Investment bank nudges Rightmove target to 805p on stronger growth outlook

RBC Capital has raised its price target for Rightmove PLC to 805p from 750p, citing a clearer growth outlook driven by expansion into rentals and mortgage services, despite some investor skepticism and mature traditional revenue streams. The property portal reported 10.2% H1 revenue growth and maintains 8-10% full-year guidance with high ~70% operating margins. While RBC trimmed 2025 earnings estimates slightly and noted mild caution on AI investment, it remains confident in Rightmove's model durability and market reliance, maintaining a "Sector Perform" rating as shares trade at 27.4x 2025 earnings near record highs.

Analysis

RBC Capital has upgraded its price target for Rightmove PLC (LSE:RMV) to 805p, reflecting increased confidence in the company's long-term growth trajectory. This optimism is primarily fueled by improving revenue visibility in strategic growth areas such as rentals and mortgage services, which are expected to supplement maturing revenue from traditional estate agencies. The company's financial performance remains robust, with first-half revenue growing 10.2% and full-year guidance maintained at 8-10%, supported by high underlying operating margins of approximately 70%. Despite this positive outlook, RBC maintains a 'Sector Perform' rating and expresses mild caution. The bank notes that investments in new initiatives, including artificial intelligence, have contributed to margins being lower than historical peaks. Furthermore, RBC has slightly trimmed its 2025 earnings estimates, citing underperformance in the 'other revenue' segment, though this was partially offset by a stronger outlook for the new homes business. With the stock trading at a premium valuation of 27.4x 2025 earnings and near record highs, the new price target suggests limited immediate upside from the current share price of 787.2p.

Key Decisions for Investors

• Given the stock is trading close to RBC's new 805p price target and at a high valuation multiple of 27.4x forward earnings, investors should consider that much of the positive outlook may already be priced in, aligning with the neutral 'Sector Perform' rating.
• Monitor the execution and revenue contribution from new growth segments like rentals and financial services, as these are critical to justifying the company's valuation and achieving RBC's long-term growth thesis.
• Investors should scrutinize the impact of continued investment in areas like AI on the company's ~70% operating margins, as RBC's note suggests a potential trade-off between future growth initiatives and near-term profitability.