LONDON (ShareCast) - (Sharecast News) - Analysts at Canaccord Genuity lowered their target price on greetings cards business Moonpig from 232.0p to 205.0p on Tuesday but said the group had "proven its resilience" despite recent macro concerns.
Canaccord Genuity noted that Moonpig's recent interim results last week came with a downgrade to revenue due to macro concerns and some impact from Royal Mail postal strikes - leading to an "unjustified" selloff in the shares.

The Canadian bank stated that despite the downgrade to revenue, underlying earnings guidance has been maintained, highlighting the "resilience" of the business model, despite the aforementioned macro challenges.

Canaccord also highlighted that sales retention had increased to 90%, which should theoretically provide valuation support, and additionally pointed out that the Moonpig business model was "asset-light".

"Therefore, despite short-term headwinds, we believe the share price drop offer[s] investors a chance to pick up a quality growth compounder for a very low valuation," said Canaccord.

"While the short-term macro environment is uncertain, we believe this is more than priced into the current valuation. Using a reverse DCF, the current share price is implying no future EBITDA growth despite the significant structural growth tailwinds from channel shift and Moonpig continually taking market share."





Reporting by Iain Gilbert at Sharecast.com

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