The recent plunge in share price of Singapore-listed commodities firm Noble Group is an opportunity for investors to buy the stock at a deep discount, one market watcher told CNBC.
"In their business, it is conceivable that there`s a lot of fluctuation in their profits and in their cash flow positions and that`s something investors need to account for. And in this case, it is conceivable that they would recover from the losses that they`ve just faced," Nirgunan Tiruchelvam, director at Religare Capital Markets, said on CNBC`s "The Rundown."
Religare does not offer recommendations on stocks but Tiruchelvam added that the numbers currently suggest Noble`s stock price is at a deep discount to its book value. In addition, the company had shown in the past that they have the ability to raise cash to meet their obligations.
Tiruchelvam`s optimism contrasted with several analysts. Moody`s on Monday downgraded ratings of Noble bonds, saying there is heightened concern over the company`s liquidity and large debt maturities over the next 12 months. CreditSights was also negative, noting management`s suggestion that the company may not be profitable this year.
There have been signs of bargain hunting in Noble, with shares up 3.4 percent in early Tuesday trade. The company`s shares plunged 54 percent between May 9 and May 15 after it reported a surprise quarterly loss of $129.3 million for the January-March.
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