Foxtons Group is expected to achieve its FY25 profit expectation despite external factors affecting demand. However, these factors, plus an internal decision to maintain headcount to capture growth when its arises, leads us to reduce our FY26 and FY27 estimates, in effect pushing out growth by 12 months. Our valuation moves from 126p to 120p as a result. That said, financial headroom has been increased to facilitate further M&A, which appears increasingly likely given the forthcoming Renters’ Rights Act.

Foxtons Group’s Q325 revenue growth was clearly affected by the loss of consumer confidence in the sales market. We, and the company, believe this will probably continue until the end of the year, given the unhelpful headlines relating to potential tax increases in the Autumn Budget and the slower-than-hoped-for decline in interest rates. We have reduced our profit estimates and valuation as a result. However, we believe Foxtons’ strategic direction remains positive, and the internal initiatives previously outlined will bear fruit. Furthermore, the revised medium-term financial targets announced in June are ambitious but achievable, underpinned by structural growth, headquarter-related cost savings, Foxtons’ technology stack and its proprietary data vault.

Foxton Group’s Q3 Lettings revenue supported an increase of c 3% but declining confidence in the London sales market due to uncertainty related to the Autumn Budget had an impact on Sales volumes and revenue, which is also likely to affect Q4. This has led Foxtons to guide FY25 underlying operating profit of £21.5–23.2m from a consensus of £23.7m and our estimate of £23.5m.