LONDON (ShareCast) - (Sharecast News) - Bank of America Merrill Lynch reiterated its 'buy' rating on Rightmove on Thursday as it awaited "further developments", after smaller rival OnTheMarket agreed to be taken over by US commercial real estate information group CoStar in a £99m deal.
Rightmove shares tumbled on news of the takeover and by 1130 BST, were trading down 11% at 508p.

BofA, which has a 625p price target on the stock, said the news could initially be taken negatively for Rightmove, given CoStar's significant scale - it has a market cap of $32bn - and expertise in US residential and commercial real estate.

"That said, history has shown unseating incumbents in the classified space is no easy feat," the bank said.

"And Rightmove is a significant market leader even by classifieds' high standards, boasting 86% share of consumer engagement."

Making a few "points for context", BofA noted that network effects in the online classified space have generally proven durable in Europe, and said it thinks are potentially strongest in real estate.

It also pointed out that OTM was created by estate agents in 2013 to provide an alternative to the two main portals, but has been unable to match Rightmove's scale. It lists 13.2k advertisers as of FY23 versus Rightmove's 19.1k, and Rightmove commands an impressive 86% share of consumer engagement, the bank said.

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