Numis upgrades Moonpig forecasts

Numis has upped its earnings forecasts for Moonpig, arguing that the online card retailer is well-placed to benefit from a shift in shopping habits.

The broker, which has a 500.0p target price on the stock, said it remained “enthused” about Moonpig, which debuted on the London market in February.

It conceded that the firm had benefited from a surge in online shopping caused by the pandemic. But it argued: “The level of ‘give back’ captured in forecasts and IPO guidance looks conservative.

“Increased marketing spend alone can bridge the gap to consensus expectations, which fails to capture any tailwinds from changes in customer habit and the benefits of an evolving proposition.

“We note further extension in card, and management delivering on promised improvements to gifting; web traffic data and peer read-across add further reasons for encouraged.”

Numis therefore now expects full-year revenues, earnings before interest, tax, depreciation and amortisation, and earnings per share to be 7%, 10% and 14% ahead of consensus respectively.

It reduced its rating on the stock, however, to ‘add’ from ‘buy’. “Valuation is not cheap, but this is a high-quality, high-margin and well-underpinned earnings agenda,” Numis said.

“The shares have rebased around 10% from recent highs, and this looks to be building to a good entry point. The prospect of further upgrades underpins enthusiasm.

“However, the proximity of the shares to [the] target price does see us moderate our rating.”

As at 1430 BST, shares in Moonpig – which debuted at 350p – were largely flat at 438.4p.

Moonpig is set to publish results for the year to 30 April next month.