(Sharecast News) – RBC Capital Markets lifted its price target on Moneysupermarket on Monday to 300p from 290p on higher long-term margin forecasts, as it argued the shares are attractive after a de-rating.
The bank, which rates the stock at ‘outperform’, noted that the shares have de-rated by around 15% over the last month.
“We believe this reflects the market’s lower confidence in its earnings beyond this year, given uncertainties around energy switching,” it said.
“Our bottom-up forecasts suggest the strength of its high-margin insurance business can offset a lack of meaningful energy switching revenue next year. Additionally, we remain confident that MONY is well-positioned for when energy switching returns, presenting upside to our FY24 forecasts.
“Therefore, we view this as an attractive entry point for MONY, trading on a CY24 estimated free cash flow yield of 7%.”
RBC said the de-rating was unjustified, “in light of the company’s favourable positioning in the current environment, the strength of its motor and home insurance businesses and its ability to drive margin improvement”.