Jeffries, the analyst that assisted Zoopla in the IPO process, has upgraded it recommendation form a Hold to a Buy. This is a reversal of its downgrading in January. Jeffries has also increased its share price target.
Jeffries says Zoopla has been the main casualty of the "only one other portal" rule implemented by OnTheMarket. "In our view, this was not a reflection of the different offerings from Rightmove and Zoopla, but rather due to a targeted campaign from OTM encouraging members to drop Zoopla over Rightmove.
“The aim of this strategy was to increase OTM’s chances of becoming the number 2 portal, at which point it would turn its attentions to taking out Rightmove.
“Since the launch, there has been much debate across the trade press about the relative strengths of the UK portals and we have been surprised by the strength of the war of words from the OTM camp.
“However, as equity analysts we have a preference for numbers over words and facts over opinions, both of which paint a pretty clear picture.”
According to Hitwise, OnTheMarket traffic peaked in week seven at 630,206 visits and then has declined each week since. By week ten, OnTheMarket had just 349,613 hits.
“This data suggests to us that the new portal is far failing to gain any traction with consumers, despite the scale of its launch marketing campaign.
“The fall in traffic also suggests to us that home buyers are visiting the site but, due to a lack of listings or a limited number of search features and research tools, are not returning.”
In summary, Jeffries says “The latest traffic data suggests that OTM is not gaining traction with home buyers and we do not believe that it currently has sufficient stock to drive traffic in the future.