Nestle Heads for Biggest Decline on Record: Lagos MoverEmele Onu
Nestle Nigeria Plc, the West African nation’s largest food company by market value, headed for its largest retreat on record as investors sold shares on speculation the stock was overvalued, FBN Capital Ltd said.
The stock fell for a second day, sliding as much as 10 percent, the most on a closing basis since at least Jan. 25, 2002, when Bloomberg started compiling the data. It traded 7 percent lower at 930.01 naira by 1:26 p.m. in Lagos, Nigeria’s commercial capital. About 1.7 times the three-month daily average volume of shares were traded.
Nestle Nigeria’s shares jumped in May, pushing its relative-strength index above 70, an indication to some traders that the stock may be overbought. The level dropped to 35.6 today as the shares’ decline over the past five trading days extended to 16 percent, the fourth-worst performer on the Nigerian Stock Exchange’s All Share Index.
“There is a general selloff after the price rally,” Bunmi Asaolu, an analyst at Lagos-based FBN Capital, said today by phone. “Our target price for the stock is 852 naira, based on cash flow.”
Nestle Nigeria said on May 3 net income for the three months through March declined to 5.99 billion naira ($37 million) from 6.2 billion naira a year earlier. Revenue rose to 30.7 billion naira from 28.7 billion naira, it said.
The company’s shares rose 29 percent this year, in line with a 29 percent gain in the all-share gauge.