Ann: Business Update, page-255

Why have Bellamy's been punished so hardtoday, slumping as much as 44 per cent on disappointing revenue forecasts?

It's a case of extremely high valuations leading to extremely high expectations, with Bellamy's one of the few growth stocks in the market.

"The market will always show scant regard for those stocks on a high PE multiple whenever they disappoint on profit expectations," the AFR's Phil Baker writes.

He recommends taking a look at some of the other stocks in the market that trade on very high valuation measures.

These include Domino's Pizza, Cochlear, Ramsay Health Care and REA Group - all vulnerable to any profit downgrade.

It's worth noting that Bellamy's is one of the most shorted stocks in the market - many investors have been betting the stock would slide. Looks like they have made a killing today.

Bell Direct analyst Julia Lee said the company's trading update was disappointing, particularly after rival a2 Milk delivered an upbeat trading update on November 22.

"Given that the update was mainly around China and temporary volume dislocation, that's what has the market worried," Lee said.

The announcement was "quite a big adjustment", she said. "Investors are used to seeing triple-digit gains in revenue from Bellamy's."

http://www.theage.com.au/business/markets-live/markets-live-bonds-tank-again-20161201-gt2bje.html