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
