ARB Corp (ASX: ARB) Faces Setback as Shares Decline Amid Slower Sales: Here's Why

2 min read | May 09, 2024 03:39 PM AEST | By Team Kalkine Media

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ARB Corp (ASX: ARB) Faces Setback as Shares Decline Amid Slower Sales: Here's Why — Image source: Mikbiz, Shutterstock

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In today's (9 May 2024) trading session, shares of auto accessories firm ARB Corp (ASX: ARB) have experienced a downturn, dropping by as much as 3.5% to AU$37.550. If this trend persists, the company is poised to record its worst day since 19 April, further compounded by hitting its lowest point since 2 May.

Slower 3Q24 Sales Prompt Minor Downgrade

According to Citi analysts, ARB Corp's slower-than-expected sales performance in the third quarter of fiscal year 2024 (3Q24) has prompted a minor downgrade to its earnings per share (EPS) estimates for FY24-26, by up to 3%. Despite the setback, Citi maintains its "buy" rating on the stock.

In light of the revised earnings outlook, Citi has adjusted its price target on ARB Corp shares to AU$44.20 from AU$44.90, aligning with its continued positive sentiment towards the company's long-term prospects.

Positive Outlook From ARB Corp

On Wednesday, ARB Corp provided an update on its outlook, indicating positive trends in trading conditions expected to persist into the first half of fiscal year 2025 (1H25). The company reported a sales growth of 2.1% in 3Q24, with the export order book showing promising signs.

Brokerage's Optimistic Outlook

Despite the temporary setback in sales, brokerage firms remain optimistic about ARB Corp's future performance. Analysts anticipate that conditions in Australia will strengthen further, driven by a robust order book and normalization of supply chains, among other factors.

Year-to-Date Performance

Despite the recent decline, ARB Corp's stock has seen a year-to-date (YTD) increase of 8.2% as of the previous trading session's close, reflecting investors' confidence in the company's resilience and long-term growth prospects.

While ARB Corp faces a short-term setback due to slower sales in the third quarter, analysts and the company itself remain optimistic about its future trajectory. With positive trading conditions expected to continue and a strong order book in place, ARB Corp is positioned to weather the current challenges and drive growth in the coming quarters.

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