TREASURY WINE REBOUNDS WITH POSITIVE FORECAST
JUST a day after suffering its deepest market rout since early last year, the standard-bearer for Australian wine has staged its biggest rally in almost eight months.
Treasury Wine Estates shares surged 4.8 per cent yesterday, adding about $430 million to the market value of the group that owns Penfolds and a suite of other prominent brands.
It came after Treasury Wine affirmed its earnings forecast for the six-month period that ended in June ahead of the release of its full-year results later this month.
On Monday, shares in the Melbourne-based company had tumbled 4.8 per cent to their lowest point in almost three months after Adam Alexander, an analyst at investment bank Goldman Sachs, cut his recommendation on the stock from “neutral” to “sell”.
It was the biggest singlesession slide in Treasury Wine’s share price since January 2016, wiping almost $460 million from its market capitalisation.
Mr Alexander had also cut his price target on shares in Treasury Wine from $12 to $10.50 – compared with a closing price last week of $12.80 – warning that expectations for its growth in Asia were unrealistic amid a slowdown in the Chinese market. Led by chief executive Michael Clarke, Treasury Wine Estates is the biggest supplier of imported wine by value in China, according to industry research.
On Monday night, the group made an announcement the Australian Securities Exchange “in response to an analyst’s comments ... which potentially give rise to misleading statements”.
It affirmed the group’s “positive outlook for the imported wine market in China and Treasury Wine Estate’s performance in the region, notably in respect of pricing and profitability”.
“Significant opportunity for continued, sustainable growth exists in China as Treasury Wine Estates expands into new, strategically important cities and provinces,” the company said.
Shares in Treasury Wine rallied 58c to $12.76 yesterday, giving the group a market value of $9.42 billion.