Shares in Moonpig (MOON) flew 23% higher to 429.6p in debut dealings on the Main Market on Tuesday, with the online greetings cards retailer having priced its IPO at a top of the range 350p for a starting market tag of around £1.2 billion.
Trading as Moonpig in the UK and under the Greetz brand in Holland, the online retailer has proved a lockdown winner and analysts are excited by the scope to sell more gifts alongside its personalised cards.
NEW TEAM, TECH CREDENTIALS
A new management team, led by chief executive Nickyl Raithatha, finance director Andy MacKinnon and former WH Smith (SMWH) boss Kate Swann, is positioning Moonpig as a technology play as it uses customer data and predictive technology to remind people of key events and suggest add-on gifts.
Raithatha is ‘confident that Moonpig will continue to make gifting even more effortless for millions of people across the UK and internationally’.
He insists that as ‘the leaders of a market undergoing an accelerating shift to online, now is the perfect time for us to bring the company to the public market, and we are excited about Moonpig’s prospects for the future.’
For the six months to October 2020, Moonpig’s revenue was £155.9 million, up 135% year-on-year, with £120.8 million contributed by the Moonpig segment and £35.1 million by the Greetz segment.
WHY PEEL HUNT IS BULLISH
Broker Peel Hunt is bullish about Moonpig’s prospects, pointing out that while the float was priced at the top of the range, it ‘still undervalues this high-growth market leader’ with around 60% UK market share.
‘There is potential to increase customer numbers, and to lift AOV (average order value) - especially by attaching gifts,’ insists Peel Hunt, adding that ‘the data science and the technology behind the scenes is impressive’.
The broker says Moonpig’s EBITDA margins are ‘high, and sustainable’, while guidance is ‘extremely conservative’ and forecasts fast-growing Moonpig will generate £77 million of EBITDA for the year to April 2021 and ‘could well be pushing £100 million of EBITDA by full year 2023’.
