Foxtons Group – tomorrow’s Q1 Trading Update should be very positive, highlighting the undervaluation of the group’s shares, now 57.50p, TP 92p

22.04.2025

On Wednesday 5th March, Foxtons Group (LON:FOXT), London’s number one estate and lettings agency group, announced a good set of results for the year to end-December 2024.

It reported group revenues up 11.4% from £147.1m to £163.9m, with adjusted pre-tax profits 39.1% better at £19.2m (£13.8m), earnings up 47% to 5.0p (3.4p), and a 30% increased total dividend of 1.17p (0.9p) per share.

The group has three main earning streams: Lettings - Revenue increased 4.8% to £106.0m, supported by M&A activity; Sales - Revenue up 30.7% to £48.6m, with market share rising from 4.1% to 4.9%; and Financial Services -Revenue up 6.2% to £9.3m, with stronger profit margins.

Management Comment

CEO Guy Gittins has stated that:

"2024 was another strong year for Foxtons with revenue up 11% and adjusted operating profit up 38%.

Across 2024 we retained our position as London's largest lettings agent and the UK's largest lettings estate agency brand, and increased our share of the London sales market by 20%.

In Sales, significant market share gains drove revenue growth of 31% and meant we agreed the highest number of transactions in London last year, while our Lettings and Financial Services businesses continued to provide the steady, recurring revenues which underpin Group profitability.

After a good start to 2025, we are well positioned to deliver another year of growth and are on-track to deliver against the medium-term growth targets I set out in March 2023.

I look forward to setting out details of the next stage of our growth plan to investors at a capital markets event in Q2 2025."

The Business

Established in 1981, Foxtons is London's leading estate agency and largest lettings agency brand, with a portfolio of over 31,000 tenancies.

Largest lettings agent in London and largest lettings brand in the UK and highest number of sales agreed in London in 2024.

The group operates from a network of interconnected branches in London and high-growth commuter towns, offering a range of residential property services across three business segments: Lettings, Sales and Financial Services. 

Group Strategy

A year ago, the company stated that the strategy of the group is to accelerate growth and deliver £25m to £30m of adjusted operating profit in the medium-term, by focusing on non-cyclical and recurring revenues from Lettings and Financial Services refinance activities, supplemented by market share growth in Sales.

It is obviously progressing very well with that strategy – giving the market upgraded guidance of a Revised Adjusted Operating Profit Target: £28m–£33m (previously £25m–£30m).

Buyback Plan

The Board continuously reviews shareholder return opportunities, and specifically the use of share buybacks, considering factors such as earnings per share accretion, borrowing capacity and leverage.

On Tuesday 8th April, the group announced that, after considering its prevailing share price, balance sheet position, forecast liquidity and timing of further lettings portfolio acquisitions, the Board has decided to return capital to shareholders through the buyback programme of up to £3m, with all shares so acquired being cancelled.

The proposed share buyback will be funded using the group's existing cash balances and revolving credit facility.

Analyst’s Views

At Zeus Capital, analyst Robin Savage in his Buy note, with a Target Price of 81p, considers that the group is now underway with its next phase of growth and updated his estimates.

He now looks for £20.5m profits for 2025, generating 5.1p earnings and paying out a 1.40p dividend.

For the 2026 year he goes for £24.8m profits, around 6.1p earnings and covering a 1.70p dividend.

He sees £28.7m profits in 2027, pumping 7.1p in earnings and a 2.0p per share dividend.

Analyst Greg Poulton at Singer Capital Markets has a Target Price of 92p, noting that the group’s strong growth trajectory has continued into its 2025 trading year.

For 2025 he looks for £178.6m revenues, £20.8m in profits, 5.0p in earnings and paying a 1.37p dividend per share.

His 2026 estimate is for £189.8m sales, £25.5m profits, 6.1p earnings and a 1.57p dividend.

Poulton sees £30.3m profits in 2027, generating 7.3p earnings per share.

At Edison Research, analyst Andy Murphy has a valuation of 134p on the group’s shares, going for £18.2m profits this year, worth 5.18p per share, and then £23.4m next year with 6.45p of earnings per share.

My View

Despite the £3m share buyback, the group will continue to pursue its lettings portfolio acquisition opportunities within its capital allocation framework.

However, I expect that tomorrow morning’s Q1 Trading Update to be a positive pre-cursor towards the group holding its Capital Markets Day on Wednesday 4th June.

The group’s shares, which were up to 71.40p in late May last year, are now trading at around the 57.50p level – I now look for them to rise again and nudging that 70p plus range.

(Profile 07.07.21 @ 60p set a Target Price of 76p)

(Profile 08.01.24 @ 49.25p set a Target Price of 61p*)

Asterisks * denote that Target Prices have been achieved since Profile publication.