Meet the most unpopular ASX large cap stock according to analysts

Australia has the dubious honour of having the most unpopular listed stock exchange operator in the world in the eyes of stock analysts.

Brendon Lau

Brendon’s passion for shares started by accident in 2003 and he has worked in various roles around capital markets ever since as a trader, stock analyst and markets reporter with the Australian Financial Review. Most of his wealth has come from share investing than any other asset class, and that has given him the financial freedom not to work full-time, if he chooses to. Brendon is a medium to long-term investor who aims to hold positions for a year or longer and is focused on fundamental analysis, although he will occasionally use technical indicators to time his entries and exits. Brendon has an MBA from Melbourne Business School and is RG 146 certified. He lives in Melbourne with his wife, three kids and two dogs.

Published December 2, 2020 10:21 am AEDT

Australia has the dubious honour of having the most unpopular listed stock exchange operator in the world in the eyes of analysts.

I am referring to the ASX Ltd (ASX: ASX) share price, which is lagging behind its peers.

But that hasn't won it any friends among stock analysts, especially after its latest screw up that shut down the exchange two weeks ago.

Bad asx shares broker downgrade represented by woman hiding face under her jumper. — Image source: Getty Images

Worst rated ASX stock on the ASX 200

Even with the underperforming ASX share price, stock analysts believe the stock is still too expensive, reported Bloomberg.

There are zero sell-side analyst willing to recommend the ASX as a "buy" and 11 "sell" ratings. This makes the stock the lowest ranked stock by consensus rating on the S&P/ASX 200 Index (Index:^AXJO)!

If that wasn't embarrassing enough, Bloomberg also pointed out that the ASX share price is also ranked the lowest among global security and commodity exchanges.

ASX under pressure

ASX's chief executive Dominic Stevens hasn't had a good run as he investigates the second major outage under his four years stint at the helm

The ASX traced last month's outage that shut the bourse for the entire day, save for the first 20-odd minutes of trade, to a software bug.

Stevens told the Australian Financial Review that heads will roll if he finds any executives responsible for the crippling oversight.

I wonder if Stevens is sweating after his counterpart at the Tokyo Stock Exchange resigned this week after a similar issue.

The humiliating screw-up could force the ASX to spend extra on infrastructure at a time when analysts are concerned about earnings growth and its sky-high valuation.

ASX share price lags international peers

To be sure, the ASX isn't the only stock exchange that has suffered embarrassing glitches. Besides the Tokyo Stock Exchange, Bloomberg points out that the New Zealand Stock exchange went offline for four days following a cyber attack and that the Euronext and Mexican market operators suffered shutdowns in October.

The ASX share price is underperforming its peers though. The stock dipped 1.5% since the start of 2020.

In contrast, the Japan Exchange Group Inc (TYO: 8697) share price surged 39%, the NZX Ltd (NZE: NZX) share price rallied 35% and the Euronext NV (EPA: ENX) share price is up around 23%.

More room to fall

Even though the ASX share price has fallen behind, it's the most expensive of its peers as it trades on a forward price-earnings multiple of 31 times.

The multiple is even richer than the 20.5 times that the ASX 200 is trading on.

The ASX share price is priced for perfection. Pity experts don't feel the same way about its performance.

Automatic Renewal

By taking up this offer, you will also be enrolled in our auto-renewal program, which is our way of making your ongoing subscription easier by ensuring uninterrupted service. Don't worry, though – you're not locked in, and can cancel your auto-renewal at any time before each 'anniversary' date without question or penalty.