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Why the Link Administration share price plummeted to a 52-week low on Wednesday

The Link Administration Holdings Ltd (ASX: LNK) share price fell 5.27% on the ASX yesterday after the company released its 2019 Investor Presentation & Strategy Update to the market.

What was in Link’s market update?

Link held its annual Investor Day at its European headquarters in London with the aim of providing investors and analysts an opportunity to meet Link’s “recently refreshed” global leadership team.

The company reaffirmed its previous guidance issued on 31 May 2019 with forecast FY19 operating earnings before interest, tax, depreciation and amortisation (EBITDA) of $350 million – $360 million (down from $335 million in FY18) and FY19 operating net profit after tax and amortisation (NPATA) of $195 million – $200 million (down from $207 million in FY18).

Link also confirmed FY19 pro-forma operating EBITDA of $315 million – $325 million, which excludes the sale of its Corporate & Private Clients business (CPCS) announced in January which the company expects to net $35 million from in FY19.

Another key update was the reaffirmation of Link’s integration efficiency target of >£15 million (A$27.5 million) for Link Group EMEA, notwithstanding the sale of CPCS.

What else has Link announced recently?

The Link share price plunged 30% on Friday, May 31 this year after providing the market with a trading and earnings update that downgraded the company’s FY19 earnings outlook.

Link sighted a lack of finality regarding the Brexit outcome in the UK and regulatory changes in the superannuation sector as key influences on second-half earnings due to lower revenue activity. Link management also announced that the company’s full-year FY19 results will be released to the market on Thursday, 29 August 2019.

The Link share price hit a 52-week low of $5.38 per share in yesterday’s trade before closing marginally higher at $5.39 per share – a long way shy of the $7.76 per share valuation just prior to the May earnings update.

Link continues to battle against fellow share market listing company Computershare Ltd (ASX: CPU) which has seen its own share price trade broadly flat since the start of the year and is currently sitting at $16.90 per share.

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Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia has recommended Computershare and Link Administration Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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