Purplebricks PLC (LON:PURP) shares were reiterated as a ‘sell’ by UBS as data shows a fall in listing on property portals.
The Swiss bank cut its price target for the shares to 78p from 85p before as it trimmed its forecasts for the 2022 financial year after data suggested that between January and May this year the total number of listings in the UK market fell by a quarter.
While Purplebricks reported a surge in customers late last year, fresh data seen by UBS shows its market share of sold listings also dropped 40 basis points to 4.5%, and unsold listings by 60bps to 3.1%.
What’s more, Strike a free online estate agent rival of Purplebricks (formerly Housesimple.com), has increased its market share by 20 basis points, UBS noted, with the number of listings excluding subject-to-contract SCT remaining broadly flat at circa 2,000.
UBS analysts acknowledged that their Evidence Lab data “may not match” numbers reported by Purplebricks, with the company using an alternative data provider that defines the market more broadly than just listings on one property portal.
Purplebricks’ declining market share has a number of possible explanations, the analysts said.
“For example, we are currently seeing strong house price growth in the UK, which may have led to more consumers choosing to use a traditional agency to help them maximise the selling price.
“Further, Strike may be winning some customers from Purplebricks.
“It is also possible Purplebricks may be holding back marketing spend ahead of the launch of its new pricing model.”
More details on the company’s plans to grow market share are expected from Purplebricks when they report full year results on 6 July.
In the meantime, UBS said it was cutting its 2022 revenue forecasts 4% based on a market share of 5.2% compared to 5.4% before.
“While we remain confident that a new pricing model can improve Purplebricks’ market share, we are concerned that this may now be from a lower base,” the analysts said.