Rightmove PLC (LSE:RMV) shares took a tumble on Tuesday hit by a downgrade by JPMorgan.
The investment bank has downgraded the online property website to ‘underperform’ from ‘neutral,’ pushing shares down 4.5% to 539.10p.
JPM pointed out that Rightmove’s share price has recovered fully after falling sharply in the wake of CoStar’s acquisition of OnThe Market last year.
It noted this recovery has been driven by better-than-anticipated property market dynamics/falling rates and a consensus view of rather limited impact of the new challenger.
But JPM argues that requirements for permanent best-in-class tech and consumer experience are rising, prompting higher R&D and opex spend.
"While our assumption for Rightmove’s top line growth is broadly in line with consensus, we see downside risk to profitability, forecasting operating margin to trend below management’s 70% target from 2025 onwards," it said.
With that, Rightmove is likely to generate below-sector-average 7% growth in EBITDA between 2024-26, it believes.