Edison Investment Research - Foxtons Group (FOXT) Foxtons Group - New CEO targets recurring income streams

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Edison Investment Research

Martyn King

Foxtons Group - New CEO targets recurring income streams

Foxtons’ new CEO has identified historical failings that are expected to be addressed by upgrades to data infrastructure, investment in staff and a reinvigoration of the Foxtons brand. If successful, over the medium term Foxtons expects margins to expand 500bp and hopes that operating profit will more than double. Importantly, it aims to increase the proportion of recurring income from c 65% currently, thereby reducing cyclical income and increasing the quality of income. We have raised our FY23 EPS estimates by c 8%, reflecting the latest M&A. Our ‘base’ case valuation rises to 59p and our preferred ‘bull’ case valuation rises from 118p to 124p.

15/03/2023 1 EN

Underlying

Foxtons Group

Foxtons Group is a holding company. Through its subsidiaries, Co. is engaged in providing residential property sales and lettings services through its network of branches. Co. provides independent mortgage advice and other related services through its mortgage broker, Alexander Hall Associates Limited. Co. has three business segments: sales, which generates commission on sales of residential property; lettings, which earns fees from the letting and management of residential properties; and mortgage broking, which receives commission from the arrangement of mortgages and related products under contracts with financial service providers and receives administration fees from clients.

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GB00BCKFY513 London Stock Exchange United Kingdom

Provider

Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

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Analysts

Martyn King

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Foxtons Group - New CEO targets recurring income streams

Foxtons Group - Deals' benefits matched by tax rise

Foxtons Group - Further strategic progress towards targets

Foxtons Group - Valuation offers 100% upside

Foxtons Group - Deals' benefits matched by tax rise

Partners Group Private Equity - Seeing good demand for several of its assets

Cereno Scientific - A productive period with plenty more to come

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