Source: REFINITIV
Nufarm Limited (ASX: NUF)
Headquartered in Melbourne, Nufarm Limited (ASX: NUF) is a global company engaged in delivering crop protection and seed technology solutions. NUF is the first company to develop and commercialise plant-based Omega-3. The ASX-listed company has also developed and commercialised advanced bioenergy feedstock technology.
Recommendation Rationale – SELL at AUD 5.580
- Profit Booking: NUF’s share price has risen by ~17.72% since the last ‘Buy’ recommendation was given on the stock on 4 December 2023, and offered a profit booking opportunity.
- Technical Standpoint: The momentum oscillator 14-day RSI (~74.33) is in overbought zone; and thus, price may face correction in the short term.
- FY23 Financial Performance: For the financial year ended on 30 September 2023, NUF reported a Group Revenue of AUD 3,481mn, down 3% YoY as its Crop Protection segment witnessed a decline in active ingredient prices for foundational products. Its uEBITDA declined by 2% annually to AUD 438mn in FY23.
- Overvalued Multiples: On a forward 12-month basis, NUF is trading at a higher Price/Earnings (16x vs 11.8x for the industry) multiple compared to the median of the Chemicals industry.
NUF Daily Chart
Daily Technical Chart; Source: REFINITIV
Given its current trading levels, recent rally in the share price, and risks associated, it is prudent to book profit at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the closing market price of AUD 5.580, up ~3.33%, as on 31 January 2024.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
Note 1: Past performance is neither an indicator nor a guarantee of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 31 January 2024. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.
Technical Indicators Defined: -
Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.