Beach - Two factors driving sell-off:
1. Despite what many have said, MacLellan is a respected analyst when it comes to NN. With NN at $29, he dropped the hatchet, claiming it was over-valued by about 30%. This suggests a near-term price target of $20-21.
'We are maintaining our reduced rating on Newbridge. We are banging the table on that today,'' he said. Kearns cut its rating
on May 19. ''We think it's at least 30 percent overvalued. We also have some strategic issues that we feel have to be addressed and
addressed very quickly,'' MacLellan said.
2. Fund managers are still skeptical about NN and are not buying the stock on dips. Here are some excepts which capture this sentiment:
''Quarter after quarter they've disappointed, and after a
while, no matter how enthusiastic you are you tend to get a
little skeptical,'' said John Kinsey, a portfolio manager at
Caldwell Securities Inc. in Toronto, which owns Newbridge stock.
He said the firm bought the stock in the low 30's and plans to
keep it.
'The analysts I've read are trying very hard to find
something positive in the fourth quarter, and they're having to
jump through hoops to do it,'' said Jack Cook, a portfolio
manager at Scotia Investment Management Ltd. ''I think most
people are looking at it and saying 'It wasn't very good.'''
news.com
Overall, this is a good old fashioned sell-off. Even with today's $200M contract there is continued selling.
Technically, NN could trade to $20 before it turns around. If it does, it would form a nice double bottom on the weekly charts.
Sadly, we ain't to far from there now....
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