits are just outweighing the good at the present time, sending the group in the wrong direction and ultimately to the bottom of the FTSE 100,” said Mr Miah.

Insurer Direct Line is another potential stock facing demotion to the FTSE 250 Index.

Shares in the group have been under pressure this year, with the stock’s woes compounded after it revealed a claims hit from the Beast from the East and the departure of boss Paul Geddes next summer after 10 years at the helm.

Direct Line’s shares have sunk 13 per cent over the past six months, sent lower last month as investors reacted to news of Mr Geddes’s plans to step down after a tenure that saw him oversee Direct Line’s split from Royal Bank of Scotland and its stock market flotation.



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