Stifel repeats 'sell' rating on Rightmove as takeover chatter lacks substance

Rightmove PLC, the property portal, remains a sell for Stifel after revived takeover speculation sent the stock up 9% to 503p. Analyst Clément Genelot kept his 'sell' rating and target price of 356p on the company, arguing that the market gains are likely to unwind given the absence of a credible bidder.

Speculation re-emerged following a report suggesting Australian rival REA Group Limited might launch a fresh attempt to buy the business alongside a Gulf-backed investment vehicle. REA Chairman cleared up the matter at the company's annual general meeting, explicitly stating Rightmove is no longer on its radar after four rejected offers in September 2024.

Stifel also pointed out that other potential suitors face clear obstacles, noting CoStar Group Inc (NASDAQ:CSGP) would encounter severe antitrust hurdles while Zoopla is itself up for sale. Overseas portal operators are equally unappealing buyers due to high UK take rates and Rightmove's pending £1.6 billion lawsuit.

The broker expects classifieds valuations to remain capped as artificial intelligence disruption forces strategic buyers to focus internally rather than on debt-funded acquisition deals. Rightmove's current strategy, which includes a £60 million artificial intelligence investment, is viewed by the bank as a forced technological catch-up rather than proactive reinvestment.

Stifel models a slowing revenue compound annual growth rate of 6.3% between financial year 2025 and 2028, down from historical levels of 9%. The bank expects adjusted earnings margins to shrink from 72% in financial year 2025 to 64% by financial year 2028.