Broker snap: CC report is 'good news' for Moneysupermarket.com, says Westhouse

18th Dec 2013 10:29

Westhouse Securities has maintained its 'add' rating and 209p target price for price-comparison website Moneysupermarket.com (MONY) after the Competition Commission's (CC's) report into the private motor insurance market.The competition watchdog announced on Tuesday that car insurance was too high in the UK and drivers are footing the bill for unnecessary costs incurred during the claims process following an accident.Price-comparison websites were also mentioned in the report. Whilst they lead to increased competition "to the benefit of motorists", the CC said that "clauses requiring the same price to be offered for an insurer's product across the market reduce competition".These arrangements, used by some sites, are known as 'most favoured nation' (MFN) clauses which make sure that individual insurers' premiums are not offered more cheaply elsewhere, Westhouse explained. As such, the CC said it is considering prohibiting MFN clauses."We believe this is good news for MONY, which is the only independent amongst major UK PC players and does not have MFN clauses in its contracts with motor insurers," said analyst Roddy Davidson."Specifically, we believe that removal of these restrictions would help MONY to build on its market leading position in the price comparison space, and we welcome any measure that helps strengthen consumer confidence and trust - key factors in unlocking the significant long-term growth potential within this market."Davidson said he forecasts an attractive earnings and dividend outlook which is not yet reflected in the MONY's current share price.The stock was 1.62% higher at 182p by 10:52 on Wednesday.BC