Though it went through a bit of a sticky patch last autumn, 2017 was a solid year for Moneysupermarket. From a starting price of £2.90, the company eventually closed out December at £3.56, marking an impressive near-23% surge across the 12 months.
Initially the stock carried this momentum into 2018, quickly hitting a 2 year peak of £3.70. However those highs didn’t last long, with a sharp decline over January and most of February, and a horrendous reaction to its full year results at the end of the latter month, leaving Moneysupermarket at a 20 month low of £2.55 by early March.
It has recovered somewhat since then, though it is still way off where it was at the start of the year, with Moneysupermarket.com Group PLC now sitting at a current trading price of £2.82.
So what was the main issue with February’s annual report, which sparked a 14% single session decline? Well, group revenue was up just 4% to £329.7 million, impacted by a 22% plunge in revenue in its Home Services division due to a ‘significantly’ lower number of customers taking up its gas and electric collective switch offer. Adjusted EBITDA also undershot expectations with a 5% rise to £127.2 million.
Yet it was the firm’s forecasts for its next financial year that really drove away investors. Moneysupermarket stated that ‘EBITDA for 2018 is expected to be broadly flat before growth resumes from 2019 onwards’, as it incurs the transitional costs of CEO Mark Lewis’ revamp. That strategic shift involves optimising customer journeys, allowing customers to personalise their experience of the site, and expanding its mortgage price comparison offerings.
The prospect of stagnant earnings didn’t prevent the company from having a mini-splurge in March, announcing it was buying Decision Tech for £40 million. The purchase is designed to help Moneysupermarket achieve its previously stated aim of taking price comparison ‘to the sites people are already visiting regularly on their mobile phones’.
In terms of Wednesday’s update, investors going to want to hear more on the Decision Tech deal, as well as an improvement in the Home Services business.
Moneysupermarket.Com Group Plc (LON:MONY) has a consensus rating of ‘Hold’ alongside an average target price of £3.33.
Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved.