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Moneysupermarket (LON:MONY) disappointed the market on Friday despite reporting that sales and revenues will be slightly ahead of expectations.
Investors were worried by its insurance business, which “contracted slightly more than expected” in the fourth quarter, by around 10%, meaning, for the year to December, it is only 2% ahead of the previous year.
“At a time when we were finishing the migration to our new technology platform, we experienced stronger competitor marketing activity,” the company said.
Shares dropped around 11%, or 41p, in early deals to 310p.
Peel Hunt said: “The fall in fourth quarter insurance is the dominant figure in an otherwise positive trading update.”
It reduced its ‘add’ recommendation to ‘hold’, saying that it will “wait to see how the company responds to the rise in insurance competition when it reports in March.”
Still, for the year, the firm said revenues for the year are expected to have grown by 14% to £282mln, with adjusted operating profit up by 13% compared to the previous year at around £99mln.
This was slightly ahead of consensus market expectations of around £98.3mln.
Its home services division grew particularly strongly, up 68% on the previous year, while its money arm grew 23%.
Peter Plumb, chief executive, said: “2015 has been another strong year for the Group with all brands delivering healthy growth.”