Can Purplebricks Lure Investors Back Home With Friday’s AGM Update?
Spreadex | Sep 25, 2017 11:14
It’s hard not to be impressed by Purplebricks’ 2017 rise. Following on from its interim results-inspired surge at the end of 2016, the stock jumped from a starting price of £1.42 to a record high of £5.25 in July and August – that’s an astonishing 270% increase.
Yet in the last couple of months the stock has slipped, largely thanks to some bad PR – it has repeatedly been in hot water with the Advertising Standards Authority, for misleading claims about everything from how much customers could save to the hidden cost of viewings – and investors’ ambivalent feelings about its expansion into the US. Purplebricks Group PLC (LON:PURP) now sits at a current trading price of £4.
Its last couple of statements have – unsurprisingly given its performance – been very strong. In May the company revealed an 83% rise in new instructions, leading it to claim that its share of the online estate agent market had risen from 40% to 70% between 2015 and 2016.
June’s annual results then showed improvements all round. Pre-tax losses shrank from £11.9 million to £6 million year-on-year, with group revenue up a staggering 151% to £46.7 million. CEO Michael Bruce boldly capped off the update by stating that Purplebricks was ‘on track to be the most successful estate agent in UK history’.
The crowning moment of its 2017 so far came on 15th September, as Purplebricks formally launched its US business – previously announced in February – with a flat fee of $3200 its main selling point. There is a lot of risk attached to this stateside expansion, however, especially for a firm that’s just 3 years old. With that in mind, though Friday’s AGM statement comes just two weeks after the US launch, investors will be hoping for some kind of trading update, just to give them a taste of what to expect.
Purplebricks Group PLC has a consensus rating of ‘Buy’ with an average target price of £3.94.
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