Moonpig sparks upgrades

Little more than a fortnight after Moonpig (LON: MNPG) floated it has sparked a forecast upgrade with its trading statement. More customers are buying gifts as well as online cards.

Third quarter trading was strong and the growth rate in the period was inline with the first half figure. A deceleration of the growth rate had been anticipated. Valentine’s Day week trading was the best ever week for the company.

There have been additional costs due to higher marketing spending and staffing levels.

Revenues are expected to reach £350m in the year to April 2021, which is double the previous year. EBITDA estimates have been raised from £77m to around £90m, suggesting potential underlying pre-tax profit of at least £65m.

Future

The main uncertainty is whether the better trading is mainly down to the lockdown conditions. Revenues are still expected to decline by around one-fifth. Outside of lockdown fewer gifts are likely to be bought with cards unless it becomes a new buying habit for Moonpig customers.

On the plus side, if Moonpig can retain the new customers that it has recruited.

The share price has risen to 470p, compared with the placing price of 350p. That is more than 50 times the prospective earnings for 2021-22. The outcome could be better than existing expectations, but the multiple will still be high.