Shares in the crop products group plunged 10.8% to $4.90 when the top 200 stock benchmark gained 0.5%.
The only other ASX shares on the worst performer list were gold producers like Silver Lake Resources Limited. (ASX: SLR) and Northern Star Resources Ltd (ASX: NST) as the gold price fell. But even then, these stocks “only” slumped around 6% each.
Nothing to see here
It’s funny how Nufarm didn’t think it was appropriate to mark its latest announcement to the ASX as “market sensitive” when the share price reaction says otherwise.
An oversight maybe? I would be more forgiving if not for the fact that management buried the update in its announcement titled “Presentation to Credit Suisse Conference”.
It that didn’t smell bad enough, the company lodged it after the market closed at 4.10pm yesterday.
Wrong way to release bad news
Happy coincidence? Call me a conspiracy theorist, but it looked like the company went out of its way to bury the news.
Now Nufarm doesn’t only have to contend with the negative update but questions about management’s credibility, in my view.
Unfortunately, the subterfuge (international or otherwise) didn’t work as at least two brokers downgraded the stock on the back of the update.
Europe is a sore point
The analysts at Macquarie Group Ltd (ASX: MQG) cut its recommendation on Nufarm to “underperform” (meaning a “sell) from “neutral”.
The downgrade was done on the back of management’s comments that the COVID-19 pandemic is creating uncertainties and challenges, such as product demand and exchange rates.
Macquarie noted that the last quarter of the financial year is usually the group’s largest seasonal quarter.
“Europe is experiencing both cyclical and structural headwinds,” said the broker.
“Whilst COVID impacts have exacerbated this, Europe is likely to remain challenging in the medium term given a tougher regulatory backdrop and competitive market conditions.”
The broker cut its 12-month price target on Nufarm to $4.85 from $5.10 a share.
Ahead of fundamentals
Meanwhile, Morgans also downgraded its rating on the stock to “reduce” from “hold”.
“COVID-19 has started to have a greater impact in the 4Q20,” said Morgans.
“As well as dry conditions, Europe’s 2H20 earnings outlook has been materially revised. Finance costs are also now expected to be significantly higher.”
The broker’s price target on Nufarm is $4.76 a share.
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