What happened to the Tabcorp Holdings Share Price?
Shares in gaming and wagering company Tabcorp Holdings Ltd [ASX:TAH] sank by more than 4% today, giving up all the gains the stock had made over the previous month. Tabcorp is now hovering at what looks to be a key support/resistance level.
Why Tabcorp Holdings?
Today’s price action in Tabcorp goes to show how powerful some research analysts’ recommendations can be.
Overnight, Deutsche Bank’s research analysts cut their recommendation on Tabcorp from ‘Buy’ to ‘Hold’. The broker seems worried that Tabcorp may face pricing pressure from a potential increase in the racefields product turnover fees.
Deutsche’s crosstown rival UBS Securities noticed the same risk at the same time. Today UBS scrapped its previous ‘Neutral’ recommendation on Tabcorp, downgrading it to ‘Sell’.
When two well-known investment houses issue bearish reports on a company on the same day, the market tends to react swiftly by marking down the value of the stock.
What now for TAH?
Shareholders shouldn’t necessarily panic on this news. It’s easy to over-estimate the edge that big investment banks have over the rest of the market on stocks like this. And even if the fees go up like the brokers fear, Tabcorp can offset this cost in other parts of its business.
In any case, let’s not forget the upcoming FIFA World Cup in Brazil. That should provide Tabcorp with a welcome boost in activity.
Tim Dohrmann+
Small-Cap Analyst, Australian Small-Cap Investigator
