Barclays is already warning investors to take cover for the coming recession
Analyst Andrew Ross and his team took the red pen to online estate agent Rightmove and price comparison website MoneySupermarket.com.The investment bank says it likes both companies' business models and believes they will win out in the long run. But both are too intertwined with the fabric of the UK economy to avoid taking a hit from the dip in the British economy that the bank expects to see as a result of the Brexit vote.
"We remain structurally positive on Rightmove. But last week's referendum changes the story near term. Our economists now expect a period of recession and uncertainty in the UK, which is likely to mean reductions in house prices and transaction volumes. Rightmove does not have a one-for-one link to these two factors. But there will be an impact if new home developments are mothballed, estate agency branches start to close and price increases for the property portals become more difficult."Barclays downgraded earnings forecasts, slashed its target price for shares from £37.38 to £33.00, and downgraded its stock rating to "underweight", meaning it expects Rightmove to perform below the wider market in the near future.
Rightmove shares are down over 6.8% at 12.00 p.m. BST (7.00 a.m. ET):
MoneySupermarket.com shares have crashed over 11% at 12.15 p.m. BST (7.15 a.m. ET) on Monday:
Many in the Leave camp dismissed this as simply scaremongering from "Project Fear." But Barclays' downgrades show how it may become a self-fulfilling prophecy as fear of a recession spooks investment.
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