- Canaccord analyst Karl Burns has highlighted Moonpig's strong market share
- Believer in the capital light model and flagged strong customer retention
- Shares well below 350p at which they floated in 2021
Canaccord Genuity analyst Karl Burns has noted Moonpig (MOON) capital light, cash generative and trading on an undemanding valuation.
‘In research on the company following its recent full year results to the 30 April 2023, Burns noted the company has ‘high visibility’, thanks to its retention of customers, and a 70% share of the market.
SHARE PRICE STRUGGLES
Year-to-date Moonpig’s shares are up 29% and are currently at the 146p mark, however their shares are still trading 60% below the 350p a share they floated at in February 2021. They hit a high of 430p on the first day of trading – a level not even approached since.
However, Canaccord believes ‘momentum is starting to shift’ after its turbulent start: ‘While the consumer environment is challenging, Moonpig operates in a low-ticket item category, allowing it to be far more resilient than other areas of e-Commerce.’
TECHNOLOGY ADVANCES
In September 2022, Moonpig moved to one technology platform which is a good thing according to Canaccord’s Burns as it freed up internal developers to focus on new product development which ‘could yield significant upside to future growth’.
‘Moonpig is attempting to increase share of wallet from existing and new customers with the larger gifting range and additional product features, combined with better use of data (Moonpig now has 250 data scientists).’
CHANGES TO ESTIMATES
Canaccord however has reduced its full year 2024-5 pre-tax profit estimates by 6-7% due to ‘higher depreciation charges for the new Tamworth and Almere distribution centres’, but it expects Moonpig to return to double-digit growth in full year 2025.
