Comparison site Moneysupermarket.com (MONY) falls 9.7% to 324.6p as a strong year-to-date performance heading into today’s mild profit warning proves a toxic mix.
We flagged concerns about valuation, competition and the pressure on margins from marketing spend here. Alongside first half results the company says a ‘lack of blockbuster energy deals’ means less switching. Moneysupermarket is reliant on people changing their insurance, energy or credit card provider to generate revenue.
LOSING ENERGY
Thanks to this trend in the energy market the company expects full-year adjusted operating profit at the lower end of consensus estimates. The operating margin for the first six months of the year was down marginally on 2016 from 29.5% to 29.3%.
Referring to the slightly weaker-than-expected performance Liberum analyst Ian Whittaker says: ‘The culprit is the lower number of collective switches in Energy, and the company's comments suggest this will not be as beneficial in the future as in the past.’
‘We think this is a company that is very well run and we like the management team but we do have issues over the barriers to entry in the price comparison industry and the relative opacity of numbers.’
