In a note initiating the AIM-listed firm with a target price of 190p, the broker said while changes in the market, including the banning of tenants fees in June, were “squeezing” traditional and smaller players, Belvoir’s franchise model allowed it to harness entrepreneurial skills in the market without exposing it directly to the cost base or capital commitments of its franchisees.
“Belvoir’s growth strategy is underpinned by a highly professional network of franchisees with sound business ethics. This sounds like a bare minimum, but it is not necessarily true for the wider market, which is characterised by small, local agents. Tightening regulation is putting professional operators such as Belvoir at a competitive advantage”, said finnCap’s analysts.
The broker added that Belvoir’s financial services business, Brook, presented a “major opportunity” to leverage its client base with a new service.
In mid-morning trading on Wednesday, Belvoir shares were steady at 106p, a 79% discount to finnCap’s target price.