Another hard day on the market yesterday for wounded dairy darling, Bellamy’s after Friday’s share price collapse.
Bellamy’s shares fell more than 4% yesterday, continuing the slide from Friday’s 43.5% slump off the back of a weak trading update, especially on dairy product sales to China.
The shares only have fall another 2.5% today and they will have halved in value in the space of three days. For that reason it wouldn’t surprise to see some bargain hunting emerge. But not among brokers and analysts which spent the weekend downgrading Bellamy’s outlook.
Morgan’s analysts remain cautiously upbeat on the company, but nevertheless made large earnings downgrades and cut the stock to a "hold" rating.
“Following the disappointing update, we have downgraded our FY17 and FY18 NPAT forecasts by 45 per cent and 55 per cent respectively,” said Morgan’s analysts in a note to clients yesterday.
The firm now expects Bellamy’s 216-17 net profit to fall 12% from the previous year to around $33.6 million.
Morgan’s has drastically cut its target share price to $7.55 from $16.65 previously.
Citi analysts are gloomy and yesterday reaffirmed their “sell” rating on the firm.
“We are also concerned that Bellamy’s is facing a number of company specific issues including i) under investment in marketing relative to competitors, ii) discounting damaging the brand and iii) sub-optimal distribution strategies,” said the Citi team in its note.
Citi said the company’s revenue guidance implies a decline of 10% for final six weeks of the first half of 2017.
Citi slashed its earnings per share estimates for fiscal 2017 by 47% and set a new target price of $6.
