Foxtons Group - Clear growth plans drive upside potential

Foxtons is at an inflexion point, in terms of both its underlying markets, which are recovering, and the next stage of its development. Revenues have fallen every year since 2016 but grew c 50% in Q1 and are now forecast to grow at a CAGR of 15% pa for the next three years, as sales are strong, lettings are picking up as the London market begins to normalise and Foxtons has been active with M&A. These positives are likely to be boosted by further M&A in lettings, as well as growth in ‘Build to Rent’ (BTR) and regional expansion. While our base case estimates imply a valuation below the current price, we value the shares at up to 129p based on our bull case scenario.