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Investors are being encouraged to keep a close eye on Foxtons’ share price, which is being tipped for growth in the coming months.
Master Investor, a UK based investment platform, has identified Foxtons as a good bet thanks to its medium-term target of doubling the adjusted operating profit that it earned in 2023.
“That aim, coupled with the visible determination of the group’s management, looks very achievable, making its shares now at just 52p look to be a very healthy bet,” Master Investor said.
It refers to the fact that Foxtons now manages a portfolio of more than 28,000 tenancies, “and that is what appeals very much to me”, said Master Investor’s Mark Watson-Mitchell.
“It [Foxtons] has a policy of acquisitive growth in its Lettings side, looking to acquire, integrate and service high quality lettings portfolios,” he added.
He explained that the ARR is not the only attraction about Foxtons – it has really a very visible selling agent business too.
Last year, to end December, the group as a whole reported an operational turnaround, whilst strengthening its operating platform helped to drive both its market outperformance and its adjusted operating profit growth.
Revenues were up 5% at £147.1m (£140.3m), while adjusted operating profit was 2% better at £14.3m (£13.9m), while its pre-tax profit was hit by a £4.5m one-off acquisition integration charge, easing 34% to £7.9m (£11.9m), leaving adjusted earnings 3% lower at 3.0p (3.1p) per share, whilst maintain its 0.9p dividend.
For the current year broker estimates range around £158m in revenues, some £15m in profits, around 3.8p per share in earnings and a 1.2p dividend.
The estimates for 2025 are some £166m revenues, £18m profits and 4.5p earnings covering a 1.45p dividend per share.
CEO Guy Gittins stated: “2023 was a year in which Foxtons has been fundamentally transformed. We have achieved a lot in a short space of time by making improvements across the business and Foxtons is now in much better shape than the company I inherited 18 months ago.
“We have restored Foxtons’ competitive advantages by investing in core capabilities, growing fee earners and reinvigorating our culture and this has been achieved ahead of schedule. As a result, Foxtons was the UK’s fastest growing large lettings and sales agency brand in the UK in 2023 and reclaimed its position as London’s leading estate agency.
“Most importantly, we have rebuilt and strengthened the Foxtons Operating Platform. The platform is a unique, industry-leading and proprietary asset which will underpin our future growth and, due to its scalability, will provide Foxtons with the capability to expand and consolidate across our industry.
“Our strategy to deliver growth through sales market cycles by delivering Lettings growth is working, delivering resilient earnings for the year despite a weak sales market and the investment we made in fee earners. We are on track against our medium-term target of delivering £25m to £30m of adjusted operating profit, through organic and acquisitive growth and supported by improving market conditions.”
Foxtons has been set a 76p target share price by Master Investor, which is higher than the existing level of 54p.
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