AsiaInfo-Linkage Shares Dropped: What You Need to Know

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.

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