Purplebricks share price rose by just over 6% at one point yesterday after one of Europe’s most influential and oldest investment houses backed the hybrid agency, saying it expected “significant growth” from the company.
Berenberg, which is based in Hamburg but has a London outpost, said Purplebricks is now its preferred stock within the property sector, citing Purplebricks’ technology, which it believes helps the company offer a “better service at a far lower price”.
“That gives it a monopoly on growth,” says Berenberg within its briefing note.
“All the large traditional agents that we track have shown flat to declining business and the other hybrids and online [agents] have generally seen no growth, demonstrating the specific appeal of the Purplebricks offering, in our view.”
Berenberg now recommends Purplebricks’ shares as a ‘buy’ while at the same time recommending investors sell both Countrywide and Foxtons, saying that it “disliked” their stocks.
It also recommends investor hold their LSL shares, saying that although it is losing market share to Purplebricks, its strong balance sheet, growing services division and investment in YOPA may help shield the firm from further volatility in the market.
But Berenberg says Countrywide faces ongoing continued restructuring costs and that it was losing market share, and that also Foxtons faced a difficult market in London as premium fees come under pressure, as well as competition from the “success of Purplebricks in core areas and declining rents”.
The investment bank, which specialises in property stocks, was until recently an investor in ZPG but sold its stake in the group for £48 million.
No mention was made in the briefing of Purplebricks’ current battle with review site allAGents.co.uk, which recently suspended the agent’s listings and has launched a crowd funding bid to raise £50,000 to fund its legal fees to fight Purplebricks. The fund currently stands at £6,085 with five weeks to go to reach to its target total.