An analyst has said he thinks it possible but improbable that OnTheMarket will achieve penetration of two-thirds of the agency market.
Robin Capp, of investment bank UBS, was commenting on Zoopla’s acquisition of price comparison website uSwitch which he said should help drive significant earnings.
He said it would take only a “very small penetration of Zoopla’s traffic to produce significant revenue synergies”.
Zoopla has said that persuading just 0.2% of its traffic to switch would be worth £10m.
Capp told financial website Interactive Investor that Zoopla has been managing to slow the exit stream of agents departing to OnTheMarket and claimed that OTM’s numbers were “disappointing”.
OTM has not given a recent update on its numbers, but another analyst, William Packer of BNP Paribas Exane, estimates that nearly 25% of agents have now quit Zoopla.
Capp, who believes Zoopla is now worth 260p per share against his previous 225p target price, told Interactive Investor: “Our downside case assumes that OnTheMarket.com gains significant consumer traction, disrupting the market and penetrating two-thirds of agents over time.
“Whilst possible, we believe that such a high level of success for the new portal is improbable.”
Interactive Investor says Zoopla lost nearly half its value in the tail end of last year, but its shares have since rebounded – currently to 215p, lower than its float price last summer of 230p.
The website says that Zoopla is expected to stay in the red until 2018, with debt expected to be £102m this year.
It also quotes Capp as saying he believes the housing market will stay buoyant.
He said: “Increased house prices and transactions should lead to larger agent marketing budgets [from which] we believe ZPG can benefit.
“We also see a continuation of the longer term structural shift in agents’ advertising spend away from newspapers and towards the internet.
“Investors do have concerns about the entrance of a new player (Agents’ Mutual) into the UK property portal in January.
“However we do not believe it will significantly disrupt the market in the long run.”