Why Bellamys Australia Ltd (AX:BAL) Shares Are Plunging Down Again
After the suspension of Bellamy’s shares December last year, shares of the Australian organic baby food company further sinks after receiving a series of downgrades from numerous analysts and forecasts of a lower demand for their baby formula products this year.
Bellamy’s shares which lost as much as 95 cents during Thursday trading dropped on investor disappointment that the company would be announcing much more upbeat news or updates regarding their recently frozen shares.
Last December, shares of the Australian company dropped by more than 40% following a missed earnings report. Bellamy’s market capitalization then was slashed by $500 million. The company then was in the middle of an issue with their supplies in China.
The ASX-listed company announced last month that they are undergoing regulatory changes in their sales channels which led to a temporary halt in their trading to make way for the company’s ongoing talks with their manufacturers and major suppliers. The company then believed that some part of their production led to a downside effect in the company’s shares, supplies, and earnings.
Although some have believed the fault was the company’s, China also made their regulations stricter then in the midst of growing concern regarding food safety.
From a recently forecasted revenue of $240 million, the company announced on Wednesday that their expected revenue for the fiscal year 2017 might range from $220 million to $240 million while their revenue for 2016 was around $244 million.
Following the halt in the trading of the company’s shares, the company also declined to make an official statement regarding the status of the company which further raised investor concern on Bellamy’s fate following a $500 million drop in their market value.
Shares of the company also have been oversold following the halt in their trading up to its resuming this month.
CEO To Leave Bellamy’s
Following a series of disappointing updates from the Australian company, the company’s board of directors has recently come to a vote to remove current Bellamy’s Chief executive officer Laura McBain from her current post. McBain’s leadership has helped the company transition into a global brand with a demand for their products coming from other countries such as China. Bellamy’s current chief financial officer Shona Ollington is also set to leave the company along with Mcbain.
After a five-week halt to the trading of their shares, the shares of the company dropped another 14% on top of Wednesday’s 20% decline.
Bellamy’s shares have been downgraded to a sell following a weak cash reserve and lack of strategy outlook for the year. The company also started the year in flat sales and an unaddressed supply concern in their products.
Collective analyst's price target on the share price of the company also ranged from $3.72 to $5.35 still a huge chunk away from last year’s trading price of around $10-$12.