The upcoming trading update on 3 April from online greetings card outfit Moonpig (MOON) needs to demonstrate it is on track with its ambitious medium-term targets.

Moonpig is the leading online designer, printer and retailer of greetings cards in the UK through its eponymous platform, and in the Netherlands (through Greetz), with close to 70% market shares in both markets. The company has boosted ancillary revenue from gifting to nearly 40% of revenue.

However, a target set in October 2024 for double-digit revenue growth could be difficult to achieve given a depressed consumer backdrop and relatively low growth in the wider greetings card market. It relies on new customer acquisition, retention and getting people to make purchases more frequently.

Investors will be looking for guidance on shareholder returns, as Moonpig generates large amounts of cash thanks to its high margins, low working capital requirements and disciplined approach to capital expenditure. This could support increases in the dividend and share buybacks.

There may also be commentary on cost pressures, which Berenberg analyst Adam Tomlinson thinks should prove fairly manageable: ‘Moonpig faces a much more benign cost outlook than appreciated, in our view. National insurance contribution rises from April will have a sub-£1 million per annum effect, while national living wage increases will be immaterial, as the group does not employ many entry-level workers.’

Broker Panmure Liberum’s consumer team comment: ‘While guidance is clear, we believe it is optimistic, as new customer acquisition is lower than needed and the market environment does not support an improved gift attach rate. Consensus estimates may be too high compared to our more conservative projections, which could impact sentiment.’ 

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