FNArena’s Weekly Insights – August 15 2022
In this week’s Weekly Insights:
-When Forecasts Are Too High
-How Long This Rally?
-Quote Of The Week
By Rudi Filapek-Vandyck, Editor FNArena
When Forecasts Are Too High
One conclusion to draw from the first two weeks of the August corporate results season in Australia is some share prices had been sold down too deeply earlier in the year.
Take BlueScope Steel ((BSL)), for example. On Monday, the company released a better-than-forecast FY22 performance, but guidance for the six months ahead will force most analysts to lower their estimate. Yet post-result, the shares have quickly gained more than 5%.
BlueScope also announced an extra $150m will be added to the running share buyback, hereby extended, which could be a positively contributing factor as well.
Irrespectively, the shares were trading near $26 exactly one year ago and they fell as low as $15, a few times, in July.
FNArena’s consensus target is currently sitting underneath $22, implying there’s a whole lot more upside potential remaining, on condition that sentiment doesn’t sour on the prospect of an economic recession in the year ahead.
On Monday, financial result releases by Carsales ((CAR)) and GPT Group ((GPT)) have equally triggered a notable positive share price response.
But let’s not get carried away, Bendigo and Adelaide Bank ((BEN)) reported as well, and its shares are, at the time of writing, down some -8.6% while Beach Energy’s ((BPT)) update has seen its shares tank by -12.4%.
It’s still very much a heavily polarised market and share price responses in either direction are not confined to your traditional definitions of ‘value’, ‘growth’, ‘defensive’ or ‘quality’; not even to ‘cheap’ or (seemingly) ‘expensive’.
Shares in GUD Holdings ((GUD)) have been trading well, well below most price targets set by stockbroking analysts, yet there is no visible momentum whatsoever post the release of FY22 financials.
On initial assessment, it seems GUD slightly missed expectations, with no forward guidance provided.
