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Analysts slash earnings forecasts for Costa



UBS downgraded its earnings per share forecasts for the years 2019 to 2021 between 11% and 14%

Analysts said the drivers for the downgrade of Costa's profit were four : a demand and prices down in December and January; results of weaker citrus fruit due to quality problems and the end of the early season; higher costs such as water; and a five-week delay in the expansion of Costa's southern Australia mushroom.

UBS said that the reason for weak demand in Australia can not be identified and although they maintained a purchase rating had "less conviction" in the company until they could not answer this was the case. UBS has set a 1

2-month price target of $ 6.80 for Costa.

Buying Opportunities

Costa investor, the portfolio manager of Tribeca Investment Partners Jun Bei Liu, said the share price course offered an opportunity.

Thursday's 39% sell-off was prompted by Costa to tell shareholders that "the weak demand" of tomatoes, berries and avocados meant that it would produce a net profit growth for the 12 months ending June 2019 Supplied

"These are the times when you can actually build your position within this company, because the growth profile in this company is not one year old, it's much longer," he said. He said.

Ms. Liu is attracted to Costa's international operations as a source of continuity

"Demand is not just domestic, it is coming internationally and is well exploited in this."

Ms. Liu said that the risks of supply and demand are inherent in a company like Costa, but she said it was too early to say if there is any

She said that Costa had had an experience similar to Thursday's downgrade soon after the listing, with an excess of tomatoes that depressed prices and punished the price of its shares.

Ms. Liu said the market was confused by the end of the year used by Costa for distribution to shareholders and this meant that the downgrade of profit was perhaps more dramatically interpreted than it should have been.

Costa Group moves from reporting the financial years to the statement of the year six months up to December 2018 was the intermediate period that filled the gap between the transition.

Debney disapproved that investors were confused and stated that the signaling switch was reported at the Costa General Assembly in November 2018 and numerous other times.

Nonetheless, the serious defeat of share prices meant that Costa climbed on Thursday afternoon, organizing a last-minute conference call that 200 investors and analysts diall

The company tried to appease investors during the call, assuring them that the long-term growth guide has remained on track.

Goldman Sachs analysts said they thought Thursday's stock price reaction was "Overdone" and updated the stock for a purchase.

Goldman Sachs cut his earnings per share for Costa for the years 2019 to 2021 between 10.8 and 11.5%, although they said that the key drivers of earnings growth remain unchanged .

"The revisions are largely due to hypotheses of lower prices for some product categories and a delay in the acceleration [mushroom facility] of Monarto", analysts Michael Peet and Myron Xie said.

The broker said that it is planned to "remain a strong year" for 2019, as the company increases the production of berries in China and Morocco and enters the current year for the two-year cycle citrus fruit. Goldman Sachs has set a 12-month price target of $ 5.90 for the stock.

Goldman Sachs said the risks to Costa are the weak prices, the execution on international markets and the bad weather conditions affecting production.


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