Price comparison site Moneysupermarket.com (MONY) slumps 8.6% to 279.7p after revealing that it is providing information to energy market regulator Ofgem in its probe into breaches of competition law.
Analysis by Investec suggests this may have been an over-reaction. The broker puts the maximum per share risk at 9p – substantially less than the 26.4p the shares have shed this morning.
The regulator is seeking to establish whether two or more companies which provide a supporting service to the energy industry breached the rules.
The Chester-based firm is passing on the information to help Ofgem establish whether to include it as a subject of the investigation.
Online property portal Zoopla (ZPLA) is also under pressure – dropping 7.3% to 254.5p – as its recently-acquired uSwitch business (one of Moneysupermarket’s rivals) is also potentially under scrutiny.
Investec notes that the maximum fine Ofgem can impose is 10% of historic sales. ‘On this basis, Moneysupermarket FY14 sales (£248 million) imply £24.8 million maximum risk on a share count of 545 million, so 4.5p/share.
'Even doubling this for contingencies implies 9p/share, so not disastrous in our view absent further escalations and/or allegations/required change in business practices impacting sales/margin.’
Until there is further clarity the market will make its own mind up and negative sentiment may weigh on the share price.