Analysts at Berenberg upped their rating on price comparison website business Moneysupermarket.com from ‘hold’ to ‘buy’ on Wednesday, stating it believes the shares were being valued on “trough earnings at trough multiples”.
Berenberg said macro headwinds for the firm will not last forever, acknowledging that Moneysupermarket.com’s third-quarter earnings were “expectedly weak” as travel was still depressed by the overhang of Covid-19.
“While these trends result in a material re-basing of our FY 2021-22 revenue and EBITDA estimates, these macro headwinds will not last forever, and we are approaching the trough in our view,” said the analysts.
Berenberg said it expects organic growth to return in 2022 which, coupled with the acquisition of Quidco and improving margin trends, should drive “a double-digit earnings compound annual growth rate” in 2021-23.
The German bank, which lowered its target price on the stock from 310.0p to 275.0p, also reckons Moneysupermarket.com could become a takeout target.
Analysts at Canaccord Genuity raised their target price on media outfit System1 Group from 380.0p to 430.0p on Wednesday after dat products made up almost half of the firm’s second-quarter revenues.
Canaccord, which also reiterated its ‘buy’ rating on the stock, noted that System1 group revenues grew 22% to £12.3m in the first half against Covid-19 impacted comparatives, in line with the guidance provided at the time of the company’s annual general meeting trading update.
While it acknowledged that revenues of £5.8m were “sequentially softer” than the £6.5m seen in the first quarter, Canaccord pointed out that automated data products contributed 45% of the mix, compared to just 28% in the first three months of the year.
“We estimate this represents quarter-on-quarter growth of 43% in data product revenues (from £1.8m). Our estimates suggest that data will contribute 50% of H2 revenues (up from 36% in H1) as SYS1 customers increasingly replace ad hoc consultancy with faster and cheaper automated products,” said Canaccord.