The Costa Group Holdings Ltd (ASX: CGC) share price is leading the S&P/ASX 200 Index (ASX: XJO) in losses on the market today.
The Costa share price is down 22.07% at the time of writing to $3.46 a share. That comes after Costa shares closed at $4.46 each yesterday, and opened at $3.74 a share this morning.
The Costa Group share price has been on something of a wild ride over the past 5 years.
Shares in the fruit and vegetable company last peaked in mid-2018, when the price got up to a high of more than $8 a share.
Deteriorating growing conditions and supply issues then battered the company, and by December 2019, Costa was down to just $2.44 a share.
In the year-and-a-half since, Costa had been on something of a recovery.
The company rose close to 100% by the middle of April this year, and topped out at $4.89 a share on 16 April. After today’s move, shares are down close to 30% from those highs.
So what’s going on today?
As we discussed this morning, Costa’s slide seems to have been in response to the company’s annual general meeting.
The highlights (or in this case, lowlights) were released to the markets this morning before open.
Costa told investors its guidance for 2021 would need to be revised.
While berry and avocado sales have reportedly been solid, the company warned its domestic mushroom, citrus and tomato productions were all experiencing issues.
Even so, Costa expects its 2021 first-half performance to be slightly ahead of the same period in 2020. Still, the markets were evidently expecting a bit more, and have seemingly punished Costa as a result.
Are Costa shares a buy today after the dip?
A share price fall of this magnitude might have some investors wondering if this is a buy-the-dip kind of opportunity today.
Well, one broker who agrees is investment bank Goldman Sachs. According to CommSec, Goldman has reiterated a ‘buy’ rating on Costa after today’s announcement, with a 12-month price target of $5.35 a share.
Goldman thinks Costa will manage to improve its domestic production in the second half of the year, which will supplement strong international markets.
That target would imply a share price upside of roughly 54% on today’s Costa share price.
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