History tells us in September the ASX 200 has fallen, with an especially volatile period to follow.
The post earnings season period can bring volatility as investors react to vital financial data and guidance from ASX companies.
This year, ASX gold stocks represented the best-performing sector during reporting season.
According to Macquarie, the gold sector rose 20.1% during August.
Meanwhile, healthcare stocks tumbled on the back of earnings results.
While it's never fun watching a share price tumble, there are instances where quality stocks are oversold.
This means it is trading below fair value.
One that fits this description that I believe is worth keeping an eye on is PEXA Group Ltd (ASX: PXA).
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Earnings season selloff
The company behind this ASX real estate stock provides a digital conveyancing platform for real estate settlements in Australia.
It touts itself as offering world-first technology that facilitates near real-time tracking of settlements and faster clearance of funds.
It has had a positive last 12 months, rising more than 15%.
However, following its FY25 Results, this real estate stock tumbled 11%.
Key numbers reported included:
- Revenue of $393.6 million (+16% from the previous year)
- EBITDA of $134 million (+21%)
- Free cash flow rose by 45% to $56 million.
- Adjusted net profit after tax (NPATA) dipped by 6% to $41.1 million
- NPAT loss of $76.1
Brokers are optimistic
Despite earnings results falling short of targets, broker Morgans has actually upgraded its price target on this ASX real estate stock.
The broker said Pexa's FY25 Group NPATA (A$41m, a decline of 6% on the pcp) appeared -11% below consensus, whilst the result was 4% below at EBITDA (A$135m, +7% on the pcp).
Although the result headline figures missed expectations, we think FY25 saw meaningful operational progress in the UK. We also like new CEO Russel Cohen's mantra of a more targeted approach to overall capital investment.
The broker has lowered its guidance for FY26F/FY27F EPS by >10%, reflecting softer FY26 guidance than expected.
Our PXA price target rises to A$16.87 (previously A$16.30) with our earnings changes offset by a valuation roll-forward. With >10% upside to our price target, we move to an Accumulate recommendation.
Based on yesterday's closing price of $15.62, this upgraded price target indicates an upside of 8%.
Elsewhere, Bell Potter has a price target of $17.30.
If Pexa shares were to reach this target, it would mean a 10.7% jump.
Both these targets reinforce this real estate stock may have been oversold following its earnings season results.
