Financial Trading Blog
Stock of the day 15/06/2016 – Majestic Wine PLC
Things turned sour in the second half of 2015, Majestic Wine finding itself stuck in a near uninterrupted downward trajectory for the final 6 months of the year. Yet the company’s fortunes immediately began to pick up as 2016 began, with its spirits lifted by its post-Christmas trading update.
(Source: IT-Finance.com 15/06/2016)
That update saw Majestic Wine reveal a 12% rise in holiday sales, with like-for-like sales jumping a similarly impressive 7%. The company’s selection of craft gins, like Bathtub and Sipsmith London Dry, saw the biggest growth, with sales surging a whopping 144% across the 10 weeks to January 4th. This news pushed the stock to £3.77, its highest price in 3 months, and while Majestic Wine did join the market in falling at the start of February by the start of March it was back pushing £4.
Good news from Naked Wines, Majestic’s mid-2015 acquisition, then lifted the stock even higher, as the subsidiary reported it had crossed £100 million in sales for the first time in its history. This left Majestic Wine hovering around £4.40-£4.50 from March until the end of May, a price it hadn’t seen since August 2015. The start of June then saw the stock surge to a 27 month peak of £4.88, before the Brexit-fearing turmoil of the middle of the month sent it back to a current trading price of £4.42 (IT-Finance.com, 15/06/2016).
Worryingly for Majestic Wine it saw a similarly strong start in 2015, only for it all to crumble in the back end of the year. The company will be hoping it doesn’t spark a decline with its annual results next Monday, though given that Majestic Wine’s pre-tax profit expected to fall to £13.98 million from £18.4 million last year it may be in for a rough week.
Majestic Wine PLC has a consensus rating of ‘Hold’ with an average target price of £4.14.
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