Here’s an odd one: the property and real estate operation of the American investment bank Jefferies International has assumed coverage of bunch of UK internet comparison sites.
Jefferies’ favourite appears to be the car buying and selling portal, which it rates a ‘buy’ up to 360p a share. Currently the stock is changing hands for 329p.
In a note to clients, it said: “Auto Trader operates the UK’s largest digital automotive marketplace.
“A 100% online model, the group is the clear market leader, hosting over 80% (that’s around 13,000) of the UK’s dealerships.
“The group has maintained high margin (around 65%), is highly cash generative and with limited capex requirements has returned £130mln to shareholders since IPO.”
The brokerage added that average revenue per retailer (ARPR) growth remains the key metric for the group, adding: “We see only a limited impact from slower new car demand and continued dealer consolidation, while the threat of new entrants is overblown, in our view.”
Moneysupermarket a ‘hold’
In the same note, Jefferies initiated coverage of Moneysupermarket with a ‘hold’ rating and 330p a share price target.
It said the last eight years had seen an ‘excellent’ stock market performance from the price comparison website. However it reckons the valuation of the stock (at 19-times current year earnings) is ‘full’.
Rightmove, the property site, is also rated ‘hold’ (target price 4,000p), while ZPG is on the ‘buy’ list (target 542p).
“If Rightmove is the Google of property search, then ZPG is the Amazon of home,” said Jefferies.
“Whilst Rightmove stays focused on search, ZPG seeks to be the one stop shop for everything you need to move, maintain and manage your home.
“We believe that ZPG’s thinking outside of the box will lead to higher returns than Rightmove’s very organised and methodical thinking from inside of the box.”