Foxtons estate agent in London hit by ‘tough’ homes market

Shares in Foxtons Group, the London-focused estate agent, fell to the lowest since its initial public offering in 2013 after reporting revenue for last year fell below analyst estimates and warning that trading conditions will remain challenging in 2017.

The broker dropped as much as 12% during the session after saying adjusted earnings before interest, tax, depreciation and amortization are expected to decline to about £25m (€28.7m) for 2016 from £46m a year earlier.

Analysts had expected about £28m. The shares later pared some their losses to end 3.7% lower on the day.

Tax increases and uncertainty over Britain’s vote to leave the EU have reduced the number of property transactions in London, hurting Foxtons’ revenue.

At the same time, the company has been opening new branches, and warned in July it may have to slow the pace of that expansion because of market conditions.

“The sales market in London is tough,” said Anthony Codling, an analyst at Jefferies Group with a hold recommendation on the the stock.

“The group will do well to see profits flat in 2017,” he said. Foxtons reported revenue from home sales of about £12m in the final quarter of 2016, down from £20m a year earlier. Lettings revenue was largely unchanged at about £13m.

“We expect trading to remain challenging in 2017,” chief executive Nic Budden said in a statement

“Should current levels of sales activity continue in the short term, it is likely that 2017 volumes will be below those in 2016.”

Bloomberg