Reporting season report card

Volatility: the name of the game

The August company reporting season has concluded, marked by what analysts describe as one of the most volatile on record.

Morningstar highlights a standard deviation of price changes exceeding 10% on results day, illustrating wild price swings not limited to small capitalisation stocks.

Results day price trading chart

Blue chip stocks like CSL, James Hardie, and Woolworths plunged in the aftermath of their results, with CSL experiencing its worst day since listing.

In fact, seven of the biggest ASX 50 companies saw drops of more than 10% on their earnings release day.

ASX 50 chart

Bottom of the class

Morningstar highlights that passive trading and algorithmic traders amplified market noise, but companies that disappointed bore the brunt of the selling.

CSL Limited (ASX:CSL)

CSL shares are down more than 30% over the past 12 months, and ASX Tradewatch data highlight they’re in a long-term bearish trend.

CSL daily candlestick chart

Ord Minnett downgraded CSL from 'buy' to 'hold' after its result, citing concerns around CSL’s plan to spin off its Seqirus vaccine business by financial year (FY) 2026, along with the abandonment of its previous three to five-year timeline for Behring margin recovery.

Ord Minnett has a $258 price target on CSL suggesting it can rally around 22% from current levels. Citi and UBS see fair value closer to $300.

CSL buy/sell indicators and analyst projections

In fact, most brokers are positive, with the average price target on CSL set at $286.17, suggesting the stock can recover from this past year’s 30% loss and more.

CSL historical trends and price targets

Star performer

NextDC (ASX:NXT)

NextDC skyrocketed after its FY results, with full-year revenue rising 6% underpinned by record new contract sales.

NextDC earnings results 

Shares are modestly higher over the past 12 months, and ASX Tradewatch data show shares are in a near-term uptrend, confirmed by a rising 20-day moving average, suggesting investor opportunity for profit.

NextDC daily candlestick chart

The outlook for NextDC is positive, with analysts overwhelmingly supportive.

Morgan Stanley, which has an 'overweight rating', tips the company to retain its premium valuation relative to Australian and US-listed data centre peers due to its larger development pipeline and relatively higher growth rates.

NextDC buy/sell indicators and analyst projections

The average price target on the stock is $20.61, suggesting a further 23% rise from current levels.

Meanwhile, Luke Winchester from Merewether Capital, notes one takeaway from this volatile reporting season was  small-cap performance. 

NextDC historical trends and price targets