Analysts suggest Purplebricks leave Australia

April 9, 2019
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Purplebricks, an online real estate agency based out of the UK, has replied to the warnings that it should abandon its operations in Australia by saying it will continue to hold its presence in the country. 

Investment bank Berenberg said the company might have to quit Australia and the US to survive in its core British market.

It slashed its share price target for the embattled company from £4.70 to 80 pence, and switched its rating from "buy" to "sell", sending the stock into a recent 8.4 percent tailspin.

"Having flown too close to the sun, with operations in five countries and cash burn of circa £7 million [$12.9 million] a month, we believe the group will be forced to seek additional equity at a significant discount or a doubtless expensive debt facility; or to abandon the Australian and US operations and retrench to the UK and Canada," the German private bank said in a note.

But Vic Darvey, the group's global chief operating officer, rejected this analysis, saying that Purplebricks was committed to the Australian market.

"Our transformation over the last six months is bearing fruit, and we are pleased with the recent growth in instructions and sales," he told The Australian Financial Review.

"Recently, we have boosted our agent numbers and expanded to new regions, bringing our proposition to more Australians."

Purplebricks shares recently closed at 129.6 pence, down about 75 percent from a mid-2017 high point of about £5.13.

The company's current bout of share price doldrums began in February, when it cut its revenue forecast. It cited fierce headwinds in Australia and the US, and revealed that both its US and British chief executives had quit.

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April 9, 2019

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