Treat’s share price fell more than 30% following news of the company’s expected poor performance. According to reports, the company has cut its pre-tax profit forecast from £21.7m to a range of £15-15.3m.
The market reaction was immediate and brutal, with prices falling by almost a third. The decline also stemmed from its announcement that it was struggling with input cost inflation and its decision not to pass inflation on to customers due to the nature of some long-term contracts. The company’s woes have also been blamed on the deteriorating tea market in the United States, where revenue from the product fell 41% year-over-year.
Treatt chief executive Daemmon Reeve noted that despite the decline in the short-term impact on profitability, other categories of the business were doing well. He noted that he expected the company to recover and meet his expectations.
Treatt Share Price Analysis
Following the poor market performance, Treat’s share price fell by almost a third of its value. Today, despite a strong upward push, with prices already up 5%, a return to the levels where it was trading three days ago seems like a daunting task.
Therefore, my analysis of the Treat stock price expects prices to either start trading in a sideways market or continue to decline over the next few trading sessions. This is partly because investors will be extremely reluctant to put their money in a company that has lost a third of its value in less than a week. In addition, there will also be questions about whether the company will return to its tea market in the United States and become very profitable again. These concerns, if left unaddressed, will put pressure on Treatt’s share price and likely lead to a further downward push.