Seemed to be a massive 7% drop today on the release of financial data showing a record profit......why is the market abandoning this stock?
Disc: hold....
Good question!
The market has come to expect a lot of ALQ and profit expectations of a 5 -15% increase in NPAT for the full year are apparently not enough! The company has a good track record in meeting and exceeding profit forecasts but given the uncertainty around the mining sector at present perhaps it's understandable that there is some caution now.
I hold - and still looking to add a few more when/if the SP gets too "attractive" to resist.
PUBLISHED: 4 hours 41 MINUTES AGO | UPDATE: 2 hours 45 MINUTES AGO PRINT EDITION: 28 May 2013 Edited by Sarah Thompson, Anthony Macdonald and Gretchen Friemann
UBS has warned the deterioration in the minerals industry is occurring faster than anticipated and warned the weakness will persist throughout next year.
The bank re-iterated its sell rating on ALS Limited (ALQ), a leading provider in minerals, and stressed its bearish view on the stock stemmed from the poor outlook for the sector rather than the company’s balance sheet or its market positioning, which remains “attractive”.
Analysts Sam Theodore and Rohan Sundram argued the downturn in the industry would hit about 60 per cent of ALQ’s earnings before interest and taxes.
The banks expects the company’s earnings per share to decline by close to 13 per cent in FY14.
The bank noted that the deterioration in minerals will be partially offset by the company’s strong growth in life sciences which has been boosted by recent acquisitions.
UBS rating seems a little pessimistic, given that the share price has already come back a long way in anticipation of their resources exposure causing a drag on earnings.
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Originally Posted by Fred114
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