It's earnings season for ASX shares once again and to say results have been mixed would be an understatement.
Analysts have started to chime in and offer their take on several companies' FY24 results, offering equally as mixed views.
Following its FY24 results on Monday, brokers at investment bank Citi are advising investors to avoid Beach Energy Ltd (ASX: BPT) for the time being.
Let's see what the broker said about this ASX share.
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ASX share wobbles after results
Beach Energy posted its FY24 numbers before the open on Monday with several key takeouts. Its share price is down more than 11% at the time of writing.
Results were mixed, with a 9% increase in sales revenue to $1.8 billion on an 11% decline in underlying net profit.
But the key issue for the ASX share was a downward revision of its oil resource reserves, particularly at its Enterprise field.
After conducting several tests at its various sites, the company's findings showed pressure declines at various assets, meaning its resource pool was smaller than anticipated.
It then hired "external experts" to conduct a post-mortem on the estimates.
This revision, which resulted in a reduction of 11.5 million barrels of oil equivalent, has likely been a major factor in the sharp decline in the share price today.
Despite this, Beach made no changes to its production guidance. Only to the resource estimates.
Top broker weighs in
As a result of the newly revised estimates of Beach's resource pool, the case to buy the ASX share has become difficult to fathom, according to Citi.
Analysts noted the "rapid deterioration" of Beach Energy's asset quality in a post-earnings note to clients, according to The Australian.
We expect the rapid degradation of portfolio quality would require substantial M&A to dilute the poor performing assets…
…Investors could instead wait for transformation execution to de-risk and for BPT to do its deals to better understand what this business will look like. Until then, a buy case in BPT is a difficult prospect in our view.
Citi has issued a sell recommendation on Beach Energy shares.
Meanwhile, the consensus of analyst estimates had rated the ASX share a buy leading into its FY24 earnings.
Consensus estimates also project earnings of 17 cents per share in FY25 from the company.
It will be interesting to see what, if any, changes are made afterwards.
Foolish takeout
With its revised resource estimates, both investors and brokers at Citi are more cautious on the company in Monday's trading. Selling pressure continues at the time of writing.
The ASX share has extended losses to more than 20% for the year to date.
