Shares round-up: Next, Currys, Moonpig

Global jitters and April’s spike in bills failed to hurt consumer stocks today as Currys (LSE:CURY) and Moonpig Group Ordinary Shares (LSE:MOON) surged on new guidance and Next (LSE:NXT) got a lift from a sweetened Buy note.

Electricals chain Currys took top billing in the sector after it lifted earnings guidance for the 2024-25 year, having also done so after a robust Christmas trading update in January.

With less than five weeks of the financial year remaining, adjusted profits are now expected to be around £160 million compared to previous guidance of £145-155 million.

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The new figure is 11% higher than the City consensus and compares with £118 million for 2023-24. The company reported further like-for-like sales growth in the UK and Ireland, with the additional bonus that the Nordics is no longer a negative influence on the business.

Shore Capital said: “The Nordic market has been a drag on group sales for the past three years, so it is highly encouraging to see this region return to growth.”

Shares rallied 14.5p to 103.4p, resuming the run that saw the FTSE 250 company accelerate from October’s 2023’s level below 50p to near 99p in February.

Shore said today that the share price looked undemanding and that it would expect a re-rating if Currys can continue to deliver like-for-like growth across its markets.

The City firm is also a big fan of Next shares after lifting its price target to 12,300p, representing a further 7% upside after today’s rise of 195p to 11,400p.

The upgrade from a previous estimate of 11,500p follows improvements to Shore’s sales and profit forecasts, driven by the strong performances of Next’s overseas and third-party retail platform operations in last week’s annual results.

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The FTSE 100-listed group reported a profit of £1 billion for the first time and upgraded City guidance for the current financial year.

Shore said it continued to view Next as an exemplary business, adding that high valuation multiples by the standard of the British listed retail sector are justified given the company’s long-term record of earnings per share progression.

It also pointed to high and stable profit margins, clear avenues for further growth and consistent cash returns to shareholders, with the combination of dividends and buybacks forecast to rise to about 6% of market capitalisation.

The broker said: “The company has once again shown itself to be one of the best-run retailers in the UK which, combined with the appeal of its wide range of brands and channels, drive its continued strong performance in what has been for most a challenging trading environment.”

Bills for energy, water, council tax, broadband and mobile are among those to have risen in April, while the increase in the National Living Wage and National Insurance contributions have created a significant headwind across the retail sector.

However, GDP figures on Friday showed households experienced the strongest real income growth in nine years. And on Monday, February’s money and lending data from the Bank of England suggested that households are starting to save less and spend more freely.

Capital Economics pointed out that the £1.4 billion rise in consumer credit in February was higher than the average gain of £1.2 billion over the previous six months, fuelling hopes that a 1% rise in retail sales may have been more broad-based than first thought.

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The robust consumer trends helped Moonpig to report a solid year-end update today as it said margins will be at the top end of its 25-27% guidance range alongside higher annual revenues between £350 million and £353 million.

The online greeting card and gifting platform said the improvement from the previous year’s £341 million had been underpinned by its three core growth levers of customer base, order frequency and average order value.

The highly cash generative business promised a new £60 million share buyback as it nears the end of its inaugural six-month £25 million share repurchase programme.

FTSE 250-listed Moonpig rose 5.5p to 226p, extending the rise of the past fortnight to 15% and to 40% in the past year. Peel Hunt has a price target of 300p.

The broker said: “We believe the shares do not reflect the strength of the underlying business model or the growth in online cards/gifting markets, and they remain firmly on our Buy list.”