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Is there plenty of upside for investors in Moonpig (MOON)?
Analysts at Berenberg certainly think so – it has reiterated its ‘buy’ rating setting a lofty 390p target price – more than double its current price. Shares in the online card and gifts retailer are currently valued at around 184p.
Moonpig share price chart
According to Berenberg, a positive trading update from Moonpig was a key factor in identifying the company as having an ‘attractive medium-term outlook’.
There has certainly been no short-term boost to shares even allowing for Berenberg’s bullish stance and Moonpig reiterating its full-year 2023 guidance at its AGM on Tuesday. The shares were down by 8% on the day and have only recovered slightly since.
The current 184p level is a long way from the 390p target price but even further away from its 487p high struck in June 2021.
What is your sentiment on MOON?
Resilient business
Chief executive Nickyl Raithatha told shareholders this week: “Moonpig Group's trading remains resilient and we are confident that full year revenue will be approximately double the level achieved three years ago.”
He added: “Against the current macroeconomic backdrop, our continued performance reflects the strength of our data-led business model and the long-term opportunities in our markets.”
“Adjusted underlying earnings (EBITDA) will also return to seasonality and be weighted towards the second half of the financial year”.
Michael Benedict at Berenberg pointed to Moonpig having a dominant share in both its core markets, that it is highly profitable, with an attractive working capital profile and relatively modest capex requirements. “It is very cash-generative,” he said.
Berenberg is not alone in seeing value in the company. Citigroup today reiterated its buy recommendation for Moonpig and Marketbeat has a consensus ‘buy’ rating for the company with a consensus price target of 406.67p - even higher than the price set by Berenberg.
Simply Wall St takes a similar position, it rates Moonpig as being below fair value at 184p – seeing fair value as 355p.
Shares in the gifting and greetings platform floated at 350p in February 2021. They soared to 430p on day one, and rose again in June but have since fallen quite significantly.
Moonpig clearly benefited during Covid when high street gift retailers were forced to close their doors. But the company has not been slow to expand its business and offerings to customers since lockdowns were lifted.
In July this year it confirmed the purchase of Smartbox, which owned the Buyagift and Red Letter Days experience gifting platforms.
The group now has four brands - Moonpig, Greetz, Red Letter Days and Buyagift.
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