Bluescope Steel (BLS) trades at about 40 cents (1 May 2012), a big discount to its NAV (was $2.30 a share at 6 November 2011, but certainly much less now). Is this a “deep value” recovery stock worth accumulating?
A: Intrinsic valuations have decreased a lot since your last check. Instead of $2-something, most stockbrokers today have set a price target in the range $0.48-$0.64, still significantly above today’s share price, but not as high as used to be. Also, when looking at consensus estimates for this year and next, it would appear the “deep value” argument is being hampered by the glaring absence of any profit momentum. Not only is fiscal 2012 expected to see yet another year of negative growth, only a very small improvement is currently anticipated for the 2013 financial year.
Certainly, there are some Buy ratings out there, but most stockbrokers, or so it would appear, prefer to stick with a Neutral/Hold rating and given the above, this is not strange.