GoCo Group PLC (LON:GOCO) is continuing to grow its bottom line faster than its online classified peers, according to analysts at Liberum, who on Friday upped their target price for the price comparison site owner to 150p from 120p and retained their ‘buy’ rating.
In a note, the broker said the market is “beginning to understand the opportunity of the large addressable market, operational gearing and recurring revenue streams” that the firm’s AutoSave business provides, which in turn will drive a re-rating of the shares.
READ: GoCo says chief financial officer to leave on October 1, to be replaced by former Photobox senior manager
“We have seen the valuation gap to Rightmove & Auto Trader that exhibit these traits begin to close, and we expect it to reduce further as GoCo is perceived as a technology platform as opposed to a legacy [price comparison website] business”, Liberum said.
“Rightmove especially had exhibited a similar growth story in which it continued to on board and further penetrate the estate agent market, but now with limited market to address and pressure on driving the average revenue per advertiser growth seems limited. However, it has been made clear that models with high visibility on recurring revenues & high margins have demanded high valuations and we see GoCo continue to be considered a close peer as AutoSave contributes a larger proportion of group revenue”, they added.
GoCo’s shares were flat at 117p in late-morning trading.