Naked Wines – ready to toast better times, shares now 75p, brokers Target Price is 150p

13.05.2025

Following the Pre-Close Trading Update, issued two weeks ago by Naked Wines (LON:WINE), I have taken yet another look at this £55m-capitalised online wine retail group.

If I were using my normal investment criteria, then there is no way that I would be preparing a Master Investor report on the company – because its shares on the face of it look massively overpriced at 75p.

However, having followed the company’s ups and downs over the years, I have a gut feeling that its Management is now getting to grips with its operations and its potential.

In fact, I understand that the company is due to declare in July its New Strategic Plan when it issues its Final Results for the year to end-March 2025.

The Business

The original business was set up in 2008, very much as a wine club, with its members, called ‘Angels’, committing regular monthly sums, which were used to cover the costs of regular dispatches of specially selected wines from winemakers across the world.

The business model was and still is based upon Naked Wines funding upfront the production costs for winemakers, allowing them to focus on creating exceptional wines without the financial burdens of traditional wine production, while passing the resulting savings back to its 600,000 ‘wine club’ customers.

The group’s Angel customers in the UK, US and Australia have direct access to over 300 world-class independent winemakers and over 2,500 quality wines from 23 countries.

Trading Update

On Friday, 25th April, the company presented its Pre-Close Update, guiding that its 2025 revenue would be in the £240m-£270m range, much in line with market expectations.

The Equity

There are 74,004,135 shares in issue, some 77.6% of which are held by institutional investors.

The larger holders include Monega Kapitalanlagegesellschaft mbH (12.76%), Punch Card Management (9.99%), Ruane, Cunniff & Goldfarb (9.79%), Conifer Capital Management (9.79%), CHAPTERS Group (7.71%), Symmetry Investments (6.76%), HSBC Trinkaus & Burkhardt (4.32%), MSA Capital (3.98%), Lombard Odier Asset Management (3.70%) and IG Markets (3.67%).

Broker’s Views

Analysts Wayne Brown and Anubhav Malhotra, at Panmure Liberum, have a Buy rating out on the group’s shares.

Their Target Price is a massive 150p a share!

Their estimates for the end-March 2025 year’s results are for £251.0m (£290.0m) sales, with pre-tax losses of £4.4m (£3.0m profit).

For the current year they look for £219.0m sales, recording just a loss of £0.1m.

The year to end-March 2027, the analysts suggest, will see £212.0m sales, but with a £2.7m pre-tax profit, generating 2.8p per share in earnings.

The brokers forecast that the group’s balance sheet will strengthen over the next three years, with the 2025 year showing a net cash position of £31.3m (£15.9m), then 2026 some £39.4m cash, and up to £46.9m by end-March 2027.

The analysts are expecting a capital distribution being soon outlined by the business.

They make a strong emphasis that the group’s corporate news flow in the next few months could be very positive.

“The group is focused on finalising a near-term limited distribution policy in conjunction with its financial partners and hopes to be in a position to provide an update shortly.

At the time of the FY25 results in the summer, the Group will provide guidance for FY26 as well as updates on areas of its New Strategic Plan.”

My View

Looking at the broker's sales and profits estimates does not immediately engender fears of missing out with its shares.

However, the way that the company is rapidly building up its cash balances, compared to its £56m market capitalisation, shows that its Management does have a handle on its recovery plans.

We will see and hear more in July when the group declares its 2025 Final Results.

The group’s shares are now trading at 75p, from which level risk-tolerant investors could well make a profitable gain over the next couple of years.