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Moonpig Group PLC MOON View profile

Moonpig shares slip on continued profit-taking as trading holds steady

Neatly organized greeting cards — Credit: Declan Sun by Unsplash
Declan Sun by Unsplash

Shares in Moonpig fell 6% to 245.4p on Wednesday, extending a bout of profit-taking that has set in since the online cards and gifts retailer hit a year high in late August.

Even after the drop, the stock is up more than a fifth so far this year.

The fall came despite a broadly reassuring update covering the first four and a half months of the financial year, in which the company said trading was in line with expectations and left its full-year guidance unchanged.

The Moonpig brand remains the engine of growth, expanding around 8% as the retailer added new customers and coaxed higher spending through upselling and add-ons such as gifts bolted on to a card order.

Order frequency, though, was down, extending a trend from the second half of last year.

Greetz, the group's Dutch business, is growing only slowly, while its Experiences arm, which sells days out and activities, was a touch softer.

Management now expects Experiences to return to year-on-year growth in the second half, which Panmure Liberum flagged as an encouraging detail running ahead of market hopes.

The broker, which rates the shares 'buy' with a 310p target, called Moonpig one of the highest-quality names it covers and a long-term compounder capable of growing earnings per share by around 15% a year out to the end of the decade.

Panmure argued the valuation still fails to capture the durability of Moonpig's cash generation, pointing to a free cash flow yield of about 8.6% and a strategy of returning surplus cash through buybacks.

Peel Hunt struck a similar note, keeping a 'buy' rating and 300p target while describing the statement as a quiet, "not much to see" affair with the shares looking decent value.

For all the share-price wobble, then, the message from analysts was that little had changed in the investment case.

Moonpig reiterated guidance for mid-to-high single-digit revenue growth this year, an adjusted margin towards the top of its 25% to 27% range, and double-digit growth in adjusted earnings.