Macquarie downgrades Zoopla as it predicts slump in revenue

(ShareCast News) - Macquarie has downgraded Zoopla Property Group to 'neutral' from 'outperform' and raised its price target to 375p from 360p."We lower our recommendation to 'neutral' from 'outperform' based on the increase in share price to our target price, the absence of a more bullish Comparison Services trading and our expectations for growth in Comparison Services revenue to slow after the first quarter of fiscal year 2017."The group recently acquired Hometrack, an automated valuation model (AVM) which tracks residential property data, analysis and valuations to 400 partners, including the 15 of the top 20 UK mortgage brokers. The property company is paying £120m plus a further earn out of up to £25m over 10 years.The takeover is expected to be earnings accretive starting 2018. The broker believes that the deal will further build the group's property resources and add scale to its data services business and its business with mortgage lenders.Hometrack's superior valuation tool also provides cross-selling opportunities by offering accurate and comprehensive valuations to both homeowners and buyers, increasing the value of the company's portal to visitors.The company also provided a trading update saying UK Agency partners continue to grow and comparison services continues to enjoy solid switching volumes. The broker said it expected a more positive statement for Comparison Services given strong market data and results from peers."Zoopla's Comparison Services offers higher long-term growth due to a less penetrated market and supportive regulation," said the broker.The adjusted earnings per share (EPS) estimate for 2017 has been cut by 3% but the forecast for 2018 EPS has been raised by 3% for 2018.Zoopla's share price rose 0.28% to 377.07p at 1030 GMT on Thursday.