Liberum cuts Moneysupermarket to 'hold' on insurance clampdown

Tougher regulation of home and motor insurance and stiffer competition will drag on Moneysupermarket's earnings, Liberum said as it cut the company's rating to 'hold'.

The Financial Conduct Authority has banned insurers' practice of charging existing customers a "loyalty penalty" and this will mean less switching, Liberum said. Moneysupermarket's rival Go Compare also has a bigger potential customer base after it was bought by Future, the broker added.

Continuing restrictions on travel, tighter credit and higher wholesale energy prices will also limit growth for core switching revenue, Liberum said. Three days before the company's annual results, analyst Harry Read cut his rating on Moneysupermarket shares from 'buy' and reduced his price target to 290p from 335p.

"We believe our 20x FY21 price-to-earnings valuation and 290p target price indicates fair risk reward payoff given the medium term difficulties for MONY," Read said in a note to clients.