Link’s Share Price Drops 4.75% after Investor Day Presentation

Following yesterday’s announcement, shares of Link Administration Holdings Ltd [ASX:LNK] have dropped in value by 4.75%.

The IT service management company held their annual Investor Day in London yesterday, giving both investors and analysts the opportunity to meet their ‘recently refreshed’ global leadership team. Here, they also reconfirmed their guidance for this financial year.

Additionally, the company announced an extension of their contract with AustralianSuper for another four years, with the added options to roll AustralianSuper for each additional year.

The announcement, released after market close, has brought Link’s trading price down to $5.42 per share.

Download your free report to learn the four hottest AI and Automation stocks on the ASX right now. Plus, you’ll receive a free subscription to Money Morning.

More on the Link update

Right off the bat, Link estimates this year’s operating earnings before interest, tax, depreciation and amortisation (EBITDA) to be between $350 and $335 million (last year’s guidance was $335 million), and their net profit after tax and amortisation (NPATA) to be between $195 and $205 million (down from $207 million last year).

However, they are reporting a one-year return of -23.95%, showing they have some damage control to conduct.

They also boast of being within a leading market position around attractive industries, obtaining a large and loyal client base, and are well positioned for continued growth. These clients include blue chips such as JP Morgan, Citi Group, Macquarie and National Asset Management Agency.

Despite the chaos of Brexit, the company also believes to be in a stable position to brave the European storm.

The company acknowledges that their contract extension with AustralianSuper comes within a ‘fundamental shift in the Australian wealth sector’ and believes the contract will draw upon the strengths of both companies to deliver the best services to consumers.

What does this mean for investors?

Over the last year, the company has experienced a number of insider transactions — the biggest being from Independent Chairman Michael Carapiet, with a purchase of $1.4 million worth of shares at $7 apiece. Company insiders such as Carapiet often trade in company stock, for one reason — they believe the price will rise. In 2018, insiders bought Link stock for a collective $2.7 million and didn’t sell.

It’s not the most important piece of Link’s news to pay attention to, but when assessing the latest news from the company, it’s important to remember that big players seem to have faith in Link’s future. Especially when we see small hiccups like this, and shareholders are tempted to sell.

Regards,

Ryan Clarkson-Ledward,
For Money Morning

PS: Often, some of the biggest investor wins come from the smaller players, not the highly coveted blue chip stocks. In this FREE report, we detail some of the best small-cap stocks on the ASX today, and ones you should seriously consider adding to your portfolio. Click here to download.


Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks by dissecting the latest events affecting the world.

To find out more about the publications Ryan works on and how you can subscribe, please click on the corresponding link here:


Leave a Reply

Your email address will not be published. Required fields are marked *

Money Morning Australia