Contrarian (foolhardy?) view on the recent goings on at Cogstate...

Due Diligence - The announcement of DD not concluding in M&A was forced out of them as it seems someone was likely acting on this info - hopefully we find out who and hopefully they were connected to the DD crowd not Cogstate.

So I can't give mgmt too much grief for this (unless it leaked from them). If DD is being done and it is announced, that would likely spike the price and may even ruin any possible deal on valuation grounds. If it's a non-binding, indicative, etc, etc I'm not sure if they need to or should disclose this (unless it gets out of course).

Downgrade - This was essentially a delay in revenue from customers who can't recruit as fast as they had planned to. Tells us that their revenue timing is not up to them and they are the mercy of customer feedback, which can clearly be unreliable so should probably not be giving (narrow range) guidance.

Due to Operational leverage (exacerbated by gearing up with extra staff to cope with coming demand) this has wiped out 1H NPAT.

Sentiment - If this turns out to be the LT compounded I think it is, I am pleased DD fell over - would be nice to know why but the market will rightly assume the worst. This will likely hang over the stock price for a while.

The late confession so close to results coming out is poor timing to say the least. Even if it's just delayed revenue that turns up eventually, the operational leverage is on full display for all the wrong reasons at the worst possible time. Next week's H1 results will require some mind altering narrative to put LT performance and outlook in a positive light.

Upshot - Expecting an extended stay in the doghouse but looks like a decent asymmetric LT bet to me.

Disc: Held.

And topped up at $1.23 this morning.