The S&P/ASX 200 Index (ASX: XJO) was on course to record a strong gain in January until a final week market selloff. The benchmark index ultimately ended the month with a gain of 0.3% to 6,607.4 points.
A number of shares were unable to follow the market higher and recorded disappointing monthly declines. Here's why these were the worst performers in January:
PolyNovo Ltd (ASX: PNV)
The PolyNovo share price was the worst performer on the ASX 200 in January by some distance with a 32.2% decline. Investors were selling the medical device company's shares following the release of a disappointing first half trading update. During the six months ending 31 December, PolyNovo delivered a 31% increase in sales over the prior corresponding period. Although this is strong growth, it fell short of both the market's expectations and management's guidance. Bell Potter was disappointed with its performance. It commented: "Polynovo announced a relatively disappointing trading update, with 1H FY21 sales growth of 31% vs the pcp well below our forecasts, consensus and management expectations."
Nanosonics Ltd (ASX: NAN)
The Nanosonics share price was out of form and dropped 14.8% lower during the month. This was despite there being no news out of the infection prevention company. Though, the company was the subject of a reasonably bearish broker note during the period. Analysts at Ord Minnett have retained their lighten rating and put a $5.65 price target on its shares. This compares to the latest Nanosonics share price of $6.84. It believes rising COVID-19 cases in Europe and the US could be putting pressure on demand for its products.
Adbri Ltd (ASX: ABC)
The Adbri share price wasn't far behind with a 14.3% decline in January. This also appears to have been driven by a broker note. According to one out of Morgan Stanley, its analysts downgraded the building products company's shares to an underweight rating and cut the price target on them to $3.30. It believes the company's shares are fully valued given its reasonably subdued growth outlook.
Link Administration Holdings Ltd (ASX: LNK)
The Link share price was out of form and dropped 13.9% lower in January. Investors were selling the administration services company's shares after the release of an update on a takeover approach by SS&C Technology Holdings. In December, the NASDAQ listed global provider of investment and financial software tabled a conditional offer of $5.65 per share to acquire 100% of Link. Although management felt the offer undervalued the company, it still allowed SS&C Technology to undertake due diligence. However, following the completion of its due diligence, the US company has walked away from the table and withdrawn its proposal.
