Proactive Investors - In a short research note, Citi has highlighted potential concerns over Rightmove PLC (LON:RMV)'s market position, following the potential acquisition of Onthemarket PLC (LON:OTMPO) by American group CoStar Technologies (NASDAQ:CSGP).
The investment bank focused on the difficulty in changing consumer behaviour and the necessity for Rightmove to engage in mergers and acquisitions to maintain its growth trajectory.
In a detailed discussion with Rob Symes, former managing director of Rightmove, the focus was on the challenges the listings portal faces in the evolving online property market.
Symes emphasised that altering consumer habits is a formidable task, yet it is central to any company aiming to challenge Rightmove's current market leadership.
Rightmove has thus far shown robust performance in its core business areas. However, to achieve its ambitious target of double-digit growth, the company may need to explore mergers and acquisitions more aggressively, the Citi (NYSE:C) note suggests.
This strategic shift is seen as crucial in a market where consumer preferences and technological advancements are rapidly changing.
Investor sentiment, as per Citi's report, remains largely sceptical regarding the possibility of Rightmove losing its top position.
Nonetheless, the potential acquisition of Onthemarket by CoStar introduces a significant variable. This move could disrupt the market dynamics, impacting Rightmove's earnings predictability and leading to asymmetric risks in its share price.
The upcoming Capital Markets Day next Monday (Nov 27) was identified as a critical juncture for Rightmove to present its plans for diversifying revenue streams beyond its core operations.
Citi rates Rightmove 'sell' and CoStar 'buy'. Shares in the former were trading sideways at 504p in early afternoon trading.