Moonpig Group PLC (LON:MOON) got a trio of personalised notes on Monday as a trio of City investment banks welcomed the new stock market arrival with open arms.
Citigroup, one of the investment banks that coordinated the initial public offer, kicked off with a 'buy' recommendation and a share price target of 550p.
JPMorgan Cazenove, the company’s broker and the other bank that coordinated the IPO, started at 'overweight' with a target price of 495p.
In between was Jefferies, another one of the banks on the IPO, which began with target of 510p alongside its 'buy' rating.
Moonpig is the number one market player in the high-growth online greeting card and card-attached gifting market in the UK and the Netherlands, the trio all noted, with the brand having a high level of consumer awareness and a market share more than three times its nearest competitor.
It has 12mln active customers, notched up 160mln transactions in October and generates around 78% of revenue from existing customers.
Citi analyst Natasha Brilliant based her recommendation partly on this “valuable pool of customer data that helps power its recommendation engine” and with the target price based on a discounted cash flow analysis.
JPM’s lower target was also based on DCF analysis, based on a high product gross margin around 77% and forecasts that revenues and EBITDA will broadly double in 2021.
“The group’s scale, data pool and loyal customer base create a first-mover advantage, which acts as a barrier to entry,” said analyst Georgina Johanan.
“This, together with structural tailwinds, provides a strong foundation for double-digit sales growth, which has been further boosted by COVID-19.”
Broker Peel Hunt, which was not part of the IPO team, last month upped its initial target price of 450p to 500p after Moonpig upgraded its full year guidance on the back of a strong Valentine’s Day and expectations of a similarly bumper Mothers’ Day.
Analyst Jonathan Pritchard said he believe management is “unduly cautious” that sales will fall very sharply next year: “the new customers are no less likely to be sticky than their forebears, and [customer relationship management] should ensure they spend well”.