A leading shares tipster at The Times newspaper has given Purplebricks a ‘hold’ rating, recommending that investors neither sell nor buy the company’s stock.
This less than ringing endorsement for the company from the newspaper is based on tipster Louisa Clarence-Smith’s view that the hybrid agency may struggle to increase its revenue and market share in the present Covid-infected climate.
Her influential advice column follows last week’s announcement that the company had offloaded its Canadian business for £35 million, helping boost its cash at the bank to £66 million.
“The sale of the Canadian business has strengthened the company’s foundations,” she says. “However, it is difficult to see how it will grow from there.”
After being published, the column helped drive down the company’s share price by 15% yesterday before it rallied towards the end of trading on the FTSE.
The reasons given by Clarence-Smith’s downbeat assessment of the company include the uncertain staying power of the current mini-boom within the property sales market and tightening mortgage ability among Purplebricks’ key younger home buying demographic.
She also suggests that many vendors are likely to pick traditional agents when the market is more volatile and, later this year, homes might become more difficult to sell.
But Purplebricks’ biggest test is due on August 3rd when the company is due to reveal its full-year results for its 2019/2020 financial year.