SEEK share price tumbles following broker downgrade

The SEEK Limited (ASX:SEK) share price is tumbling lower on Thursday after analysts at Morgans downgraded it to a hold rating…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The SEEK Limited (ASX: SEK) share price is one of the worst performers on the ASX 200 on Thursday.

The job listings giant's shares are down 4% to $21.80 at the time of writing.

Why is the SEEK share price tumbling lower today?

Investors have been selling SEEK's shares after it was the subject of a broker note out of Morgans.

As you might have guessed from the share price weakness, it wasn't an overly positive one.

According to the note, Morgans has downgraded SEEK's shares to a hold rating from add. Its analysts have also cut the price target on them slightly to $21.82.

Why has Morgans downgraded SEEK's shares?

There are two main catalysts for Morgans' downgrade to a hold rating.

The first is its valuation. Prior to today, SEEK's shares were up were up a massive 38% since the start of the year. This left them trading at a level beyond the broker's price target.

The second catalyst is its Zhaopin business. Morgans appears concerned that the China-based business is being negatively impacted by the US-China trade war.

It notes that momentum in the online job listings business is softening after the Chinese SME sector started to feel the effects of the trade war.

And while Morgans acknowledges that its short-term labour hire division continues to grow strongly, it doesn't believe this will be enough to offset a decline in job advertisements. As a result, the broker has downgraded its forecasts for the China business.

Other downgrades.

SEEK isn't the only share that has been downgraded on Thursday.

A note out of Citi reveals that its analysts have downgraded ALS Ltd (ASX: ALQ) shares to a neutral rating from buy. This was made on valuation grounds after a strong post-result gain on Wednesday.

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Contented looking man leans back in his chair at his desk and smiles.
Share Market News

5 things to watch on the ASX 200 on Thursday

Here's what to expect on the local market today.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Broker Notes

These ASX 200 shares can rise 20% to 50%

Let's see which shares are being tipped to rocket from current levels.

Read more »

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors panicked when the latest inflation figures came out today.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Broker Notes

Why Guzman Y Gomez shares are a sell

Goldman Sachs has given its verdict on the burrito seller.

Read more »

A man pulls a shocked expression with mouth wide open as he holds up his laptop.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why Mac Copper, Pro Medicus, Web Travel, and Yancoal shares are pushing higher today

These shares are having a good time on hump day. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why ALS, Fisher & Paykel Healthcare, IPD, and Predictive Discovery shares are falling today

These shares are having a tough time on hump day. But why?

Read more »

Man looking at his grocery receipt, symbolising inflation.
Share Market News

How are ASX 200 investors responding to the latest Aussie inflation numbers?

The ASX 200 was up 0.2% today before the ABS reported the latest inflation figures.

Read more »