Foxtons slips on London house price warning
01-10-2015
Bryce ElderBryce Elder
©Bloomberg
A warning on London house prices left Foxtons trailing the FTSE 100’s biggest rally in three weeks.
Foxtons dropped 5.7 per cent to 164p on a downgrade to “neutral” from joint house broker Credit Suisse, which in 2013 had co-led the estate agent’s 230p a share flotation.
Heading into a general election year, the London outlook creates “extreme uncertainty” for Foxtons’ commissions and transaction levels, the broker said.
An average annual increase of 9 per cent since 1996 may demonstrate the resilience of London housing as an asset class but valuations are now looking stretched at more than seven times average earnings, Credit Suisse told clients.
It forecast London prices to fall 2 per cent this year, which would stall Foxtons’ earnings growth.
Halifax mortgage data for December showing the UK housing market continuing to cool was weighing elsewhere in the sector.
Property website Zoopla lost 5.8 per cent to 181.5p. Just seven months after its flotation, Zoopla has become London’s third most-shorted large-cap with more than 15 per cent of its free float on loan.
Supermarkets led the blue-chip risers on better than expected Christmas sales figures from Tesco, which surged 15 per cent to 209.3p. The FTSE 100 was up 2.3 per cent, rising 150.13 points to 6,569.96.
J Sainsbury advanced 9.9 per cent to 252.4p, having slipped on Wednesday following its own mixed trading update, while Wm Morrison added 7.8 per cent to 184.7p.
Vodafone climbed 4.5 per cent to 225.8p with talk of a Vodafone-Sky tie-up doing the rounds once again. Sky was 2 per cent higher at 887p.
SABMiller rose 4 per cent to £33.63 after Investec took the brewer off its “sell” list.
“SAB’s lofty premium to the peer group has disappeared in the face of rising emerging markets risk aversion,” Investec said.
“With the valuation now more appealing and acquisitive interest from AB InBev not unlikely in the medium term, we are persuaded that the recent bout of underperformance has probably run its course.”
Chipmaker Arm Holdings , up 2.4 per cent to £10.00, extended its recent rally on a Benchmark “buy” advice following a management presentation.
Boardroom changes were responsible for several of the fallers. Halfords slumped 8.5 per cent to 423.3p after losing its chief executive Matt Davies to Tesco while EasyJet was down 1.7 per cent to £16.16 after its finance director Chris Kennedy agreed to move to Arm.
AO World lost 6.2 per cent to 254.3p after Norman Stoller, a pre-float investor in the electricals website, sold nearly 4m shares to cut his stake to 4.2 per cent.
GW Pharmaceuticals recovered from an 8 per cent drop to close 2.7 per cent higher at 404.5p.
The cannabinoid medicine maker said the first of its late-stage trials of its Sativex drug for cancer pain had failed but also that it had been awarded a use patent to defend its Epidiolex experimental seizure treatment against imitators.
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