It looks to me like profit downgrades, Italy going broke, global thermonuclear war and dogs pissing on their new carpets have all been well and truly factored into the share price. When the institutions did their initial book build the float price was thrashed out at $4.10, at the very low end of the mooted price range. Now we are at $2.65. Are they better value now, or back then? I think it's pretty obvious. Economies always go up and down and will continue to do so.
IMO all Myer needs is for the sharemarket to hold its ground, and it's already taken a bit of a haircut, and they will limp back towards the $3 mark. I'm slightly concerned that a stockbroker agrees with me... maybe I have missed something? $3.00 seems like an important psychological level to me; if they can get back above that, positive sentiment will return.
What I'd like from Myer is some kind of release acknowledging that Brookes' big expansion strategy may have been mistimed, and some guidance on what they intend to do to minimize the damage. Management is there to steer the boat, not look at the rocks approaching and later tell us that unfortunately we hit them.
One thing in our favour is that other retailers are doing it tough too and some may not survive. Myer will still be around when consumers start to open their wallets again one day.
Who knows what the future holds? It could be chaos in Europe, yes. Or an early election might be triggered, Labor booted, carbon tax rolled back, economy booms in relief, retailers surge.
MYR Price at posting:
$2.65 Sentiment: Buy Disclosure: Held
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