GoCo suspends financial guidance during Covid-19 outbreak
Goco Group
131.60p
17:15 16/02/21
Insurance specialist GoCo Group said it had seen a notable shift in search trends during the Covid-19 pandemic, as it suspended guidance for the current year.
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Updating investors on first quarter trading, the website comparison business said it remained “highly cash generative with a strong balance sheet”. Core GoCompare car insurance revenues grew 4% year-on-year in the three months to 31 March, driven by free £250 excess cover, while AutoSave – a tool GoCo has developed to automatically switch customers to better deals – delivered revenues of £4.2m, or 10% of group revenues.
Total revenues, which include all price comparison revenues as well as AutoSave, were ahead 6% at £41.5m.
However, GoCo said it had seen a number of behavioural changes since the Covid-19 outbreak. In particular, it said search volumes for generic terms across financial services had “reduced”, which it attributed to people spending more time on social media instead.
It added: “People have been naturally distracted by current events, and therefore browsing and quoting has reduced.” It said more people were now letting policies either auto-renew or lapse, and that it had seen quote reductions from people waiting to buy a car as consumers delayed big ticket spending.
“While demand will not return overnight, it is considered a temporary phenomenon,” GoCo said.
Looking ahead, GoCo said: “The board remains confident of long-term group strategy, and believes it is very well positioned to meet the challenges presented. However, dynamic changes in consumer behaviour, positive and negative, post Covid-19 make it difficult to provide precise forecasts with a broad range of post lockdown outcomes for the year possible.
“We have therefore taken the prudent decision to suspend formal guidance for 2020, but we are committed to keep the market regularly appraised of our position.”
Harry Read, analyst at Liberum, said: “Following initial traffic volatility, trading has since seen some stabilisation, although some short-term impact is expected.
“We highlight GoCo as our preferred pick in the price comparison website space and in terms of valuation. The shares have come back strongly since our last update, but we still see more to go.”
Liberum has a ‘buy’ recommendation on the stock, with a price target of 115p. As at 1230 BST, shares in GoCo were trading 7% lower at 70.50p.