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  • Writer's pictureMark Watson-Mitchell

Foxtons Group – Is Rothschilds Looking For A Buyer

Next Tuesday this £176m capitalised estate agency group will be holding its AGM covering its 2023 results, which were gently better than those of 2022.

The Foxtons Group (LON:FOXT), which is London's leading estate agency and largest lettings agency brand, with a portfolio of over 28,000 tenancies, saw revenues of £147.1m (£140.3m) for the year, with adjusted pre-tax profits of £13.8m (£13.1m) but lower earnings of 2.8p (3.0p) and a maintained dividend of 0.9p per share.

Recent Q1 Trading Update

Two weeks ago, the group gave out a Q1 Trading Update for 2024, showing a 9% advance in revenues at £35.7m for the three months to end March.

CEO Guy Gittins stated that:

"This has been a strong start to the year with our revenue growth demonstrating the real momentum we have built across the business.

Last year we regained our number 1 position in London and delivered significant growth in our market share of property instructions across both Lettings and Sales.

The business is now focussed on converting these listings to transactions as we deliver results for our clients.

Sales revenue was up 17%, reflecting improved market conditions and Foxtons' continued growth in market share as the operational improvements we made last year took effect.

We entered the second quarter with the highest value under-offer Sales pipeline since the 2016 Brexit vote, giving us optimism for the rest of the year.

We have made great strides in the past two years, with the business' foundations rebuilt and the Foxtons Operating Platform significantly strengthened.

We are well placed to continue to unlock value within our business, drive growth, and ultimately deliver against our medium-term adjusted operating profit target."

The Group’s Strategy Going Foward

The strategy of the group is to accelerate growth and deliver £25m to £30m of adjusted operating profit in the medium-term, by focusing on non-cyclical and recurring revenues from Lettings and Financial Services refinance activities, supplemented by market share growth in Sales.

Broker’s View – Price Objective 88p

Analyst Greg Poulton at Singer Capital Markets rates the group’s shares as a Buy, with a Price Objective of 88p.

He is now estimating current year revenues of £158.3m, £17.0m profits, 4.0p earnings and a 1.10p dividend per share.

Over the next two years to end 2026 he sees revenues rising to £179.6m, £25.2m profits, 5.9p earnings and a 1.50p per share dividend.

My View – Looking For 80p A Share

The market in the group’s shares is interested to know just how its brokers and Rothschilds will be faring in attempting to get FOXT a much better rating than at present – with suggestions that the whole group is up for sale to the right bidder.

Could we be getting any update on their joint progress to date?

Probably not – but it would be good to excite some more interest in the group’s shares, which are currently trading at around 58p.

If a potential predator is being sought and lined up in due course, it would be reasonable to look for a bidder having to offer at least 80p a share, some £240m in value.



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