Rightmove faces FTSE 100 eviction as engineering firms climb, say analysts
Online estate agent Rightmove is the top contender to drop from the FTSE 100 during its reshuffle next week, analysts have predicted.
A weak housing market in London and the south-east, and tough competition for rivals such as Zoopla and PurpleBricks could see the company dropped into the FTSE 250, despite year-on-year growth in revenue and operating profits.
Helal Miah, investment research analyst at The Share Centre, said Rightmove was having a “tumultuous” year, dragged down by market factors despite reaching a share price high in May.
Insurance giant Direct Line is also facing the chopping block during the reshuffle on 7 September, which will re-sort companies between categories based on their market cap. British institutions Royal Mail and Marks and Spencer (M&S) are both floating just above the danger zone, with water supplier Severn Trent also put at risk by regulation pressures and interest rate rises.
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The leading contender to grab a position in the top listing is is Spirax-Sarco Engineering, which specialises in steam systems. By raw market cap, Spirax-Sarco is the UK’s 93rd-largest listed firm – 14 places ahead of Rightmove, which is at 107th, and beating seven other FTSE 100 firms.
For movement to occur, either a non-FTSE 100 company must either surpass the market cap of the 90th-place company, currently housebuilder Barratt, or a current FTSE 100 company must drop below the 111th-ranked company, currently retailer B&M European, by the deadline.
Michael van Dulken, head of research at Accendo Markets, said the upcoming reshuffle could be the first even in which there is no movement in or out of the FTSE 100, given that no company has yet passed the threshold for auto-promotion or auto-relegation.
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“I can’t remember any other instances where nobody was in auto-promotion or auto-demotion territory,” he told CityAM
David Madden, market analyst at CMC Markets, said stagnant growth put M&S in danger of a drop.
“[M&S] narrowly avoided demotion from the FTSE 100 in June, and their market cap hasn’t moved much since late May,” he said.
Other FTSE 250 companies that could see a climb include engineering firms John Wood and Weir, as well as specialised insurance provider Hiscox.
With four days of trading left after today, Miah said that the situation could still radically change before the deadline.
“It will definitely be worth keeping an eye on the noted company prices over the next few days to see if anything changes,” he said.