ELD –5.86%: been a shocker of late with shares nearly halving in price at a time when agricultural businesses in Australia are meant to be killing it. In our opinion, we think it’s this disconnect between the market’s perception of their operational performance and what they’ve (now) been telling brokers in recent meetings (they have had a few this week). Market perception is that Ag is very strong, and ELD is leveraged to that strength, a view that was being pushed by their Chairman at the end of last year, however, they’re now suggesting some weak undercurrents are at play, with potential margin pressure in generic crop protection commodities which may impact near-term earnings & livestock prices off 10-15%. When the market is bullish and long a stock and there is a shift in tone from the company, selling can be quiet aggressive, which is what we’ve seen in recent sessions.
We are starting to see value <$9.00 but remain in no rush to buy this falling knife.
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