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Credit Suisse sees 'solid and uneventful' year for Moneysupermarket
Credit Suisse analysts maintained their 'hold' recommendation on Moneysupermarket.com (MONY) as they feel the company's new strategy will unlock new market growth but will take time.
However, analysts at the investment bank noted that recent tech investment has restricted customer experience innovation and so expects MONY to underperform industry growth of 6-7% in 2018 before accelerating, thus justifying the continued 'hold' recommendation.
In the same research note, the analysts revised the target price for MONY down to 300p from the previous 350p estimate, explaining that this revised projection reflects execution risks that could reduce as the market becomes more "comfortable and confident" with the group's strategy.
Regarding the content of the strategy, the analysts said: "Overall whilst we see clear merit in the group's strategy of focusing on customer conversion, retention and rebuy we doubt the market will give the group the benefit of the doubt for the strategy, at least initially. Given tangible and financial benefits from the previous technology spend are yet to be seen we await evidence of execution."
The note also highlighted market concerns such as the slowing growth of car insurance premiums, rising interest rates and the looming energy price cap as slowing down MONY's growth in comparison to that of recent years, projecting a 5.1% increase in revenue growth for 2018.
MONY's dividend per share was seen as increasing to 11.48p per share in 2018.
"Overall we see FY17 as largely solid and uneventful. Whilst we see merit in the group's Reinvent strategy (and we hope to learn more at the group's presentation today) we doubt the market will give the group the future benefits for the investment given the lack of benefits seen thus far from their previous strategy/investment."