Three stocks that fell like stones - Mesoblast, G8 Education and Genworth Mortgage Insurance Austral

Mesoblast Limited


MSB Details

·       Positive Phase 2 results: Mesoblast Limited (ASX: MSB) stock corrected over 16.2% on August 16, 2016 based on market sentiments, after the group surged over 48.4% in last five days alone (as of August 15, 2016). MSB Mesenchymal Precursor Cells (MPCs) were well tolerated in biologic refractory RA patients and the group reported that they were without adverse events over twelve weeks. The group reported that ACR70, showed favorable measure of clinical improvement, with high dose MPC-treated than placebo-treated patients at 12 weeks. The efficacy results of this trial indicate solid potential of Mesoblast’s allogeneic MPCs which would be positioned as a first-line treatment option in RA patients who have previously got a prior anti-TNF or other biologic agent.
·       Recommendation: We maintain our “Hold” recommendation on the stock at the current price of $1.505
 

Summary of Key Efficacy Responses at Week 12 (Source: Company Reports)                                                                                     
 
G8 Education Ltd


GEM Details
·       Mixed results drove the stock lower: G8 Education Ltd (ASX: GEM) stock corrected over 12.5% on August 16, 2016 as the group delivered softness in financial results. GEM reported an overall revenue of $361.2 million which is an increase of 16% as compared to the prior corresponding period. Underlying Earnings before Interest and Tax rose over 8.5% year on year (yoy) to $57.4m while underlying Net Profit after Tax rose over 1.6% to $32.0m. But what disappointed the investor’s is that the Underlying basic Earnings per Share fell 2.5% yoy to 8.53 cents and additional borrowing costs led the statutory Net Profit After Tax dipping 12% to $25 million. Moreover, the group’s gross margins were also hurt due to rising wages coupled with investment in staff training and center refurbishments. On the other hand, we believe today’s fall is a temporary momentum given the solid top line rise and other fundamentals.
·       Recommendation: We maintain our “Buy” recommendation on the stock at the current price of $3.23
 
Genworth Mortgage Insurance Australia Ltd


GMA Details
·       Maintained FY16 Guidance: Genworth Mortgage Insurance Australia Ltd (ASX: GMA) stock fell over 10.1% on August 16, 2016 due to the group trading ex-dividend. On the other hand, GMA has reported its 1H16 net profit after tax to be up 20.2% with resilient underlying NPAT. The company has also maintained its FY16 guidance. The stock has an outstanding dividend yield and is trading at a low P/E.
·       Recommendation: We maintain a “Hold” recommendation on the stock at the current price of $2.94

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