The shares opened 4p lower at 66.4p on the trading statement before recovering to 70p, as the company said sales volumes this year have been lower than in the corresponding period of last year.
Performance in lettings was affected by a slow start to January and the timing of Easter, which had a negative effect on revenue, Foxtons said.
In the first quarter of 2018 group revenue was £24.5mln compared to £28.7mln in the first quarter of last year. This comprised sales revenue of £8.2mln (2017: £11.1m), lettings revenues of £14.3mln (2017: £15.5m), and Alexander Hall mortgage revenue of £2.0m (2017: £2.1m).
The mid-morning share price rally may have been prompted by some of the more optimistic comments in the statement, including an assertion that the sales pipeline has started to improve, though it is still down year-on-year.
The lettings business also saw a pick-up towards the end of the first quarter and throughout April.
Broker Numis responded to the update by cutting its profit forecasts again; it is now predicting underlying earnings (Ebitda) for the current year of £4mln, down from £10mln, though it has retained its ‘buy’ recommendation.
“Whilst this is disappointing and there is little evidence of a pick-up in sales transactions in London, we take comfort from its strong listing volumes and its net cash position,” the broker said.
Neil Wilson at Markets.com said it was not a good start for the estate agent, particularly in lettings, which until now had held up reasonably well.