Stock of the day – Purplebricks Group PLC
After a decent start, with the stock spiking to a 6 month peak of £4.96 at the start of February, the online estate agent has struggled somewhat. By late March it had fallen below £2.75 for the first time in a year, tumbling first on a research note from Jefferies (NYSE:JEF) in early February – a note Purplebricks felt so incensed by it issued a rebuttal – and then its current trading statement on March 26th.
From that low the firm did manage to climb back to £4.08 towards the end of May, only to tumble once more as spring turned to summer. Purplebricks Group PLC now sits at a current trading price of £3.23.
That aforementioned update in March saw Purplebricks warn of that ‘underlying softness’ in the UK market, in part blamed on the ‘Beast from the East’, would result in full year revenue being around 5% lower than initially forecast.
The company did manage to soften the blow of this, however, by revealing a £125 million strategic investment from ‘Europe’s leading digital publisher’ Axel Springer (LON:0NV2). That gives the Germany firm an 11.5% stake in Purplebricks, and is intended to ‘accelerate’ the rollout in the US, ‘support entry into new markets’ and ‘fund technological innovation’ and expand the estate agent’s service offerings.
In terms of Thursday’s annual results , revenue is still expected to more than double from £46.7 million to £93.74 million year-on-year. Yet that’s unlikely to be the headline, as Purplebricks’ losses are estimated to jump by £6 million to £22 million.
Investors may also be after a bit more detail on its expansion plans. Mid-June saw the company add Las Vegas, Nevada and Phoenix to its US offerings after launching in California and New York, while July 2nd saw it splash £29.3 million of Axel Springer’s cash on Canadian estate agent DuProrio and its English-language subsidiary ComFree.
Purplebricks Group PLC (LON:PURP) has a consensus rating of ‘Buy’ alongside an average target price of £4.40.
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