Numis initiates coverage of Moneysupermarket with 'add' rating

Numis on Tuesday initiated its coverage of Moneysupermarket Group with an ‘add’ rating and target price of 325p.

“Moneysupermarket’s portfolio of verticals is a key strength and provides protection at a group level to wobbles in a particular quarter in an individual vertical,” Numis said.

“We expect high single digit top line growth at Moneysupermarket for the foreseeable future (around 8% run rate through 2018).”

Numis believes the main drivers of the price comparison website’s growth are technology investment, opportunity in the energy switching market and the MoneySavingExpert brand.

The broker said Moneysupermarket has a long history of consistent and strong cash generation with excess cashflow distributed to shareholders.

The company has said that once the cash pile rises above £40m they will make more returns to shareholders.

“ Our year end 2016 cash position falls a touch short of the £40m that will trigger a distribution, but at the very least we would expect an announcement on this by the time of interim results in 2017,” Numis said.

Shares rose 4.24% to 285p at 0954 BST.