Moonpig Group PLC (LSE:MOON) has had its price target raised by stockbroker Panmure Liberum, which repeated a ‘Buy’ rating ahead of its upcoming interim results.
The broker, in a note, increased its target price from 260p to 300p (current price: 215.5p), arguing that the shares are undervalued given the group’s resilient free cash flow profile.
Moonpig is expected to generate over £65 million in free cash flow annually, Panmure analysts highlight.
Moreover, Panmure sees potential for value catalysts under incoming CEO Catherine Faiers, who was announced in late October and will, in 'due course' switch over from her role as Auto Trader COO via a 'smooth handover'
Catalysts described by Panmure include possible increased share buybacks, further international expansion in Australia and the US, or targeted investment in core markets. The broker also positively highlighted Moonpig’s customer retention, high margins, and strong online penetration as structural strengths.
Moonpig in September, told investors that trading in the first few months of its financial year has been line with expectations, with the Moonpig brand delivering around 10% year-on-year revenue growth.
The growth in orders was supported by an expanding active customer base, with subscription services Moonpig Plus and Greetz Plus exceeding a million members. Average order values increased, which was attributed to guaranteed delivery and gift attachment trends.
The group expects adjusted EBITDA to grow at a mid-single digit rate for the year, with adjusted earnings per share growth of between 8% and 12%. And, it plans up to £60 million in share buybacks during the year.