ASX 200 (XJO) drops 1%, growth shares drop

The ASX 200 (ASX: XJO) is currently down around 1%, reversing some of the gains of yesterday.

Growth shares go backwards

After a strong rise earlier in the week, many of the ASX’s ‘growth’ shares are heading backwards today. Here are some examples:

The Pro Medicus (ASX: PME) share price is down 6%.

The WiseTech Global (ASX: WTC) share price is down 4.2%.

The Afterpay (ASX: APT) share price is down 3.5%.

The Appen (ASX: APX) share price is down 2.5%.

The Xero (ASX: XRO) share price is down 2.2%.

And so on.

But it’s not like every share is in the red. The Challenger (ASX: CGF) share price is up 4.8%, the Beach (ASX: BPT) share price is up 3.7% and the Treasury Wine Estates (ASX: TWE) share price is up 3%.

QBE (ASX: QBE) share price up 2.4%

QBE shares are up after the insurer announced an FY20 update.

On a constant currency basis, and adjusting for asset sales completed in 2019, gross written premiums grew by around 10% in the half.

QBE now expects to report a combined operating ratio of around 104% which reflects COVID-19 impacts of approximately $335 million, adverse catastrophe experience of around $60 million and adverse prior accident year claims development of around $120 million. Excluding COVID-19, the combined operating ratio is expected to be around 98%.

The COVID-19 underwriting impact includes $150 million of net incurred claims and $115 million of additional risk margin.

QBE estimates total COVID-19 related costs to be around $600 million, including $265 million of potential further net claims.

The company expects a first half statutory loss of around $750 million, largely due to COVID-19.

Baby Bunting (ASX: BBN) FY20 growth

The Baby Bunting share price is up another 10% after announcing impressive underlying growth in FY20.

The company expects to report total sales of approximately $405 million, representing growth of around 12%. Comparable store sales growth in the second half of FY20 of 10.5%, with full year comparable store sales growth of 4.9%.

Online sales (including click and collect) grew 39%, which represented 14.5% of total sales. In FY19 online sales were 11.8% of FY19 sales.

Baby Bunting is expecting to report a gross profit margin of 36.2%, an increase of 120 basis points (1.2%) against the prior corresponding period.

‘Pro forma’ is the company’s attempt to calculate a reasonable comparison compared to last year. Pro forma EBITDA (click here to learn what EBITDA means) is expected to show growth of 22% to 25% to be between $33 million and $34 million.

Pro forma net profit after tax is expected to grow by 29% to 35% to be between $18.5 million to $19.5 million.

However, statutory/reported net profit after tax is expected to be between $9.5 million to $10.5 million, down from $11.6 million in FY19.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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