The Costa Group Holdings Ltd (ASX: CGC) share price has been a disappointing performer for a second consecutive day.
At one stage today the horticulture company's shares fell as much as 5% to a new two-year low of $3.57.
This brought its two-day decline to a sizeable 33.5% and its 12-month decline to a disappointing 53.5%.
Why is the Costa share price down 33.5% in two days?
Costa's shares have come under significant selling pressure this week after the company downgraded its calendar year 2019 earnings guidance.
Management was forced to make the revision after its performance deteriorated suddenly again in May following a series of issues impacting both production and pricing.
These issues include lower than expected mushroom prices due to extended summer temperatures impacting short term demand, high waste and low yields in a major raspberry variety, delayed fruit maturity and increasing competitive pressures on pricing for its Moroccan business, and the presence of a female fruit fly during a routine trapping at the Impi farm at Stuart's Point.
The latter has led to authorities implementing a 15-kilometre exclusion zone from the Riverland fruit fly free region.
In light of this, management believes approximately 17,000 tonnes of its citrus crop may not be packed in its Riverland sheds. This fruit will instead need to be sent to third party packers in Sunraysia and also cold treated to meet export protocols.
The overall impact that these issues are expected to have on its calendar year profits is material.
Management now expects NPAT-SL in the range of $57 million to $66 million in CY 2019, which represents a 0.7% to 16.6% increase compared to the prior corresponding period. Whereas in February management had forecast calendar year 2019 NPAT-SL growth of at least 30%.
Two brokers that believe this selloff is a buying opportunity are Goldman Sachs and Morgans. According to notes released this morning, Goldman Sachs has retained its buy rating, albeit with a significantly reduced price target of $4.40. And Morgans has upgraded Costa's shares to an add rating with a $4.77 price target.
Other shares falling heavily today include Link Administration Holdings Ltd (ASX: LNK) after its disappointing market update and St Barbara Ltd (ASX: SBM) after downgrading its production guidance.
