Moonpig sell-off presents a buying opportunity, says Canaccord Genuity

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.

The news led to a 15% drop in the stock on the day, and a 17% drop for the week, settling at 222.5p by Friday's close.

However, Canaccord said results were still "strong" and kept a 'buy' rating on the shares on Monday, raising its target price from 254p to 267p.

"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 analyst Karl Burns.

"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."

Prior to the results, the stock has surged around 75% over the year to date, but Burns still thinks last week's sell-off was "unwarranted". The shares trade at 17 times forward earnings, which is "too low for a high-quality, strong visibility and high margin profit stream with an accelerating growth profile".

Shares were up 1.5% at 226p by 1124 GMT.