LONDON (ShareCast) - (Sharecast News) - Rightmove was the standout gainer on the FTSE 100 on Tuesday as Deutsche Bank upped the stock to 'buy' from 'hold' and lifted the target price to 530p from 440p, highlighting its attractive valuation.
It noted that since their peak in June 2018, Rightmove shares are down almost 20%.

"This is an unusual scale drop for a steady market leading online classified business, which consistently delivers 76% operating profit margin and returns circa 4% per annum of market cap to shareholders via dividends and buyback."

DB said the stock came under pressure on competition news flow and a UK and tech sector sell-off. However, it argued that concerns are overdone and there is potential for a re-rating.

"The stock is trading towards its five-year low on one year forward EV/EBITDA multiple and just at 2.5x premium to AutoTrader (Hold; 437.3p) on one year forward price-to-earnings, versus historical high of 10x."

The bank said it has upgraded its estimates and is now 4-8% ahead of consensus earnings per share in 2018-2020 as it is more optimistic on the sustainability of margins. DB said its new target price offers 20% potential upside.

At 0930 GMT, the shares were up 2.4% to 459.60p.

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