Day: 24 January 2022

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Enterprises are increasingly relying on data to drive business decisions. One of the most critical components of data synthesis and aggregation is cloud computing, a form of server virtualization to deliver infrastructure-as-a-service (IaaS). Instead of investing heavily into capital expenditures in the form of physical servers, cloud providers allow customers more scalability because enterprises are essentially outsourcing active management of data aggregation and server maintenance. According to Gartner, the public cloud market is dominated by Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), and Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), and Amazon is emerging as the leader. Does that positioning merit an investment in the web giant right now?

AWS has proven tough to beat

Through the first nine months of 2021, Amazon’s cloud segment, Amazon Web Services (AWS), generated $44.4 billion of revenue while operating at a 30% margin. For one point of comparison, Google Cloud contributed $13.7 billion of revenue for the first nine months of 2021 and is unprofitable, as it reported a loss of $2.2 billion.

What’s even more staggering is the pace of AWS’s growth. During Q3 2021, AWS generated $16.1 billion of revenue, which represented 39% year-over-year growth. Investors can see that the quarterly operating income of $4.9 billion for the AWS segment was more than Amazon’s entire business combined. Amazon Web Services is arguably becoming the most important pillar of the company’s ecosystem.

Despite the impressive growth of AWS and the operating leverage it’s providing Amazon’s business, investors may find it curious that Amazon stock has remained relatively flat over the last 12 months. Competing cloud providers Microsoft and Google witnessed 42% and 52% stock price increases over the last 12 months, compared to Amazon’s 0.10%.

Ambitions beyond the cloud

Amazon has been able to reinvest the profits from its cloud business into other segments, as the company works to differentiate itself from other technology behemoths. One area that is quickly becoming an important crux of Amazon’s business is digital advertising.

According to eMarketer, Amazon is expected to comprise 10.7% of the U.S. digital ad market in 2021 and grow to 12.8% by 2023. Although the uptick has been bolstered by increasing consumer reliance on digital shopping during the pandemic, one could argue that this theme will stick because Amazon’s platform makes it more time-efficient and cost-effective for consumers to make purchases online versus going to a physical retail location.

The boom on the digital ad side of its business could serve as another lucrative catalyst for the company as it gains market share from Google and Meta Platforms. On the contrary, eMarketer predicts that Google’s digital ad business in the U.S. is expected to decrease from 28.9% in 2020 to 26.6% in 2023. 

Amazon is well-positioned to benefit from enterprise investment in digital transformation. As the company gains market share over its competition, AWS’s capital efficient margin profile will continue fueling additional growth drivers as the company looks to enter new industries.

When in doubt, zoom out

Investors and Wall Street analysts kept a close eye on Amazon during 2021 as the company significantly increased its operating expenses to combat pandemic-driven supply chain speed bumps. The effects of these increased expenses were most apparent in the company’s Q3 2021 financials. For the quarter ended Sept. 30, 2021, Amazon reported operating margins of 1.3% and –3% for its North American and International e-commerce segments, respectively.

During times of economic uncertainty, it is important for investors to zoom out and look at the larger picture. Microsoft, Google, and Amazon all appear to be compelling investments, especially given many growth and technology stocks witnessed significant sell-offs during the final months of 2021 due to lingering concerns over inflation. Although Amazon’s overall profitability profile has taken a hit due to challenges on the e-commerce side of the business, it could be argued that this is primarily a function of short-term headwinds related to wage inflation and supply chain. The growth in AWS has allowed the company to combat these near-term challenges given the strong operating profits it produces. Moreover, Amazon is able to reinvest some of these profits into other areas such as digital market, entertainment, and consumer electronics.

Amazon’s business appears far more prolific than its competitors who are heavily reliant on singular products, namely hardware devices and advertising, which are also markets that Amazon competes in. As the company trades for three times trailing 12-month sales compared to Microsoft’s 15 times and Alphabet’s eight times, now may be a unique time for investors to consider Amazon before its next bull run. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post The cloud wars are heating up, and Amazon is primed to thrive appeared first on The Motley Fool Australia.

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Adam Spatacco owns Amazon, Microsoft, Alphabet, and Facebook. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Alphabet (A shares), Alphabet (C shares), Meta Platforms, Inc., and Microsoft and Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Gartner and recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, and Meta Platforms, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Have you got room for a blue chip or two in your portfolio? If you have, then take a look at the excellent ASX 200 blue chip shares listed below.

Here’s why they are highly rated:

CSL Limited (ASX: CSL)

The first blue chip ASX 200 share for investors to look at is CSL. It is one of the world’s leading biotechnology companies, comprising the CSL Behring and Seqirus businesses. Both are leaders in their respective fields – plasma therapies and vaccines.

And while COVID headwinds have been weighing on plasma collections over the last two years, CSL appears well-placed for growth once conditions ease. Particularly given strong demand for its immunoglobulins and vaccines, and its lucrative R&D pipeline. The latter is full of potential therapies that could boost sales materially in the future. CSL has also recently announced the proposed acquisition of Vifor Pharma, which will boost its offering in other lucrative markets.

Citi is a fan of CSL. It recently upgraded the company’s shares to a buy rating with a $340.00 price target. This compares favourably to the most recent CSL share price of $262.57

ResMed Inc. (ASX: RMD)

Another blue chip ASX 200 share to look at is ResMed. It is a medical device company with a focus on the growing sleep treatment market.

Management estimates that there are over 1 billion people globally that suffer from sleep apnoea. However, the vast majority of these people are yet to be diagnosed. This gives ResMed a significant market opportunity to grow into as awareness grows and more and more sufferers are diagnosed.

Especially given its industry-leading products, wide distribution network, and investment in research and development. The latter has led to the development of its new CPAP device, AirSense 11. This device appears to have cemented its leadership position, particularly given how one of its biggest rivals is currently dealing with a significant product recall of 5.2 million CPAP devices.

Credit Suisse is very positive on the company and recent retained its outperform rating and $43.00 price target. This is notably higher than the latest ResMed share price of $32.73.

The post 2 excellent blue chip ASX 200 shares to buy this month appeared first on The Motley Fool Australia.

More reading

• Analysts name 2 excellent ASX 200 shares to buy
• Has the CSL (ASX:CSL) share price dropped back into the buy zone?
• 2 killer ASX shares to buy for a volatile 2022
• How is the CSL (ASX: CSL) share price performing in the age of Omicron?
• Leading fund manager says these blue-chip ASX shares are buys right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. The Motley Fool Australia has recommended ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re looking to take advantage of recent market volatility by making some new additions to your portfolio, then you may want to look at the shares listed below.

Here’s why these ASX shares have been rated as buys:

Breville Group Ltd (ASX: BRG)

The first ASX share to look at is Breville. It is a leading appliance manufacturer responsible for a number of popular brands. These include Kambrook, Sage and the eponymous Breville brand. Thanks to its global expansion, burgeoning product pipeline, and favourable consumer trends, it has been tipped to grow strongly over the long term. Morgans is positive on the company and has an add rating and $34.00 price target on its shares.

Lovisa Holdings Limited (ASX: LOV)

Another ASX share to look at is Lovisa. It is a fast-fashion jewellery retailer with a growing global store network. While the company surprised the market with the announcement of the exit of its long-serving CEO last year, its replacement has gone down very well with investors. Lovisa has appointed Victor Herrero as its new CEO. He was previously the Head of Asia Pacific and Managing Director Greater China for Inditex (Zara, Pull & Bear and Massimo Dutti), the CEO of Guess, and the CEO of Clarks. The team at Macquarie was pleased, especially given that Mr Herrero has experience in China and India. These will be a key focus for Lovisa’s expansion in the future. In light of this, Macquarie has put an outperform rating and $25.00 price target on its shares.

South32 Ltd (ASX: S32)

Finally, another ASX share to consider is South32. It is a diversified mining and metals company producing bauxite, alumina, aluminium, copper (soon), energy and metallurgical coal, manganese, nickel, silver, lead, and zinc. Thanks largely to its exposure to a number of in-demand commodities such as aluminium, it has been tipped to generate significant free cash flow in the coming years. It is for this reason that Goldman Sachs has a conviction buy rating and $4.60 price target on its shares. The broker is also expecting double digit dividend yields for a number of years.

The post 3 top ASX shares to buy in 2022 appeared first on The Motley Fool Australia.

More reading

• Here are the 3 most heavily traded ASX 200 shares this Monday
• Why is the South32 (ASX:S32) share price tumbling 5% on Monday?
• 2 stellar ASX growth shares analysts rate as buys
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Lovisa Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key points

• AGL, Origin Energy shares closed lower today
• Beach Energy, Woodside Petroleum, and Santos also finished in the red
• Natural gas prices have fallen 19% since 12 January

ASX energy shares, including AGL Energy Ltd (ASX: AGL) and Origin Energy Ltd (ASX: ORG), have had a tough day on the market.

The AGL share price fell 2.74% to $7.10. Meanwhile, the Origin Energy share price closed 1.58% lower at $5.60. For perspective, the S&P/ASX 200 Index (ASX: XJO) ended the day down 0.51%.

Let’s take a look at what may be impacting energy shares.

Tough day for ASX energy shares

AGL and Origin finished in the red today, but they were not alone. The broader S&P/ASX 200 Energy (ASX: XEJ) also closed 0.53% lower.

Investors could be reacting to the declining price of natural gas. The commodity has fallen 1.68% in the past day to $US3.932 per MMBtu.

Since 12 January, the natural gas price has plummeted by a whopping 19% from US$4.8570 to US$3.932 per MMBtu.

Despite the fall in price, AGL and Origin are reportedly planning to pass increased natural gas costs to consumers, the Herald Sun newspaper reported yesterday.

Origin executive general manager Jon Briskin told the publication:

The increase in natural gas prices for variable rate plans is primarily due to a significant increase in what it costs us to purchase and supply this gas to our customers.

Increasing prices is not a decision we take lightly, which is why we absorbed some increases in network costs in Victoria over the past few years to keep gas prices flat for our customers throughout 2019 and 2020

Meanwhile, in other energy stocks today, the Beach Energy Limited (ASX: BTP) share price fell 1.05%, Woodside Petroleum Ltd (ASX: WPL) dropped 0.24%, and Santos Limited (ASX: STO) dipped 0.14% today.

As my Motley Fool colleague James reported this morning, oil prices dropped on Friday, with the WTI crude oil price falling 0.5% and Brent crude oil prices dropping 0.55%.

Share price recap

AGL shares have dived around 40% in the past year, while Origin Energy shares have climbed 9.6%.

In comparison, the benchmark ASX 200 index has returned about 5% in the past year.

The post Why AGL (ASX:AGL), Origin (ASX:ORG) shares tumbled today? appeared first on The Motley Fool Australia.

More reading

• Why UBS says the Woodside (ASX:WPL) share price is a buy
• 5 things to watch on the ASX 200 on Monday
• Own AGL (ASX:AGL) shares? JP Morgan is overweight, tips 23% upside in 2022
• 2 cheap ASX 200 shares rated as top buys
• 5 things to watch on the ASX 200 on Friday

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key points

• COVID-19 variants continue to impact Australia’s economy
• Tasmania again leads the states in the past quarter’s economic performance
• Australia’s unemployment rates are historically low across much of the country

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Call it COVID-19. Or the coronavirus. Or Delta. Or Omicron.

Call it what you will, the virus has managed to spread rapidly across every Australian state over the past month. That’s with the exception of Western Australia which hopes to stem the spread of COVID by remaining isolated from the rest of the country.

The pandemic is hitting supply chains, impacting international and interstate travel, and seeing some businesses forced to shutter, at least temporarily.

With that in mind, we take a look at the latest CommSec State of the States report to see which state is handling the COVID impacts best.

(CommSec is wholly owned by the Commonwealth Bank of Australia (ASX: CBA).)

Tasmania leads the charge in COVID hampered economy

According to the CommSec report, released today, Tasmania once again leads the states – and territories – as the best performing economy. That’s the 8th quarter in a row the prize goes to Tasmania.

As for the rest of the nation, CBA reports  “little separated the other states and territories before the [COVID] Omicron variant started influencing activity across the country”.

Tasmania took first spot in 4 of the 8 categories CommSec uses to gauge economic performance. Namely: equipment investment, relative unemployment, retail spending, and dwelling starts.

The Tassie economy came in second spot in 2 other indicators: relative economic growth and construction work done.

A word from CommSec’s chief economist

Commenting on the economic picture amid the continued spread of COVID, CommSec’s chief economist, Craig James, said:

Australia’s state and territory economies are in solid shape, well supported by strong fiscal and monetary stimulus. Unemployment rates are historically-low across much of the nation. Labour is in short supply across many industries – a reflection of current COVID-related self-isolation requirements and border restrictions.

Ahead, the country will continue to face challenges managing the latest Omicron wave with infrastructure spending continuing to be a key driver of growth in 2022.

As for Tasmania’s best in show performance, James said other states could take the prize in upcoming quarters:

Tasmania has held top position in the performance rankings – solely or jointly – for eight consecutive quarterly surveys. While it is likely to remain on top in the short-term, much can change over 2022.

In fact, the Western Australian and South Australian economies have moved up the rankings, performing strongly during the pandemic, with the former benefiting from a surge in iron ore exports and prices, while the latter has benefited from strong government and business investment.

In differing ways, each state or territory will attempt to ‘live with COVID’ throughout 2022, potentially leading to major changes in the performance rankings.

The post CBA reveals the Australian economy’s leading state amid COVID surge appeared first on The Motley Fool Australia.

More reading

• What’s happening to ASX bank shares today?
• Own CBA (ASX: CBA) shares? Here’s what’s happening with the big bank this week
• What to expect from the CBA (ASX:CBA) half year result next month
• 2 buy-rated ASX dividend shares with fully franked yields
• How are ASX bank shares performing today?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key points

• The gold sector dragged the All Ords Index lower on Monday, sliding 1.85%
• Its constituents were likely impacted by a slight dip in gold prices. Though, the sector’s worst performer dropped its full year guidance by as much as 11%
• As of the end of Monday’s session, the All Ordinaries Index was 0.68% lower than it was at Friday’s close

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The All Ordinaries Index (ASX: XAO) struggled on Monday. It was weighed down by one of the market’s worst performing sectors, the S&P/ASX All Ordinaries Gold Index (ASX: XGD).

The gold sector faced multiple challenges today, as the price of gold softened overnight while one of its participants reported that its guidance had dropped on the back of a geotechnical incident.

As of Monday’s close, the All Ords had tumbled 0.65%. For context, the S&P/ASX 200 Index (ASX: XJO) had also slumped 0.51%.

Let’s take a look at what weighed on the index’s ‘golden children’ today.

Why did All Ordinaries gold shares drag on the market today?

The All Ords was weighed down by gold miners on Monday, with the gold sector having slid 1.85% at the session’s close.

It followed a softening of the price of gold overnight. As The Motley Fool Australia reported this morning, the metal’s price slipped 0.35% to trade at US$1836.10 an ounce prior to the ASX’s open.

And, while it has recovered slightly in today’s trade – CNBC has the commodity’s value at US$1,837.20, a 0.29% improvement – it hasn’t been enough to pull its ASX-listed producers out of the red.

The share prices of Resolute Mining Limited (ASX: RSG), DGO Gold Ltd (ASX: DGO), and Pantoro Ltd (ASX: PNR) slipped 11.2%, 5.4%, and 7.2% respectively.

However, the sector’s biggest tumble came from the Regis Resources Limited (ASX: RRL) share price.

It fell a whopping 14.29% on Monday after the company downgraded its financial year 2022 guidance.

A wall slip at the company’s Rosemont operation and other challenges resulted in the downgrade of its full year production guidance. It now expects to produce between 300,000 ounces and 340,000 ounces of gold at its Duketon operation in financial year 2022 – 40,000 fewer than previously thought.

That saw the company’s total expected production fall to between 420,000 ounces and 475,000 ounces.

However, one All Ords gold producer recorded a gain on Monday. The Tietto Minerals Ltd (ASX: TIE) share price surged 6.1% after the company announced it had struck a bonanza gold intercept at its Abujar Gold Project.

The post These ‘golden’ ASX shares weighed on the All Ordinaries Index today appeared first on The Motley Fool Australia.

More reading

• Here are the latest broker updates from Macquarie. It’s not all pretty for ASX shares.
• Why Adairs, Bigtincan, Regis Resources, and Telix shares are sinking
• Here’s why the Regis Resources (ASX:RRL) share price is nosediving 14% today
• Why is the Regis Resources (ASX:RRL) share price frozen today?
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Today, the S&P/ASX 200 Index (ASX: XJO) was awash with more red, replicating the disappointing end to the week on Wall Street Friday night. At the end of trade, the benchmark index was 0.51% worse for wear at 7,139.5 points.

Tech shares took another backward step as the sector erased 1.5% today. Though, it wasn’t alone in its uninspiring performance, with miners and utilities also wearing a deep shade of red on Monday. Glimmers of green still managed to poke through in the opening session for the week. Real estate, consumer staples, and communication services provided some positivity for investors.

However, the question is: which shares delivered the biggest returns to investors on the ASX today? Here are the top ten stocks that came through for investors:

Top 10 ASX shares countdown today

Looking at the top 200 listed companies, Uniti Group Ltd (ASX: UWL) was the biggest gainer today. Shares in the telecommunications company surged 8.75% after the company revealed it has received multiple approaches from parties interested in a potential acquisition. Find out more about Uniti Group here.

The next biggest gaining ASX share today was Goodman Group (ASX: GMG). The property company posted a 4.02% gain in its share price following a broker note from Macquarie. Analysts believe there’s a chance Goodman could upgrade its FY2022 guidance in its half-year results. Uncover the latest Goodman Group details here.

Today’s top 10 biggest gains were made in these ASX shares:

ASX-listed company	Share price	Price change
Uniti Group Ltd (ASX: UWL)	$4.10	8.75%
Goodman Group (ASX: GMG)	$23.54	4.02%
Orica Ltd (ASX: ORI)	$14.18	3.20%
Corporate Travel Management Ltd (ASX: CTD)	$20.80	3.12%
REA Group Ltd (ASX: REA)	$151.04	2.87%
Vicinity Centres (ASX: VCX)	$1.675	2.76%
Domino’s Pizza Enterprises Ltd (ASX: DMP)	$103.665	2.76%
Mercury NZ Ltd (ASX: MCY)	$5.54	2.40%
Megaport Ltd (ASX: MP1)	$15.14	2.30%
Carsales.com Ltd (ASX: CAR)	$21.57	2.23%

Our top 10 ASX shares today countdown is a recurring end-of-day summary to ensure you know which companies were making big moves on the day. Check-in at Fool.com.au after the market has closed during weekdays to see which stocks make the countdown.

The post Here are the top 10 ASX shares today appeared first on The Motley Fool Australia.

More reading

• Here are the 3 most heavily traded ASX 200 shares this Monday
• Why Corporate Travel Management, Goodman, Lendlease, and Uniti shares are rising today
• Why are these beaten-up small cap ASX tech shares seeing 52-week lows today?
• The Nasdaq is in correction territory. Is the ASX 200 next?
• Why is the Uniti (ASX:UWL) share price up 10% on Monday?

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended Corporate Travel Management Limited, Dominos Pizza Enterprises Limited, MEGAPORT FPO, REA Group Limited, Uniti Group Limited, and carsales.com Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The February earnings season is fast approaching, which means results will soon be feeding through the ASX. One company that will draw plenty of attention with its earnings is A2 Milk Company Ltd (ASX: A2M). This follows a 26% fall in the A2 Milk share price since releasing its FY21 full-year results on 26 August 2021.

For investors, Monday 21 February 2022 will serve as an important day. On this day the infant formula company is expected to reveal its results for the first half of FY2022.

After enduring a year and a half of disastrous performance, shareholders will be hoping the company reports a better result. Otherwise, there could be more pain ahead for this unloved ASX share.

Having said that, let’s dive into an earnings preview of A2 Milk and its share price.

What to look for in the upcoming earnings?

The once darling of the ASX share market has been plagued with issues involving its distribution channels and inventory in recent times. As a result, revenue and earnings evaporated during last year.

To illustrate this, the infant formula company posted revenue of NZ$1.731 billion in FY20. Then China’s demand softened and the company was stuck with excessive inventory. In turn, A2 Milk recorded a significantly reduced revenue of NZ$1.205 billion in FY21.

Similarly, earnings were crushed, tumbling nearly 80% from NZ$388.17 million to NZ$80.66 million. For this reason, investors will likely be seeking — at a minimum — a reduction to the impact on revenue and profits in the upcoming half-year result.

At this stage, analysts are expecting net profits after tax (NPAT) of NZ$60 million for the half-year. Unfortunately, this would suggest another 50% reduction on the NZ$120 million of NPAT reported in 1HFY21.

What else is there to consider for the A2 Milk share price?

In an interview with Livewire, Jun Bei Liu of Tribeca named the A2 Milk share price as a buy. While the company has still been trending towards the downside, the portfolio manager believes it could be a turnaround story in the making.

A highlight that Bei Liu mentioned for A2 Milk is that it remains debt-free. Simultaneously, the company laid claim to NZ$875 million of cash and cash equivalents at 30 June 2021. In addition, Jun Bei Liu likes the great brand that A2 Milk has built.

Taking all of this into consideration, the fund manager believes the A2 Milk share price could “really recover” in the next 12 months. Currently, A2 Milk shares are fetching a price of $5.11 — giving the company a valuation of $3.8 billion.

The post A2 Milk (ASX:A2M) share price awaits judgement day as earnings draw near appeared first on The Motley Fool Australia.

More reading

• Broker tips A2 Milk (ASX:A2M) share price to rise over 50%
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• Are the worst-performing ASX 200 shares turnaround opportunities?
• Here’s why the A2 Milk (ASX:A2M) share price lost 52% of its in value in 2021
• Leading brokers name 3 ASX shares to buy today

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The TPG Telecom Ltd (ASX: TPG) share price has edged lower on Monday.

In afternoon trade, the telco giant’s shares are down 0.5% to $6.07.

This means the TPG Telecom share price is now down 19% since this time last year.

Is the TPG Telecom share price good value now?

Although the TPG Telecom share price has come under significant pressure over the last 12 months, one leading broker still doesn’t see enough value on offer to recommend its shares as a buy.

According to a note out of Goldman Sachs this morning, its analysts have retained their neutral rating but lifted their price target on its shares by 3% to $6.30.

Based on the current TPG Telecom share price, this implies modest upside of 3.8% over the next 12 months.

What did the broker say?

Goldman notes that despite the deterioration in its enterprise revenues, TPG Telecom has aspirations to achieve $1 billion a year in business revenues by 2025 as part of its post-merger new enterprise strategy.

This target implies a 7% revenue compound annual growth rate across 2020-25 versus the ~$700 million business (non-wholesale) revenue it delivered in calendar year 2020.

Goldman appears to have a few doubts that TPG Telecom will achieve this. But even if it does, the broker expects softer margins to undo a lot of the good.

It explained: “We would expect even if TPG is successful on building its $1bn business revenues, the corresponding EBITDA is likely to be less significant than would have historically been the case. Given this and the execution risk on achieving $1bn p.a. in revenues (given ongoing NBN aggression, HyperOne build, Telstra adaptive networks launch and superior 5G coverage) we are cautious on TPG’s outlook.”

In light of this and other risks, it believes investors should keep their powder dry for the time being.

Goldman concluded: “We continue to see: (1) mobile subscriber headwinds (following underperformance vs. industry in recent halves); and (2) risk of shareholder churn (noting remaining escrows expire in 2022), as key overhangs for the name, while also acknowledging potential support from: (1) upside from Tower monetisation; (2) greater leverage to the roaming recovery; and (3) improved enterprise mobile/fixed offerings enabling share gains. Hence we remain Neutral, with our 12m TP +3% to A$6.30 driven by lower than expected spectrum payments (driving FY21-23E EPS +5% to +10%).”

The post Is the TPG Telecom (ASX:TPG) share price good value? appeared first on The Motley Fool Australia.

More reading

• Dividend investors should put these 2 top ASX shares on the watchlist
• 2 top ASX shares to buy according to WAM
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• This top broker just rated the TPG (ASX:TPG) share price as a buy
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key Points

• Bigtincan achieves sound performance for the December quarter period
• Integration of Brainshark progressing along smoothly
• Remains on track to meet or exceed FY22 targets

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The Bigtincan Holdings Ltd (ASX: BTH) share price is lower today regardless of a positive trading update from the company. It appears the All Ordinaries (ASX: XAO) is dragging the company’s shares lower following a heavy sell-off throughout the day. 

At the time of writing, the enterprise mobility software company’s shares are down 3.93% to 85.5 cents. On the other hand, the All Ords is also down by 0.56% to 7,448.5 points.

How is Bigtincan performing?

In its release, Bigtincan provided investors with a quarterly business update for the 2022 financial year.

For the 3 months ending 31 December (Q2 FY22), Bigtincan reported total quarterly cash receipts of $26.3 million. This reflected an increase of 150% when compared against the prior corresponding period (Q2 FY21) of $10.5 million.

Cash operating payments came to $25.2 million, which included operating payments for the first full quarter of Brainshark. This led to a $1.1 million positive cashflow for the company.

At the end of the period, Bigtincan declared a balance of $49.9 million in cash and equivalents.

What’s ahead for Bigtincan?

While the company has made significant progress in the Brainshark integration program, annual recurring revenue (ARR) is expected to grow.

In the December quarter, Bigtincan achieved $112 million in ARR underpinned by cross sell/upsell opportunities from the Brainshark acquisition. Whilst this was a 133% lift over the previous comparable period, ARR is forecasted to be at least $119 million for FY22.

In addition, revenue is anticipated be somewhere in the vicinity of $109 million for the current financial year. In contrast, Bigtincan reported $43.9 million in revenue at the end of FY21.

Bigtincan share price snapshot

Despite shooting to a 52-week high of $1.53 in August, the Bigtincan share price has moved lower in recent times. Its shares are currently down 18% when looking at the past 12 months.

Based on today price, Bigtincan has a market capitalisation of roughly $470.43 million, with approximately 547 million shares on issue.

The post Why is the Bigtincan (ASX:BTH) share price in reverse today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended BIGTINCAN FPO. The Motley Fool Australia has recommended BIGTINCAN FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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