Shares in Moonpig (MOON) have rallied 44% to 163.6p year-to-date with the online greetings cards-to-gifting platform delivering solid trading and avoiding the downgrades sceptical investors expected.

Shareholder excitement will be tempered by the fact the shares are trading more than 50% below their 350p, February 2021 initial public offering price.

One of the retail sector’s most-shorted stocks, investors were quick to write Moonpig off as a Covid winner and a post-pandemic loser, so this year’s rally also likely reflects a short covering bounce.

Results (29 June) for the year to April 2023 demonstrated the resilience of the business, showing decent 5.2% sales growth to £320.1 million with reasonably robust margins and cash flow. Looking ahead to full year 2024, Moonpig expects mid-to high-single-digit revenue growth with all of its brands returning to growth in the second half.

Canaccord Genuity’s Karl Burns remains bullish on what he regards as a quality, capital light and cash generative business with high market share and ‘still with a long runway of structural growth’.

Doubts remain over Moonpig’s ability to deliver growth given a toughening consumer backdrop and the fading of the lockdown e-commerce boom, while the lingering leverage on the balance sheet, with net debt of £167.7 million at last count, is also cause for concern in a higher interest rate environment.

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