GoCompare's valuation 'too attractive' for Berenberg to ignore

Analysts at Berenberg said financial services comparison website GoCompare's valuation was "too attractive to ignore" on Monday.

Berenberg, which reiterated both its 'buy' rating and its 150p target price on GoCompare, noted the Welsh firm's share price had fallen roughly 40% since July, despite the group remaining steadfast on full-year guidance.

"This represents its lowest one-year forward valuation since the group’s IPO," analysts wrote, also noting that GoCompare was also trading at a 50% discount to rival price comparison outfit Moneysupermarket.

The broker said the threat posed by Amazon, which was rumoured to be eyeing an entrance into the UK insurance price comparison website market back in August, had placed material pressure on GoCompare's shares since, despite there being no suggestion these launch plans were imminent.

However, Google lunched a UK PCW in 2016, which quickly failed due to low traction from both consumers and operators.

"With no certainty of this risk materialising or affecting numbers in the forecast period, we feel the resultant pressure on GOCO’s shares is unwarranted," said Berenberg.

Despite GoCompare delivering flat year-on-year revenues, Berenberg remains "confident" the firm can reach its second-half guidance of £79m in revenue and £38m of marketing profit on the back of improved energy revenues from Energylinx, steady margins in its marketing department and an overall solid performance from its MyVoucherCodes unit.