Cuts bring flicker of light to Ellies
ANTHONY CLARK : Ellies re-loaded
It is in a better position and, though still high risk, seems a ripe recovery stock
I have been damning in my commentary on and opinion of Ellies Holdings since April 2013 — when the share price was at 940c and I recommended taking profits — until my outright sell recommendation in October that year, when it was at 714c. But following the company’s 2017 results announcement recently and a frank management meeting, I have upgraded my near four-year sell/avoid recommendation to a speculative buy at 29c. A bold move from an ardent critic, but a move that I feel is now justified. However, on a p:e of less that 4 and even with all noise stripped out and varying covenant safeguards in place, I do not recommend the stock for widows and orphans. The counter remains high risk. Still, if management’s comments can be believed that Ellies’s problems are now settled and it can move forward, the counter has speculative recovery attractions. I had a target of 45c initially, and then of 60c.
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