Profit-taking affects prices

Peter McIntyre.
Peter McIntyre.
Dunedin cancer diagnostic company Pacific Edge may be the victim of profit-taking by shareholders, as its share price continues to settle after a stellar run.

From its breathtaking 250% gain over 17 weeks to $1.72 on February 10, Pacific Edge had steadily slumped more than 28%, or 49c, to trade around $1.23 yesterday.

Its earlier run was sparked by many market-sensitive statements, signing up numerous new contracts, receiving $4.5 million in Government research and development grants and then joining the NZX top 50 index.

Craigs Investment Partners broker Peter McIntyre said in the case of both Pacific Edge and cloud accounting company Xero - both of which are yet to post a maiden profit - there had been profit-taking by shareholders.

Xero had raced from $17.95 in early October to gain almost 150% when it hit $44.79 in early March, and had since dropped more than 31%, to trade around $30.66 yesterday.

''When shares rocket up too quickly there's invariably going to be profit-taking. Many would have made gains even with the [selling during the recent] pull-backs,'' Mr McIntyre said.

''It's hard to find value in the New Zealand market; the biggest play is Genesis [partial float],'' Mr McIntyre said.

He noted ''uncertainty and weakness'' in the Dow Jones in New York, and while retail investors were buying and selling, institutional investors appeared to be ''taking a break and sitting on the sidelines''.

''There's a theme of high growth stocks falling, as with the trend in the United States, on the Nasdaq, which has been pared back and is more defensive,'' Mr McIntyre said.

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