Foxtons (FOXT): Initiation - Clear growth plans...

Edison Investment Research Limited Edison Investment Research Limited: Foxtons (FOXT): Initiation - Clear growth plans drive upside potential 30-Jun-2021 / 08:00 GMT/BST London, UK, 30 June 2021 Foxtons (FOXT): Initiation - Clear growth plans drive upside potential Foxtons is at an inflexion point, in terms of both its underlying markets, which are recovering, and the next stage of its development. Revenues have fallen every year since 2016 but grew c 50% in Q1 and are now forecast to grow at a CAGR of 15% pa for the next three years, as sales are strong, lettings are picking up as the London market begins to normalise and Foxtons has been active with M&A. These positives are likely to be boosted by further M&A in lettings, as well as growth in 'Build to Rent' (BTR) and regional expansion. While our base case estimates imply a valuation below the current price, we value the shares at up to 129p based on our bull case scenario. Our base case shows 2022e EPS of 2.4p, which gives a valuation below the current share price when we apply the average 2014/15 P/E of 17.5x. If we roll over our forecasts to 2023e, our EPS of 2.9p implies a valuation of 50.8p, much closer to the current price. However, we would argue that future growth may not be fully reflected in the share price or our estimates as we do not forecast acquisitions. Our bull case highlights the potential upside in forecasts, where Foxtons is particularly geared to further acquisitions of lettings books as well as growth from BTR, regional expansion and underlying markets. Our bull case scenario suggests potential 2022e EPS of 7.4p, which implies a valuation of 129p when the 17.5x P/E is applied. Click here to view the full report or here to sign up to receive research as it is published. All reports published by Edison are available to download free of charge from its website www.edisongroup.com About Edison: Edison is a leading research and investor relations consultancy, connecting listed companies to the widest pool of global investors. By focusing on the volume and quality of investors reached - across institutions, family offices, wealth managers and retail investors - Edison can create and gauge intent to purchase, even in the darkest pools of capital, and then make introductions via non-deal roadshows, events or virtual meetings. Having been the first in-market 17 years ago, Edison now has more than 100 analysts covering every economic sector. Headquartered in London, Edison also has offices in New York, Frankfurt, Amsterdam and Tel Aviv and a presence in Athens, Johannesburg and Sydney. Edison is authorised and regulated by the Financial Conduct Authority. Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities. For more information, please contact Edison: Andy Murphy [phone] [e-mail] Learn more at www.edisongroup.com and connect with Edison on:  LinkedIn  https://www.linkedin.com/company/edison-group-/ Twitter   www.twitter.com/Edison_Inv_Res YouTube  www.youtube.com/edisonitv Dissemination of a CORPORATE NEWS, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.

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