Panmure upgrades Rightmove to 'buy', says enough caution is priced in

(Sharecast News) - Panmure Liberum upgraded Rightmove on Monday to 'buy' from 'hold' after shares in the property portal tumbled at the end of last week as it warned that increased investment in technology and artificial intelligence would weigh on profits "A surprise investment programme focused on AI, coupled with a cut to medium-term revenue guidance, has justifiably damaged the shares," Panmure said.

"Following the AI selloff earlier this year, the latest move leaves Rightmove's shares 30% down from their August peak, when we cut to hold.

"We reduce our revenue growth rate to 8% for FY26 and FY27, which we believe the business can comfortably deliver. Including the investment programme in full, we are now forecasting EBIT margin decline to 65% in FY27E, and expect this will fall further in outer years given increased capex - our DCF assumes 60% terminal."

Panmure, which cut its price target on the stock to 660p from 790p, said that with the second investment programme in two years, the shares are now discounting a scenario behind even its cautious forecasts.

"Credibility will take time to rebuild, but for now 18.6x PER and 13.7x EBIT price in enough caution that we upgrade to buy," it said.