RBC Capital upgrades Moneysupermarket, shares surge

RBC Capital Markets upgraded Moneysupermarket on Monday to ‘outperform’ from ‘sector perform’ and lifted the price target to 250p from 230p, as it argued that the 20% de-rating since August presents a good entry point.

It said the shares are now trading attractively at a free cash flow yield of 10%.

"We believe MONY's core business should benefit from consumers increasingly looking to save on their monthly bills, positioning it as a resilient play during the economic downturn," RBC said.

"We believe this is reflected in the positive dynamics suggested by both app data and Google Search Trends. We view its Insurance (excluding travel insurance) and Money products as beneficiaries in this environment, particularly in light of rising insurance premiums and interest rates," it said.

"This drives our confidence in the company's ability to deliver +7% year-over-year revenue growth in FY23, amidst an economic downturn. This is despite what we think are conservative assumptions. We assume no revenue contribution from energy switching and for Travel insurance revenue to normalise back towards 2019 levels (versus 30% growth in Q2)."

RBC said that based on its conservative assumptions, it reckons the company can deliver in line with expectations, which amid market downgrades, should drive relative stock outperformance.

At 1100 BST, the shares were up 8% at 195.20p.