Investec: DMGT’s buy rating following Zoopla approval

The completion of DMGT’s merger with online property site Zoopla following OFT clearance is a sign of strategically repositioning the group towards growth, according to Investec.

The bank has changed its forecast for DMGT on the basis that the combined businesses will be able to provide a realistic competitor to Rightmove. “DMGT looks increasingly attractive in our view,” a statement said.

The merger brings together zoopla.co.uk and DMGT’s brands findaproperty.com and primelocation.com. DMGT now owns 55% of Zoopla, while former shareholders own 45%.

“We assume a good upside if [Zoopla] can rationalise its online brand portfolio and offer a streamlined, effective competitor to Rightmove. We also see good margin upside if savings/growth are delivered.”

Read the full Investec note here.