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Berenberg reiterates 'sell' rating on Moneysupermarket

By Iain Gilbert

Date: Friday 21 Feb 2020

Berenberg reiterates 'sell' rating on Moneysupermarket

(Sharecast News) - Analysts at Berenberg upped their target on shares of Moneysupermarket from 285.0p to 310.0p on Friday but reiterated their 'sell' rating, stating that the previous session's share price gains were overdone.

Moneysupermarket delivered in-line full-year results and maintained its guidance for 2020, sending the shares up 18% on the day before.

However, Berenberg saw this reaction as being "unjustified" given slowing core growth and deteriorating margins, uncertainty over the chief executive's departure and the fact that 2020 guidance was predicated on improving market conditions and new product initiatives - which will both be heavily weighted to the second half.

The German bank also pointed out that trends remained "weak", with core sales growth declining for a third consecutive quarter to only 3% in the fourth quarter. Insurance and money verticals were also softer but were slightly offset by some strong growth in Moneysupermarket's energy division.

The analysts noted that while the energy unit traded "in line with the prior year" in the first six weeks of 2020, tough comparatives only begin in the latter stages of the quarter, meaning it stills expect energy to decline year-on-year in the period.

In addition, Berenberg said it was unlikely that headwinds to gross margins would disappear, leading it to forecast just 2.0-4.5% EBITDA growth for 2020 and 2021, respectively, well and truly shy of consensus estimates of 7-10%. Berenberg left its underlying earnings forecasts unchanged at 5-8% below consensus.


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