Broker tips: Compass, Moonpig
By Iain Gilbert
Date: Monday 16 Dec 2024
(Sharecast News) - Analysts at Berenberg raised their target price on food service business Compass Group from 2,460.0p to 2,900.0p on Monday, stating the company was in possession of "all the ingredients for sustained growth".
Berenberg, which also reiterated its 'buy' rating on the stock, said Compass had delivered "a good set of FY24 results" that were "a touch ahead of consensus" and FY25 guidance that was broadly in line with market expectations.
However, Berenberg also noted that the absence of a buyback and some further country exits had moved its earnings per share estimates lower.
"That being said, with its conservative balance sheet and the potential for earnings surprises, we remain positive about the outlook for Compass," said the German bank.
"Compass shares have re-rated in 2025, now sitting firmly ahead of historical levels. We accept that there is likely less scope for multiple expansion from current levels; however, given the sustained growth outlook, the conservative balance sheet and the potential for upside earnings surprises if net new and volume growth surpass expectations, we remain buy-rated."
Last week's dramatic share-price plunge at cards and gifts retailer Moonpig represents a good buying opportunity for investors, according to Canaccord Genuity, which reiterated its positive stance on the stock.
Moonpig said last Tuesday that it swung to a pre-tax loss of £33.3m in the first half, from a profit of £18.9m the year before, and pointed to "challenging" trading in its Experiences segment.
However, Canaccord said results were still "strong" and kept a 'buy' rating on the shares on Monday, raising its target price from 254.0p to 267.0p.
"Moonpig delivered a strong set of interim results, upgrading medium-term EBITDA margins by 100bps, yet this got overshadowed by tough trading on the gifting side and by a non-cash impairment of the Experiences business, while a high share price into the results resulted in a sell-off in the stock," said analysts.
"We believe the sell-off in the shares provides a buying opportunity with the investments made into the platform beginning to pay off with Moonpig returning to active customer growth and seeing rising order frequency, while new revenue initiatives are helping support the margin."
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