Market Report: Gocompare out of tune with City on rivalry fears

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Shares in Gocompare, best known for its opera-singing mascot Gio Compario, were off-key today as investors shopped around for a better deal at rival price comparison sites.

The group, which was spun out of car insurer esure last month when it floated on the stock market, fell 1.75p, or 2.5%, to 69.25p after broker Investec told clients the company would struggle to grow as a standalone business.

“Gocompare looks a quite small player in a noisy, competitive price-comparison website market,” said analyst Steve Lietchi.

He is concerned that it will need to spend big on advertising to make Gio Compario’s voice heard over larger rival, which has a bigger marketing budget.

The business makes almost all of its profits in insurance switching and Lietchi thinks the amount of money needed to diversify into other areas will also hit margins.

The Investec analyst slapped a Sell rating on the shares and a 57p target price, suggesting it will have a rough first year as a standalone stock.

He said larger players would be unlikely to purchase the company, but added that “more marginal players like Zoopla” could be interested.

Meanwhile, shares in were up 1.7p at 279.5p, tracking the wider market higher, with the FTSE 100 up 15.93 points, or 0.2%, at 6906.35.

Unilever, up 46.18p, or 1.5%, to 3158.18p, was among the risers after investment bank Jefferies raised its rating to Buy, impressed by the consumer goods giant at its recent investor event.

Share registrar Equiniti dipped 8.25p, or 4.3%, to 186p after the Evening Standard revealed its former owner Advent, the American private-equity firm, was in the final stages of selling its remaining shares in the business, which it floated last year with a valuation of £500 million.

The sale of Advent’s 7.9% stake is being conducted via an accelerated bookbuild in the City and is expected to be worth close to £50 million, sources said. Advent declined to comment.

Troubled collectibles firm Stanley Gibbons sank 0.25p on AIM to 10.5p. It follows a strong showing yesterday, which dealers said was sparked by vague takeover speculation.

Shares in Richland Resources, part of whose tanzanite mine was seized by armed, illegal miners in 2012, were in the line of fire, tumbling 0.13p, or 11%, to 0.99p after a heavily discounted share placing to raise £1 million. 

The company left Tanzania last year and now operates the Capricorn sapphire mine in Australia.

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December 14, 2016 |
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