The recent plunge in Eros International (EROS) is finally getting some mainstream media attention in the U.S. Bloomberg ran a story on Friday, October 23. This attention finally prodded EROS management to issue a statement about the latest drama in its stock. Reuters quickly followed with a story on that press release. Forbes Asia did its own follow-up on October 27th. From EROS:
“With reference to letters received from BSE & NSE with regards to article appearing in “The Economic Times” dated October 25, 2015 captioned “Eros International under Wells Fargo’s scanner, stock downgraded”, We believe that the recent movement in share price volatility at our NYSE listed parent level and today at Indian stock exchanges are based on speculative media reports…
We would like to reassure our shareholders that there has been no material change to the previously announced strong fundamentals of the company…
Our Q1 results have been strong and nothing has materially changed since then, in fact a further string of hits by the Company such as ‘Bajrangi Bhaijaan’ in Q2. We will be announcing what we expect to be a strong second quarter results in the first half of November (specific date to follow), and that will be another opportunity for us to answer further questions regarding all aspects of our operations and finance during that earning’s call…”
The press release also referenced an October 23rd Wells Fargo analyst report that is apparently driving the renewed selling in EROS. The company essentially dismissed the negative implications of the report by pointing out that the analyst did not change earnings estimates or the price target. The company further pointed out that a Macquerie analyst sang praises for EROS on the same day with an outperform rating and $25 price target.
This press release was good enough for a gap up and strong close off recent 52-week lows. The buying interest was not sustained. At the close of trading on October 29th, EROS closed at levels last seen around March, 2014.
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