![Market's faith shaken: Aconex CEO Leigh Jasper.](/content/dam/images/g/q/z/8/a/0/image.related.afrArticleLead.620x350.gu1ppm.png/1485779863523.jpg)
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Monday was a day to forget for the local Morgan Stanley equities desk – and particularly for its impressionable analyst James Bales, a devout fanboy of construction software company Aconex.
Bales fired off a prescient note on Sunday evening at 7pm spruiking a "tactical idea" based on "an [impending] earnings release". Great intel there! It went on to estimate "an 80%+ probability [that] the share price will rise in absolute terms over the next 30 days" given "we expect [the trading update] to show strong sales momentum". Bales' price target was $9.30.
But anyone being fed like a parking meter should always ask themselves whether 20¢ coins is all they're swallowing. Because Aconex's update was a downgrade, with forecast underlying earnings down 30 per cent on management's previous outlook. The stock collapsed, down 45 per cent, closing at $3.10 from Friday's $5.65.
We're not sure who displayed more courage: CEO and founder Leigh Jasper for fronting an explanatory teleconference for investors or Bales for announcing himself on the call.
A month since the half-year ended and just three weeks until its interim result, Jasper spun the shock news as "really, if you like, a pause in the growth in business".
Bales sought clarification. "So you still believe in the 20 per cent long-term sales growth target?"
Jasper's answer? "At this stage, yes." Doesn't that just fill you with confidence …
"In terms of the guidance, if you could give us a bit more colour?" Citigroup analyst Ross Barrows. Hello?! The colour is unmistakably a deep hue of brown!
It's a miserable case of fool me twice for Bales, who issued a similar "tactical idea" back on October 19, predicting the same $80%+ chance of Aconex stock rising in 30 days, with a price target of $10 (it was trading then at $5.42). A month later, it hit $4.66.
And it makes the $19.6 million Jasper and his fellow executive director Robert Phillpot have raised selling ACX shares since April, at around $6 a pop, look like the smart money. Although in this case study, the alternative sure ain't much competition!
You have to feel for Jasper's new chief financial officer Paul Koppelman, whose first day at work on Monday was nothing if not memorable. As if his appointment wasn't surreal enough already. In the biggest comedown since Alexander the Great joined the Boy Scouts, Koppelman spent the previous four years as CFO at Medibank Private.
And of course Koppelman has very big strides to fill indeed, succeeding no less than Stephen E. Recht as Aconex's hard man of numbers. We hear the Aconex Board first offered the gig to Virgin Australia's John Thomas, but he just wouldn't come at the idea.