Broker backs Gocompare to win money website war
BROKER Berenberg played UK price comparison sites at their own game yesterday, revealing which stocks in the sector are providing the best value for investors.
The broker identified relative newcomer Gocompare as the best bet for punters, awarding the stock a ‘buy’ rating and a price target of 130p, sending its shares up 1pc, or 1p, to 99.75p.
Meanwhile, Moneysupermarket, the UK’s leading price comparison website, languished after it was awarded a less rosy ‘hold’ rating, with shares down 0.1pc, or 0.3p, to 318.4p.
Berenberg said it expects price comparison websites to continue to thrive as the insurance market grows on the back of a rise in premiums. However, it said power is shifting away from Moneysupermarket towards fresh-faced peers such as Zoopla owner ZPG and Gocompare.
‘Moneysupermarket has spent around £60m on technology development – vastly more than peers – but from our perspective has failed to deliver meaningful financial benefits for this investment,’ said Berenberg.
With Gocompare generating 94pc of its revenues from insurance, Berenberg said the firm is well positioned to deliver as much as twice the earnings per share growth of Moneysupermarket.
Berenberg said Gocompare had a management team with experience of building online platforms, driving a culture of innovation and technological development.
The FTSE 100 spent another day in the red as sterling rose to a oneyear high, continuing to benefit from a surprise jump in inflation to 2.9pc in August. It fell 0.28pc, or 20.99 points, to 7379.70. Baileys and Smirnoff owner Diageo sank after Berenberg downgraded it to ‘hold’ from ‘buy’, saying a drop in young Americans drinking alcohol is likely to hit the firm’s prospects.
It said the firm, which recently bought a tequila company cofounded by George Clooney for around £790m, must find new ways to connect with its audiences.
Last year, Diageo had to drop its target of growing in line with the US spirits market due to changing generational drink preferences, which hit key brands such as Captain Morgan and Ciroc vodka.
It scraped together annual sales growth of 3.4pc, but this still underperformed wider sales growth of 4pc. Shares fell 0.8pc, or 20p, to 2560.5p.
Pensions specialist Just Group said the benefits of the merger between Just Retirement Group and Partnership Assurance began to show in the first half of 2017.
After announcing earlier this year that it had delivered target cost savings from the merger of £40m six months ahead of schedule, Just Group announced a likefor-like jump in profits of 39pc.
The firm also saw new business profit more than double, with retirement income sales growing by 16pc. Despite a ‘buy’ rating by Panmure Gordon, shares fell 0.1pc, or 0.1p, to 160.8p.
Low- cost home improvement firm Epwin Group reported a 28pc drop in profit before tax over the first half of 2017, taking in £7.5m.
The porch and window frame maker, which issued a full-year profit warning in August, also saw its earnings per share drop 28.3pc to 2.23p, while operating profit remained flat at £1.1m. Shares fell 4.5pc, or 3.25p, to 69.5p. Shares in medicine producer
Quantum Pharma rallied 18.3pc, or 12.12p, to 78.5p after rival Clinigen agreed to buy it for £150.3m. Ten-pin bowling alley operator
Ten Entertainment struck a chord with investors yesterday, revealing year-on-year profit growth of 24pc in the first half of 2017 to £6m. It said it was boosted by wet weather and a late Easter. Shares rose 2.1pc, or 3.5p, to 170.5p.