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Purplebricks stock price soars on virtual viewings and video home appraisals amid COVID-19

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·Contributor
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Purplebricks shares reached a one-week high at around 1.30pm in London, up around 17.7%. Photo: Mike Kemp/In Pictures via Getty
Purplebricks shares reached a one-week high at around 1.30pm in London, up around 17.7%. Photo: Mike Kemp/In Pictures via Getty

Online estate agency Purplebricks’ (PURP.L) shares have been skyrocketing as the company delivered a strong first-half performance and increased its guidance for investors in its latest earnings report. Offering customers 3D virtual tours of properties and video appraisals of homes amid the COVID-19 pandemic were key to the gains, said the company in a statement on Tuesday.

Shares reached a one-week high at around 1.30pm in London, up around 17.7%.

Purplebricks' shares are up over 17% on Tuesday as it beat analysts' estimates.
Purplebricks' shares are up over 17% on Tuesday as it beat analysts' estimates.

Strong underlying financials and keeping operating costs in check allowed Purplebricks to deliver growth in its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), up 110%.

Despite two successive COVID-19 lockdowns in the UK and regional restrictions being put in place, the desire to purchase homes remained strong during this period, with the company saying that instructions increased by 8% compared to the same period last year.

"I am proud of the way we responded to the COVID-19 crisis, which demonstrated our ability to deliver our improved virtual capabilities to our customers throughout the period,” said chief executive officer Vic Darvey. “We made sure we looked after our people when things got tough, we adapted quickly to new ways of working, and we enhanced our technology to make it easier and safer for customers to do business with us.”

READ MORE: Rising COVID-19 cases cast a shadow over European markets

Purplebricks also recorded a pre-tax profit of £4.3m ($5.85m) for the six months to October, compared with a £2.3m loss a year earlier.

“The disposal of Canadian business gives us the financial strength to focus on our UK growth opportunity,” the company said in a statement on Tuesday, referring to the sale of its Canadian business for CAD$60.5m to Desjardins Group as Purplebricks focused its attention on its core UK market.

Yet, not all analysts were impressed by the results.

“The shares have underperformed this year, they are still over 40% down year to date which when you consider that it is very much a platform for selling houses online, and is probably one of the market leaders, the performance is a little disappointing,” said Michael Hewson, chief market analyst at CMC Markets. “In the current environment the business, as well as the share price, ought to be doing better, however in such a competitive market place, margins are extremely thin, particularly with the fixed rate model.”

Despite a strong result, the company said it remains “cautious on the economic outlook,” adding that “we are confident in the levers which are under our control, and we currently expect adjusted EBITDA for the full year to exceed the upper end of the current range of consensus.”

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