Foxtons Group – this morning’s Trading Update shows just how attractive this group’s shares are at 70p, while analysts forecast up to 94p

28.01.2025

This morning Foxtons Group (LON:FOXT), London’s leading estate agency and largest lettings agency, has announced its 2024 year-end Trading Update.

It was very positive and should lead to the group’s shares advancing even further.

For the year both revenue and adjusted operating profit are expected to be ahead of market expectations.

Ahead of market expectations, the company has stated that its 2024 total revenue was some £163m, up about 11% versus the prior year (£147.1m).

Adjusted operating profit of c.£19m was also ahead of market expectations and up around 33% against the prior year (2023: £14.3m), as higher revenues and operating leverage within the Foxtons business model drove improved adjusted operating profit margins.

The Business

Established in 1981, Foxtons is London’s leading estate agency and largest lettings agency brand and has a portfolio of over 31,000 tenancies.   

It operates from a network of some 64 interconnected, single-brand branches and offers a range of residential property services across three business segments: Lettings, Sales and Financial Services.  

The company has a declared strategy to accelerate its growth and deliver against its medium-term target of £25m to £30m adjusted operating profit, by focusing on non-cyclical and recurring revenues from Lettings and Financial Services refinance activities, supplemented by market share growth in Sales.  

Management Comment

With today’s Update CEO Guy Gittins stated that:

“I'm delighted that we have delivered a second consecutive year of revenue and profit growth since I returned to the business in September 2022, as our turn-around strategy continues to deliver results, and we ended the year with earnings ahead of market expectations.

Our renewed focus on training, culture and retention, supported by our best-in-class data and technology, has driven double-digit market share gains in Sales, and revenue growth in Lettings.

In addition, we have made two acquisitions in commuter towns as we expand into exciting new growth markets.

We enter 2025 with optimism.

We expect the Lettings business to remain resilient and, in Sales, we start the year with the highest opening under-offer pipeline since the Brexit vote in 2016. 

This dynamic, coupled with our results-driven culture and industry-leading Foxtons Operating platform, leaves us well placed to continue to deliver against our strategic priorities in 2025."

Analyst Views

Greg Poulton, at Singer Capital Markets, rates the group’s shares as a Buy, with a Target Price of 94p.

He notes that the group’s outperformance was driven by improved operational efficiency.

He has upgraded his estimates by some 10%, now looking for the end-December 2024 year to show revenues of £163.5m (£147.1m), with adjusted pre-tax profits up to £18.7m (£13.8m), generating earnings of 4.6p (2.8p) and paying a dividend of 1.10p (0.90p) per share.

For this year he looks for £178.7m revenue, £20.8m profits, 4.9p earnings and 1.30p per share dividend.

His 2026 estimates see £190.0m revenues, £25.5m profits, earnings of 5.9p and 1.50p dividend.

He concludes his Buy not as stating that he remains strongly positive on Foxtons, expecting its double-digit earnings growth to help to drive the group’s shares higher.

Over at Zeus Capital, analyst Robin Savage increased his expectations by 3% for revenues and an added 10% in profits for last year.

He sees the group’s shares rising to over 81p in reaction to their value.

His estimates for 2024 are for £163.0m revenues, £15.0m profits, 4.1p earnings and a 1.2p dividend per share.

For the 2025 year his figures are for £174.0m revenues, £15.8m profits, 4.5p earnings and a 1.4p dividend.

Next year could see £186.0m revenues, £19.4m profits, 5.9p earnings and a dividend of 1.7p per share.

In My View

This is a cracking business, that is well-based, and its shares are an excellent addition to any portfolio.

The 2024 Finals are due to be released on 5th March, by that time I would expect that the group’s shares will have risen from the current 70p, up 4p on today’s news, to trade the 75p to 85p range.