These 3 ASX growth shares have been slammed on the ASX recently, after being highly sought after this entire year. So, what's changed?
Below, I've analysed whether today's prices for these embattled growth shares reflect good buy opportunities, given each company's fundamentals and future growth.
WiseTech Global Ltd (ASX: WTC)
The WiseTech share price has plummeted 25% lower in the past two weeks, to be trading at around $26 at time of writing. But what's been driving its negative price movements?
Chinese-based research firm, J Capital (JCAP), released a report two weeks ago claiming that WiseTech overstated its performance in the European market. This caused WiseTech's share price to drop 10%.
WiseTech responded that its EBITDA would remain between $145–153 million, with growth numbers between 34–42%.
However, JCAP hit back with a second report last week. It accused WiseTech of poorly performing acquisitions, exaggerating its customer claims and churn rates. As a result, the company's share price dropped another 12.3% before entering a trading halt.
While I'm still confident in WiseTech's logistics product and business model in the long run, this is certainly not a good look for the management team. I'll be earnestly waiting for the company's response to report two.
A2 Milk Company Ltd (ASX: A2M)
From breaking the $17 mark in July, the a2 Milk share price has fallen almost 30% since then to $12.03 at time of writing.
This weakening share price stems from its subpar FY19 results. Though it missed the mark with analyst expectations, it still reported strong growth. Revenue was up by a whopping 41.4% to NZ$1.3 billion, driving EBITDA 46.1% higher to NZ$414 million.
Due to greater marketing expenditure in FY20, a2 Milk's profit margin could drop slightly from its current (and impressive) rate of 30%, which will be a huge investor disappointment.
Nevertheless, a2 Milk has strong fundamentals and its infant formula products show no signs of slowing in the Chinese market.
Webjet Limited (ASX: WEB)
On the other hand, Webjet is actually up 12% in the last two weeks, currently trading for $11.30. While this is a great short-term pick-up for the company, it is still 33% lower than its $16 high in May.
Weakness in its share price has largely been attributed to the collapse of its UK partner Thomas Cook, which will inevitably punch a hole in Webjet's 2020 earnings. This triggered a wave of broker downgrades, which have hit the company's share price hard.
However, management has confidence that the WebBeds platform can drive its earnings before interest, tax, depreciation and amortisation margin closer to 50%. The company is also expecting strong organic growth in the new year.
This sell off now puts Webjet at an attractive price, particularly with insiders snapping up Webjet shares recently. I'll definitely be keeping a close eye on the company.
