The Vocus Group Limited (ASX: VOC) share price has fallen 32% since reaching a peak in May this year. The question on every ASX investor’s mind is: can it bounce back?
Vocus is a vertically integrated telecommunications service provider, operating in the Australia and New Zealand markets. Thanks to a merger with M2 Group, it is responsible for numerous retail and business telco brands, such as iPrimus and Dodo.
Why Vocus Shares Are Down
Vocus shares have suffered several setbacks over the last two months. First, EQT Infrastructure took interest in Vocus but quickly withdrew a takeover offer after a due diligence period.
To make matters worse, AGL Energy Ltd (ASX: AGL) did almost exactly the same thing shortly afterwards. This suggested to investors that maybe something wasn’t quite right with Vocus’s business, and AGL and EQT both noticed it during the due diligence process.
Vocus shares then took another hit after releasing FY20 earnings guidance for EBITDA of $350 million to $370 million. This is the same guidance they’ve provided for FY19, meaning Vocus are predicting no growth over the next 12 months. The video below explains how you can calculate EBITDA.
Are Vocus Shares A Buy?
The lack of growth is concerning to me, but more concerning is the fact that two separate companies have made offers before quickly withdrawing them.
While it may have just been FY20 guidance that was putting them off, I’ll be waiting to see full-year 2019 results before making any further decisions.
The share price could recover somewhat, but I’d be surprised to see Vocus shares around the $4.60 mark again any time soon.
I’d rather invest in one of the companies mentioned in the free report below.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.