I am not charting orientated at all, but cant help but notice...

I am not charting orientated at all, but cant help but notice the beautiful head and shoulder pattern that has now developed in TSE (any chart over more than 2 years).

This would surely suggest that the price has broken a long term upward trendline and is due to fall significantly lower than the 10.00 resistance line currently being tested.

I am interested in any comments if someone cares to share.

Thanks in advance.

J.

Incidently, here is a summary of the TSE broker recommendations post last Friday (from FN Arena: www.fnarena.com)

Brokers Re-Assess After Transfield's Guidance Surprise
FN Arena News - May 19 2008

By Chris Shaw

Having enjoyed strong earnings growth in recent years asset maintenance play Transfield Services (TSE) enjoyed a solid reputation in the Australian market but this has been undone somewhat by last week's downgrade to earnings guidance, which surprised most in the market given it follows on just a few weeks after a positive analyst tour of the company's US operations and generally positive commentary from management in recent months.

The cut to earnings guidance to a full-year result of $105-$110 million, which compares to previous consensus estimates of $115-$120 million, has led brokers to cut earnings forecasts accordingly, while it is the reasons for the downgrade that have changed the view of some securities analysts towards the stock.

According to both Macquarie and ABN Amro the revised guidance justifies a downgrade in rating to Hold from Buy, the former as it sees little scope for a quick turnaround in the US operations, which is where a number of the issues generating the revisions in guidance originated.

ABN Amro sees the disappointing update as impacting on sentiment towards the stock for some time as some of the factors behind the downgrade, including rising input costs and the deferral or cancellation of some maintenance contracts in the US, suggest earnings risk remains to the downside in coming years.

In the broker's view the stock is now fairly priced on FY09 estimates as post the cuts to its forecasts the shares are currently trading on a P/E (price to earnings ratio) of around 15x. To turn more positive the broker wants to see either the stock trade lower, meaning a level below $9.50, or show signs of delivering on or exceeding FY09 earnings estimates.

In earnings per share terms the FY09 number is 67c, which is largely in line with the estimates of others in the market and compares to its forecast for the current year of 54.4c. As a means of comparison GSJB Were is forecasting EPS of 53.3c this year and 67.9c next year, JP Morgan is at 53.2c and 63.6c and the FNArena darabase shows consensus forecasts of 54.9c and 65.5c.

Citi argues the downgrade to guidance is not a major concern as while it has cut its forecasts accordingly the broker retains its Buy rating as it sees the future growth drivers of the comapny as still in place. These include upside from the company's work in the developing Canadian oil sands market, infrastructure exposure in Australia especially post the Federal budget given an increased focus on such projects and growth generally from the group's US operations.

The broker also suggests there could be good news in coming months from new contract wins, so even though it has cut its price target to $12.73 from $14.84 the upside this implies from current levels justifies a Buy rating. JP Morgan agrees, the broker having upgraded its rating on the view the share price correction from around $13.00 to around $10.00 was an over-reaction to the size of the downgrade in guidance.

Even allowing for the factors mentioned by management as contributing to the earnings shortfall the broker expects earnings growth of 10-15% over the next 12-24 months, which it sees as enough to justify a positive stance given its valuation on the company now stands at $12.79. UBS agrees, the broker sticking with its Buy rating in the expectation the earnings issues will prove to be temporary rather than permanent.

GSJB Were is a little more cautious, the broker seeing the stock as a Hold as the ongoing margin pressure in the US operations and scope for similar pressures in Australia means earnings risk is starting to tilt to the downside in coming years. As well the broker notes (somewhat to its surprise) a number of the company's contracts are not in fact cost reimburseable, which offers additional cause for concern given the margin pressures.

Overall the stock is now rated as Buy four times and Hold three times with an average price target of $11.92, down from $13.90 prior to the update. The median price target according to Thomson One Analytics is $14.45 (which suggests they have some updating to do post the profit warning). Shares in Transfield today are slightly higher and as at 11.30am the stock was up 3.3% or 33c at $10.33. Its trading range over the past 12 months has been $9.38 to $16.32.