Why did this $1 billion ASX 300 stock just crash 10%?

This stock isn't having a good finish to the week. What's going on?

| More on:
A man slumps crankily over his morning coffee as it pours with rain outside.

Image source: Getty Images

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

McMillan Shakespeare Ltd (ASX: MMS) shares are having a tough finish to the week.

The $1 billion ASX 300 stock is down 10% to $13.88 in morning trade.

Why is this ASX 300 stock crashing?

Today's decline appears to have been driven by the release of a broker note out of Bell Potter this morning.

According to the note, the broker has downgraded the salary packaging company's shares and taken an axe to its valuation.

Bell Potter advised that it has become cautious on the stock amid risks around vehicle order growth. It explains:

We review our investment thesis and cyclical drivers, forming a neutral view that MMS should demonstrate sales growth YOY at the upcoming interim result (showing vehicle supply improvements) before future revenue is dependent on orders. We see greater risk around the prospects of order growth given increased competition in the private segment, where sales have fallen to a low, and static EV penetration.

Our analysis of order growth shows MMS building EV volumes as a replacement for ICE, which could pose downside in 2H25e. We expect contract specific sales churn, and strong demand for PHEVs should face headwinds when FBT exemption rolls off Mar'25.

Downgraded to neutral

The note reveals that Bell Potter has downgraded the ASX 300 stock to a neutral rating (from buy) and slashed the price target on its shares to $15.80 (from $21.00).

This was only marginally ahead of where its shares closed yesterday's session. Whereas its previous recommendation implied potential upside of 36% for investors. Quite a difference!

Commenting on the downgrade, the broker said:

Downgrade from Buy to Hold. MMS is cycling a difficult comp with fading support from carry over revenue. We see emerging risks to the downside, predicated on 1) negative volume momentum, segment exposure and a reversion in EV sales back to long-term trend (FY23/24 presented material growth); and 2) margin disappointment. Balancing this is the multiple de-rating and uplift in BEV and PHEV sales.

Our revised earnings see MMS trading at ~12x FY25e P/E, in-line with historical levels and below the Pacific Equity Partners' Dec'24 acquisition of SG Fleet for $1,227m. Implied price to earnings was b/w 12.9x and 13.9x FY25e NPATA guidance or 8.3x FY24 EBITDA. Our price target falls to $15.80 p/s on lower earnings and the multiple we apply in our sum of the parts approach, reflecting order growth vs traded peers at this point in the cycle.

The ASX 300 stock is now down 21% since this time last year.

Should you invest $1,000 in Aeris Resources Limited right now?

Before you buy Aeris Resources Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Aeris Resources Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended McMillan Shakespeare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Broker Notes

A bland looking man in a brown suit opens his jacket to reveal a red and gold superhero dollar symbol on his chest.
Broker Notes

Bell Potter names more of the best ASX 200 stocks to buy in May

These stocks could be best buys this month according to the broker.

Read more »

A financial expert or broker looks worried as he checks out a graph showing market volatility.
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

Man looking upwards contemplating which shares to buy
Broker Notes

CSL shares have climbed 10% since 11 April. Is it too late to buy?

What are analysts saying about this biotech giant after its recent rally? Let's find out.

Read more »

Excited couple celebrating success while looking at smartphone.
Broker Notes

Bell Potter names the best ASX 200 stocks to buy in May

The broker is feeling bullish on these names this month. Let's find out why.

Read more »

Red buy button on an apple keyboard with a finger on it representing asx tech shares to buy today
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

Three people in a corporate office pour over a tablet, ready to invest.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A mature age woman with a groovy short haircut and glasses, sits at her computer, pen in hand thinking about information she is seeing on the screen.
Share Market News

ASX shares in April: 8 key takeaways according to Macquarie

Here are eight key takeaways from April, according to a new note from the broker.

Read more »

A shocked man holding some documents in the living room.
Broker Notes

Macquarie's take on Judo Capital shares after suddenly falling 19% yesterday?

Judo Bank was the ASX's top-performing banking stock in 2024.

Read more »