Rightmove could face stock market demotion after ‘tumultuous’ year

Rightmove is among candidates to be relegated from the FTSE 100 Index.


Rightmove looks on course to be booted out of London’s blue chip share index this week (PA)
Rightmove looks on course to be booted out of London’s blue chip share index this week (PA)

Property website Rightmove looks on course to be booted out of London’s blue chip share index this week after suffering from a stalling housing market and increased competition.

Rightmove is among candidates to be relegated from the FTSE 100 Index when the FTSE Russell EMEA Committee confirms the results of its quarterly review, according to The Share Centre.

Since hitting an all-time high in June, the stock has fallen 7% due to fears over the health of the property market and pressure from rivals such as Zoopla and Purplebricks.

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Helal Miah, investment research analyst at The Share Centre, said Rightmove has suffered a “tumultuous year”, with intense competitive pressures leaving it in a “vulnerable position”.

He added: “A weak housing market in London and the South East and what the group describes as a ‘muted sentiment towards the UK property market’ continues to weigh.”

Worries over its prospects failed to ease despite interim results in July revealing a 10% rise in revenues to £131.1 million at the property portal and operating profits up 12% at £98.2 million.

Analysts cautioned that with estate agents under pressure, Rightmove’s future growth outlook might be limited.

Surveyors warned earlier this year that the housing market was seeing a decline in demand from buyers, while recent figures have confirmed the slowdown in London and the South East.

Data from the Office for National Statistics last month showed house prices in London dropped 0.7% in the year to June, the lowest annual growth rate since September 2009 when they fell 3.2%.

“It could be that the bad traits are just outweighing the good at the present time, sending the group in the wrong direction and ultimately to the bottom of the FTSE 100,” said Mr Miah.

Insurer Direct Line is another potential stock facing demotion to the FTSE 250 Index.

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Shares in the group have been under pressure this year, with the stock’s woes compounded after it revealed a claims hit from the Beast from the East and the departure of boss Paul Geddes next summer after 10 years at the helm.

Direct Line’s shares have sunk 13% over the past six months, sent lower last month as investors reacted to news of Mr Geddes’s plans to step down after a tenure that saw him oversee Direct Line’s split from Royal Bank of Scotland and its stock market flotation.

The announcement came as Churchill owner Direct Line reported a 13.9% fall in pre-tax profits to £293.8 million for the first six months of 2018 following a £75 million weather hit after the Beast from the East freeze sent claims soaring.

But blue chip retailer Marks & Spencer looks likely to be spared relegation once again this quarter, in spite of competitive pressures and weak consumer spending.

Share Index said oil and gas services firm John Wood Group and Weir are among those sitting at the top of the FTSE 250 and therefore contenders for top tier promotion.

Mr Miah said: “Re-energised commodities investments as a result of a strong recovery in the sector and in the case of John Wood, the integration of acquisitions, are likely to be the reasons for the two companies featuring.”

The next set of stock promotions and relegations will be announced after the market closes on Wednesday September 5, based on the previous night’s closing prices, and are set to take effect on September 24.

Press Association

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