Moonpig Group PLC (LSE:MOON) shares nudged up 3% to 223p on Thursday, bucking wider market declines, after the online greetings card group announced a fresh £60 million share buyback and strong trading momentum.
For the year to April 30, revenue is expected to land between £350 million and £353 million, with profit margins at the top end of guidance.
Adjusted earnings per share are set to grow by double digits, helped by more customers, increased order frequency, and larger basket sizes.
A £25 million buyback is due to be completed soon, with the new £60 million plan kicking off next year. CEO Nickyl Raithatha said the group is benefiting from a long-term shift to online and expects mid-teens earnings growth going forward.
"Overall, we view it as a good statement that should be well received by the market, albeit on a difficult day," said Peel Hunt, repeating its 'buy' advice and 300p price target.
Shore Capital thinks Moonpig is priced at the higher end of what’s typical for retail businesses - but says that’s fair, given how profitable and cash-generative the company is.
In simple terms, investors are willing to pay a bit more for Moonpig’s shares because the business has strong profit margins and brings in solid, steady cash.
The next big test will be how well it performs across all parts of the group, not just the main Moonpig website, but also Greetz in the Netherlands and the gift experience brand Buyagift.
If all three perform well, Shore believes Moonpig could return to growing its sales by high single digits each year (say, 7–9%), while continuing to deliver the strong profits it’s known for.