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Investing.com - Deutsche Bank (ETR:DBKGn) downgraded Moonpig Group PLC (LON:MOON) from Buy to Hold and lowered its price target to GBP2.35 from GBP2.90, citing concerns about the company’s ability to deliver double-digit revenue growth.
The downgrade comes despite Moonpig’s FY25 earnings exceeding expectations by approximately 7%, with the company achieving a 27.6% EBITDA margin that surpassed its 25-27% target range.
Deutsche Bank noted that while Moonpig’s core brand posted 7.5% revenue growth in the second half of the fiscal year, this performance has raised questions about whether the company can sustain the double-digit topline growth needed to drive its targeted mid-teens EPS growth.
The bank acknowledged that Moonpig’s performance was "not bad relative to the sector," but suggested investors have been overly focused on revenue growth at the expense of recognizing the company’s strong margins and cash generation capabilities.
The analyst’s comments indicate that Moonpig’s October Capital Markets Day had established a "confident KPI formula" with the core Moonpig brand expected to be the "proof point" this year, but the recent growth figures have prompted a reassessment of the company’s mid-term equity story.
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