Moneysupermarket.com Group Plc (MONY), a U.K. price-comparison website, fell the most in five years after revenue growth stalled in July and amid concern about potential competition from Google Inc. (GOOG)
The stock fell 15 percent in London, the steepest decline since July 2008, to 181 pence, valuing the Chester, England-based company at 981 million pounds ($1.49 billion). Trading volume was more than 12 times the three-month daily average.
Moneysupermarket said revenue in July is “flat” compared with a “strong” corresponding month last year, when a new advertising campaign was started. The company plans this year’s campaign for next month, it said in a statement. First-half sales rose 10 percent from a year earlier to 112.3 million pounds.
Slowing insurance revenue growth, following changes by Google to search algorithms, was compounded by the lack of specific comment on full-year prospects in the earnings statement, Steve Liechti, an analyst at Investec Securities Ltd. who recommends clients buy the stock, said in a note.
“First-half figures are fine and marginally above our forecast, but the financial year outlook comment looks an issue,” he said. “We intend to tweak numbers down given second-half uncertainties.”
Adjusted earnings before interest, taxes, depreciation and amortization rose 29 percent to 39.9 million pounds. The company also said today that Paul Doughty will step down as chief financial officer no later than June 1, 2014.
Investors should also factor in the risk on the stock of Google vying for market share, which could unravel Moneysupermarket’s price-to-earnings ratio from 18 to less than 12, David McCann, an analyst at Numis Securities, said in a note to clients. He has the only sell recommendation on the share among 12 analysts tracked by Bloomberg.
“It is not so much that we see the Google threat as a certainty, but more we think there should be more allowance in the price for the tail risks,” said McCann, who has a price estimate of 150 pence.
To contact the editor responsible for this story: Tom Contiliano at firstname.lastname@example.org