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American Dairy (NYSE:ADY) got whacked Monday falling 44% to $20.88. The stock's drop was in response to the company's second quarter financial guidance it released yesterday morning which was well below analyst estimates of $84 million. The stock had been making a run from ~$17.00, when it recorded solid 2009 first quarter results May 13, 2009 well ahead of analyst estimates. In fairness to the company, it had warned investors not to use the first quarter results as a barometer for the remainder of the year stating that:

"The first quarter's growth rate was exceptional, and we expect the second and third quarters to trend in line with historical results, in which we deliver year over year growth."

Although estimates for the 2009 second quarter echoed this statement, the magnitude of the second quarter sequential decline was more severe than anticipated. The company reported first quarter revenues of $113.8 million.

2nd Quarter 2009 Guidance Ending June a

2nd Quarter 2009 Guidance 2nd Quarter 2008 Reported Period Change 2nd Quarter 2009 Analyst Estimate
GAAP Revenue $41.0 M $37.3 M 9.9% $84 M

Source: See Release, July 13, 2009

On the bright side, American Dairy did provide 2009 full year guidance, which at the high end could result in the third and fourth quarter earnings coming close to meeting analyst estimates. Combined third and fourth quarter analyst revenue estimates currently stand at $226.8 million compared to the company's extrapolated 2009 second half guidance of $175 to $205 million. American Dairy reported 2008 second half revenues of $113 million.

Unfortunately, the company did not provide 2009 earnings per share guidance which may create a sense of uncertainty. Due to the company's forecast for strong 2009 second half and full year revenue growth, the GeoTeam® will keep American Dairy on the GeoBargain on the Radar list. If the company can also achieve above average earnings per share growth, it is quite possible that the fall in the company's shares could present a future opportunity for value investors who missed the first run.

The GeoTeam® will provide updates if warranted.

Second Half 2009 Guidance a

Second Half 2009 Guidance Second Half 2008 Reported Period Change Second Half 2008 Analyst Estimate
GAAP Revenue $175 to $205 M $113 M 54.9% to 81.4% $226.8 M


FULL YEAR 2009 Guidance Ending December a

Full Year 2009 Guidance Full Year 2008 Reported Period Change Full Year 2009 Analyst Estimate
GAAP Revenue $330 to $360 M $193 M 71.0% to 86.5% $404.6 M

Source: See Release, July 13, 2009

a The above forecasts reflect the Company's current and preliminary views and are therefore subject to change. Please refer to the Company's Safe Harbor Statement (usually in press releases) for the factors that could cause actual results to differ materially from those contained in any forward-looking statement.

Disclosure: No position

Source: ADY Shares Tumble in Response to Financial Outlook