AsiaInfo-Linkage Shares Dropped: What You Need to Know

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Chinese telecom software and services provider AsiaInfo-Linkage (NAS: ASIA) were getting clobbered by investors today, falling as much as 19% in intraday trading after a Wall Street downgrade.

So what: Susquehanna downgraded AsiaInfo-Linkage shares to "neutral" from "positive." That doesn't sound all that terrible, right? Along with the downgrade though, Susquehanna also slashed its target price for the stock from $23 to $11, citing slowing industry growth and expectations that it thinks are too optimistic.

On Friday, AsiaInfo-Linkage shares closed at $11.20, so Susquehanna's call basically suggested that, instead of having the potential to double, shares were fairly priced. That's a pretty drastic change, so it's no wonder investors are going bananas today.

Now what: Consensus estimates currently have the company earning $1.62 for all of 2011. With a now-current stock price of roughly $9, that could make the stock a bargain in some investors' eyes. AsiaInfo-Linkage bulls should definitely take Susquehanna's warning as a good reason to take a closer look at the company's numbers and make sure growth estimates make sense. However, I'd also caution against knee-jerk reactions to the view of a single Wall Street analyst.

Want to keep up to date on AsiaInfo-Linkage?Add it to your watchlist.

At the time this article was published Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributorMatt Koppenhefferdoes not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting hisCAPS portfolio, or you can follow Matt on Twitter@KoppTheFoolorFacebook. The Fool'sdisclosure policyprefers dividends over a sharp stick in the eye.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners