MARKETS SPECTATOR: Buying Billabong

What’s Billabong worth?

Citgroup analyst Craig Woolford reckons it is worth 23 cents a share but has set a price target for the stock at 25 cents following the collapse in takeover talks between two buyout firms and Billabong’s board of directors.

“The company's earnings are still deteriorating,” says Woolford. “While the situation is poor, we see balance sheet support at $0.23 per share. The US business is trading well and Billabong's brands are holding share in this market.”

At 1417 AEST Billabong shares were unchanged at 23 cents after rising as high as 11.1 per cent to 25.5 cents earlier. Billabong lost half its market value yesterday and fell as low as 19 cents, or 58 per cent, in a single trading session.

The company’s market value is now $112.6 million. Its net debt was $152.2 million as of December 31 last year.

Meanwhile, the benchmark S&P/ASX200 Index was down 56.308, or 1.2 per cent, to 4844.50.