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Is it time to add to the Audinate (AD8) position?

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    Is it time to add to the Audinate (AD8) position?

    Hi guys, Audinate reports on 19 August, and my expectation is that they will show positive results. Given the massive correction on this stock since its peak in March, are you planning to add to this position? Thanks, Angela Dear James, Can you explain why not one guru analyst was able to predict the issues in the recent AD8 update ? What does this say about management who must now have lost all credibility. No-one can blame MM for not selling earlier. Not sure if the CFO resignation a while ago , on its own, would have been a reason to sell, given the very good last profit report several months ago. John. Hi Guys What to do with Audinate? I am happy that I more than halved my holding after your warnings prior to reporting. What to do with the rest? The price has more than halved from my previous sell price.  Thanks, Roger.

    Answer

    Hi Guys,

    We wrote about AD8 on Wednesday following its sharp decline in lieu of its significant downgrade to FY25 earnings estimates, frustrating before its reporting date:

    • AD8 is now expecting lower sales and gross profit marginally down YoY as costs increase 7-9%. That implies EBITDA of around ~A$16m in FY25 vs consensus of A$27.7m, a ~40% downgrade.

    The update and subsequent share price reaction were awful and MM has been considering our options over the last 48-hours but increasing our exposure is not on the agenda so soon after the release which raises questions around the appropriate growth potential in FY26, and beyond. We believe in the long-term structural shift of analogue to digital, AD8’s strong leadership position, and significant upside opportunity from video but it may take time for investors to regain confidence in the stock.

    • We are likely to hold what we have, but we’re not adding to it at this stage.
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    Audinate Group Ltd (AD8)
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