Analysts at the mid-level Canadian bank reckon the wine retailer’s online Naked Wines business, which sees members pay £20 a month in return for discounted plonk made by craft winemakers, is “deeply-undervalued”.
“Our analysis suggests that Naked Wines is valued by the market at a 55% discount to internet peers on EV/EBITDA and a 50% discount on a growth adjusted basis,” read the note to clients.
“The valuation discount is even greater on EV/sales at 70%, which we view as excessive.”
RBC adds that Naked’s move into the US could deliver “significant value creation” over the coming years, estimating that the market across the pond is worth £17bn.
“Our proprietary US consumer survey suggests superior growth in spending on wine online and for Naked Wines' target customer segment,” said the bank.
“We expect the direct-to-consumer channel in which Naked operates to continue to outpace the growth of the overall market owing to its relative price advantage and as e-commerce further develops.”
Online wine clubs are becoming increasingly popular, but RBC’s comparisons suggest Naked Wines has “greater flexibility in its service options” and a better recommendation system.
Analysts kicked off their coverage of Majestic with an ‘outperform rating” and price target of 550p.
Shares rose 1.3% to 407p in mid-morning trade, valuing the company at almost £300mln.