Majestic Wine’s shares fell on Friday as Canaccord Genuity reiterated a ‘sell’ rating and cut the target price to 290p from 350p.
The company last Wednesday issued a profit warning, saying it had been hit by the costs of a failed marketing campaign for its Naked Wines business in the US. Majestic said weak growth in its commercial division, which sells wine to businesses, had also weighed on results.
“Majestic Wine delivered an unwelcome downgrade of £4m to fiscal year 2017 pre-tax profit expectations, equating to a around 25% cut to previous consensus forecasts,” Canaccord said.
“Despite the company's understandable attempts to reassure investors on the progress in all other parts of the business, the fact that the two culprits - commercial and Naked USA - have been positioned as growth drivers is clearly a source of considerable disappointment.”
Canaccord said while management has been targeting double digit growth in commercial, gross margin of 200 basis points in the year to date has seen the top line resolutely flat. As a result, Majestic said this will deliver a £2m hit to earnings before interest and tax in the rest of the year.

Liberum Capital today reaffirms its buy investment rating on Majestic Wine PLC (LON:WINE) and raised its price target to 535p (from 500p).

RBC Capital Markets today initiates coverage of Majestic Wine PLC (LON:WINE) with a outperform investment rating and price target of 550p.

StockMarketWire.com
Wine merchant Majestic Wine said on Thursday it would import an extra £5-8m worth of stock to ensure it can meet deliveries post-Brexit as it announced a pre-tax loss amid a "tough" retail market and a gloomy outlook.

The company reported a pre-tax loss of £0.2m for the 26 weeks ending 1 October (down from £3.1m the previous year) as increased new customer investment and fixed costs weighed on profits, as previously announced.

"The UK retail market is tough and will continue to be a drag on performance in Retail and Majestic Commercial; whereas we had previously targeted growth, we now expect full-year 2019 adjusted EBIT across these business units to be flat at best versus full-year 2018," the firm said.

The company also expected to see lower profits at its Naked Wine business as it increased its planned investment to £20m or higher compared with the £19m or higher announced in June.

Nonetheless, the company's longer-term expectations remained unchanged despite the short-term headwinds.

"We were planning for tough times and we're investing through tough times because we know that's the route to a more profitable future. As a result, we now have a business that is almost 45% online and over 20% international with both the option, and intention, to invest further in order to drive returns," the firm added.

Peel Hunt today downgrades its investment rating on Majestic Wine PLC (LON:WINE) to hold (from buy) and cut its price target to 350p (from 500p).

Liberum Capital today downgrades its investment rating on Majestic Wine PLC (LON:WINE) to hold (from buy) and cut its price target to 360p (from 535p).