Panmure Liberum still likes Moonpig Group PLC (LSE:MOON) as a business, keeping its 'buy' rating, but has slashed its target price from 390p to 225p
. The analysts see a strong company with a business model that keeps customers coming back, generates solid cash flow and doesn’t require heavy investment to grow. However, they’re not convinced Moonpig can hit its ambitious targets.
The main concern is growth. While Moonpig’s management has set clear goals, Panmure Liberum thinks they’re optimistic.
The company isn’t attracting enough new customers, and the market conditions don’t look great for boosting gift sales alongside greeting cards. If expectations are too high, there’s a risk of disappointment.
That said, Moonpig’s fundamentals remain solid. It has impressive customer loyalty, and good cash flow, and is returning about 10% of its market cap each year through dividends and share buybacks. The question is whether there’s much upside from here.
In afternoon trading, the stock was off 1.6% at 201.5p.