Why Are Beach Energy (BPT) and PEXA Group (PXA) Falling Today?

By Jason McIntosh | 6 February 2025

Investors saw sharp falls in Beach Energy Ltd (ASX: BPT) and PEXA Group Ltd (ASX: PXA) today, despite Beach Energy posting positive earnings. While BPT fell 4.9% to $1.44, PXA tumbled 9.8% in early trading before closing 3.1% lower at $12.44.

Let’s explore the factors driving these moves and what they mean from a technical perspective.

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Beach Energy Ltd (ASX: BPT)

Beach Energy reported a strong half-year result for FY25, but the stock still fell as external factors and market expectations weighed on sentiment.

Key Reasons for the Decline:

• Oil Price Slump: Global oil prices fell overnight, with Brent crude down 2.0% to US$74.68. This impacted the entire energy sector, dragging the S&P/ASX 200 Energy Index down 0.7%.
• Narrowed Production Guidance: Beach Energy reduced its upper-end production guidance from 21.5 MMboe to 20.5 MMboe, signaling potential operational constraints.
• Profit-Taking After Gains: The company reported a 5% increase in sales revenue ($990M) and a 20% rise in underlying EBITDA ($587M). However, after recent strength in the share price, some investors appear to be locking in profits.

The Technical Picture for BPT
Beach Energy has been range-bound since 2020, trading between upper and lower boundaries without establishing a strong breakout trend.

• Near-term momentum has been positive, with shares staying above the rising 50-day and 100-day moving averages since mid-December.
• Pullbacks to moving averages are common after strong price runs. Despite today’s dip, the technical structure remains intact while the shares are above the moving averages.
• Investors should watch how the stock reacts near its moving averages, as a break below them increases the possibility of a return to the lower end of the range.

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PEXA Group Ltd (ASX: PXA)

PEXA was one of the biggest losers on the S&P/ASX 200 today, facing a series of negative announcements that sent its stock tumbling.

Key Reasons for the Decline:

• Impairment Losses: PEXA raised its impairment loss forecast for 1H FY25 from A$15-20M to A$35-40M, a significant increase.
• CEO Resignation: The sudden resignation of Les Vance, CEO of PEXA’s Australian unit, without explanation has raised concerns.
• Deferred Tax Asset De-Recognition: The company announced it will write off $19M in deferred tax assets, impacting its financial outlook.
• Higher Tax Expenses: FY25 tax expense guidance jumped from A$13-18M to A$40-45M, adding to investor worries.
• Potential Additional Impairments: PEXA is reviewing a $14.1M intangible software asset for possible impairment, creating further uncertainty.

The Technical Picture for PXA
PEXA has been trading below declining 50-day and 100-day moving averages for three months, which is a sign of technical weakness.

• Stocks below declining moving averages are vulnerable to further declines, as many professional investors avoid stocks in downtrends.
• Failed rallies and continued weakness highlight the difficulty of fighting against a weakening share price.
• Risk Management Matters: Many successful investors use stop losses to minimise downside risk, ensuring capital is preserved for higher-probability opportunities.

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Key Takeaways for Investors

1. Beach Energy’s dip may be temporary, but key support levels must hold. If BPT stays above its moving averages, the uptrend could resume.
2. PEXA’s consolidation below key moving averages increases its risk profile. The stock remains vulnerable while this condition persists.
3. Risk management is critical. Using stop losses and trailing stops can help prevent excessive losses in falling stocks.
4. Avoid fighting against weak technical structures. Stocks trading below declining moving averages often struggle, making them less favorable for trend-following investors.

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Final Thoughts

While Beach Energy’s decline appears to be driven by external factors and profit-taking, PEXA’s fundamental and technical weaknesses increases the stock’s risk profile, in my view. Investors should stay disciplined, manage risk carefully, and focus on stocks with strong technical trends.

At Motion Trader, we emphasise rules-based investing that helps identify high-probability opportunities while minimising downside risks. By following market trends rather than fighting them, investors can position themselves for long-term success.

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Jason McIntosh | Founder, Motion Trader

Jason’s professional trading career began over 3 decades ago. He’s a founder of two stock advisory firms, a listed funds management business, and has helped thousands of investors navigate the stock market. Click here to read Jason’s incredible story of, at age 20, sitting alongside some of the world’s greatest traders (and the life changing experience that came with that).