Platypus: March rally merely an illusion

Don Williams from Platypus Asset Management says the ASX300 is set to trade lower as earnings per share forecasts for the market are revised downwards. “The local market has ‘rolled over’ once more and seems destined to trade back to the bottom of the range, around 4600 on the ASX 300. The market EPS growth number for 2016 has also taken another leg down, and is showing a prospective decline of 7% on our numbers. Estimates for FY 2017 are beginning to flow through, and as has been the case since 2012, are starting from a bullish perspective. Partly contributing to this are predictions of stronger energy prices going into 2017. We are not convinced this will play out as the sell side expects, and wouldn’t be surprised to see FY 2017 estimates decline as the calendar year progresses.” The chart below shows how EPS forecasts have been consistently downgraded for each of the past five financial years.