Moneysupermarket tumbles on Barclays downgrade

Shares in Moneysupermarket.com tumbled on Monday after Barclays downgraded the price comparison website to ‘equalweight’ from ‘overweight’ and slashed the price target to 260p from 390p.

The bank said it had been positive on the stock since initiating on it last year, but that uncertainty has been building in the last nine months, mostly due to elevated competition.

“The Brexit vote and a likely recession in the UK is now a new uncertainty, and one too many for us,” it said.

“We do see areas of cyclicality in the Moneysupermarket business model, notably in Travel Supermarket, travel insurance in Insurance, and credit cards in Money. At this point, it is hard to model the precise impact of the downturn on numbers – our first attempt is to put through a 9% EPS downgrade in 2017E.”

The bank added that it sees clear risks to consensus for next year.

It wasn’t all doom and gloom, however, with positives in the form of a likely special dividend at end-2016 and benefits from the capex programme still to filter through, Barclays said.

“But we no longer have confidence in positive forecast momentum, and on 17.7x 12 month forward P/E, the shares are only slightly below their historical average relative to the FTSE250.”

Barclays said that while the valuation already captures the risks, it struggles to argue for a re-rating from here, hence the downgrade.

At 0948 BST, shares in Moneysupermarket were down 9.4% to 249.30p.