Financial Trading Blog
Stock of the day 12/11/2015 – Majestic Wines PLC
There have been some huge movements from Majestic Wines this year; after opening 2015 at £4, the stock soon dropped by 17% to £3.29 on January 7th following a disappointing Christmas period despite heavy discounting. Things failed to improve for the company as the first few months of the year continued, hitting a near 5 year low of £2.98 by the start of April. However, news on April 10th that Majestic Wine had bought Naked Wines for £70 million eventually (after some investor umming and ahhing) put the stock on a path of explosive growth, growing over 35% between the initial announcement and mid-May.
(Source: IT-Finance.com 12/11/2015)
In the process Majestic Wine crossed the £4 mark for the first time since its post-Christmas plunge, peaking at around £4.28. The company’s full year results in mid-June put a brief spanner in the works, with a 22.5% fall in pre-tax profit to £18.4 million causing the stock to fall back to the £3.80s by the start of July. Yet the booze-provider didn’t remain in doldrums for long, and by mid-August the stock had hit a 2015, and 16 month, high of £4.76.
However things soon got worse for the company; Black Monday and its associated issues dragged Majectic Wine below £4 and, despite a brief bounce back to £4.40 at the start of September, since then the stock has been on a near-uninterrupted decline that has culminated in a current trading price of £3.20 (IT-Finance.com, 12/11/2015), only 20p higher than its year-lows.
During that poor period the company announced a (hail Mary?) new pricing structure, abandoning its long-held 6 bottle minimum order to make the online shopping experience, in the words of CEO Rowan Gormley, ‘simpler and easier for both new and existing customers alike.’ Its half year results on Monday arrive too early for the impact of this decision to have had any affect, rough any update on the earlier days of the change may be appreciated by investors (who sent the stock 2% lower when the overhaul was announced).
Majestic Wine has a consensus rating of ‘Hold’ with an average target price of £4.40.
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