ATM - A2 Milk Corporation Limited

[JohnnyTheHorse]

Got the setup I was waiting for this morning with a small bounce on Aussie open to set a 15m and 1hr lower high. Shorted into resistance at AU$6.18 and covered on a pivot at AU$5.92. Looking to short more lower highs and long a bounce of AU$5.80 (or even better a break of this into a bounce).

[flyinglizard]

got the setup i was waiting for this morning with a small bounce on aussie open to set a 15m and 1hr lower high. Shorted into resistance at au$6.18 and covered on a pivot at au$5.92. Looking to short more lower highs and long a bounce of au$5.80 (or even better a break of this into a bounce).

how to short this one?

[Entrep]

Guess the previous comments in this thread with SP $3.50 based off expected PE 11-15 is very much a reality. Will we see a new low somewhere between $3.50 and $5. Shorts will likely be coming out of the wood work again. Haven't got into shorts with my trading to date, but maybe now is a good opportunity to start with ATM.

Yes, PE needs to come way, way down on this one.

[Hoop]

Can investors succeed by relying solely on Broker forecasts or their buy/sell activities?
..There was a debate (actually more like a big argument) a long time ago (2013?) as to how accurate Broker forecasts ended up being. Somewhere back on Sharetrader or maybe Sharechat, Phaedrus used his Metastock program to test the correlation between forecast v actual price. The results showed a mediocre correlation..That created the argument . . I did a similar thing manually by plotting past forecast data with actual price on charts and eyeballing the results.
Back in 2013 when I plotted the forecast price data with the actual stocks price I found an interesting lag correlation ..Broker forecasts were above the actual price (over optimistic) most of the time during Bear market cycles and below the actual price (over pessimistic) during bull market cycles..
This resulted in investors using broker forecasts perceiving the stock prices were "cheap" during a down trending period ( outgoing tide...Bear cycle)
Also noticed was their forecasting was more conservative than the actual price event both up and down..and to correct that conservatism they would chase the actual price by updating their forecast creating a lag effect...This is evident when the stock reverses and "comes right" ...investors miss the golden opportunity to invest near the bottom because updated broker's price forecasts are still pessimistic..

Fast forward to 2021..I'm not sure if broker forecasts v actual stock prices now are similar or different to many examples of 2013
But...Interesting ..huh

Psychology-wise.. It seems to be a "Human Thing" a sub-conscious bias by relying too much on the past up to the present when formulating a forecast..

An example below is 2012 - 2013 FBU price v Macquaries forecast target price chart..Also Note the PE Ratio rise against the pessimistic forecasting.

FBU 04022013.jpg

[Ferg]

An interesting discussion on analysts which has confirmed my thinking and answered my (somewhat rhetorical) questions above. What this highlights to me is that any analytical work or target SP produced by a broking house is not worth the paper it is written on. Yeah they can get some credit for collating some of the macro trends, but the micro stuff?......useless. The cynical side of me thinks the target prices are there to drive activity....qui bono? (definitely rhetorical)

[flyinglizard]

valuation equation is calculated based on the input like growth rate. however, even the A2 management team cannot figure that out, how can analysts get the accurate number for future growth rate? guess work or relay on industry average figure. En............ maybe more guess work.

[Master98]

seriously thinking A2 milk may be kicked out of MSCI index at next index rebalancing if current sp continue on downtrend.

[101nick101]

Haven't been following this stock since I sold out at a loss, have they righted the ship yet?

[Ferg]

Haven't been following this stock since I sold out at a loss, have they righted the ship yet?

Not yet. Latest annual report has EPS of 23c, sales and EBIT momentum appear soggy. They are tipped to earn 24cps next year but are not providing guidance. They may surprise, either upwards or downwards. Most here think we have not yet seen the bottom. Others don't expect Management to do nothing, especially in China and USA markets. So it's bit of a crap shoot with odds possibly favouring downside over upside, with a view to growth in possibly FY23.

[Beagle]

Not yet. Latest annual report has EPS of 23c, sales and EBIT momentum appear soggy. They are tipped to earn 24cps next year but are not providing guidance. They may surprise, either upwards or downwards. Most here think we have not yet seen the bottom. Others don't expect Management to do nothing, especially in China and USA markets. So it's bit of a crap shoot with odds possibly favouring downside over upside, with a view to growth in possibly FY23.

Good synopsis and what's a fair PE for a company with so much uncertainty hanging over it ? Its beyond my comprehension why anyone would pay more than 18 times near term earnings unless they think long term this will come out smelling like rose petals mixed in with fresh A2 milk powder. How can anyone be sure of the long term prognosis ?
Makes DCF "valuations" nothing but a bunch of very highly speculative guesswork.