DX Group (AIM:DX) trading update sees the shares tumble: is the sell-off overdone?
The trading update from the parcels, mail and logistics operator, for the financial year to 30 June 2016 has seen the shares more than halve in quick time. Clearly some big holders have had enough!
However, the severity of the sell-off suggest some irrational Friday selling may have got the better of them. A bargain on offer or more to fall?
The trading statement confirmed that trading conditions in the new financial year remain challenging, with pricing pressure a significant factor. The DX Exchange operation is experiencing a higher than expected level of volume erosion and there have been increased cost base pressures, mainly arising from driver resourcing issues (where there is an industry wide shortage). In addition, the new business pipeline in the parcels operation, while healthy, is converting more slowly. Revenues for the first four months are 5.3% down against the prior period and profits will be significantly below current market forecasts, being previously for pre-tax profit of £27.45m…