Day: 2 March 2022

A message from our CIO, Scott Phillips:

“G’day Fools. If you’re like us, you’re dismayed by the events taking place in Ukraine. It is an unnecessary humanitarian tragedy. Times like these remind us that money is important, but other things are far more valuable. And yet the financial markets remain open, shares are trading, and our readers and members are looking to us for guidance. So we’ll do our best to continue to serve you, while also hoping for a swift and peaceful end to war in Ukraine.”

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It’s proving to be a big week for ASX cybersecurity shares as fears of Russian cyber attacks grow and the tech sector recovers.

Internationally, cybersecurity stocks Crowdstrike Holdings Inc (NASDAQ: CRWD) and Palo Alto Networks Inc (NASDAQ: PANW) have each gained around 15% over their last five sessions.

And the theme is carrying over to the ASX. Let’s take a look at what’s seemingly got investors bullish on cybersecurity and two ASX shares that could be benefiting.

What’s driving ASX cybersecurity shares higher?

Warning bells are ringing after Western powers – including Australia – placed sanctions on Russia, barring its banks from accessing the Society for Worldwide Interbank Financial Telecommunications (SWIFT) payment system.

International banks are likely now preparing for retaliatory cyberattacks, according to reporting by Reuters.

Meanwhile, Telstra Corporation Ltd (ASX: TLS) CEO Andy Penn told the Mobile World Congress that the crisis occurring in Ukraine is an example of a changing landscape where cyberattacks can ultimately harm individuals and businesses anywhere, as reported by The Australian.

Just last week, the Australian Cyber Security Centre (ASCS) issued a warning to organisations, asking them to consider strengthening their cybersecurity measures following Russia’s invasion of Ukraine.

Of course, concerns of malicious cyber activity have helped put a spotlight on ASX cybersecurity shares.

Additionally, as cybersecurity stocks inevitably overlap with the technology sector, it’s worth mentioning the latter’s recent rebound.

After plunging last Thursday, the S&P/ASX All Technology Index (ASX: XTX) and S&P/ASX 200 Information Technology Index (ASX: XIJ) have recovered their losses – and then some.

The All Tech Index is currently 5% higher than it was one week ago. Meanwhile, the ASX 200 Info Tech Index is 10% higher.

These ASX cybersecurity shares have taken off this week

ArchTIS Ltd (ASX: AR9)

Producer of cybersecurity and secure information sharing solutions, ArchTIS has seen its share price surge 14% over the last week. At the time of writing, shares in the company are trading for 19 cents apiece.

Worth noting, the company released its earnings for the first half of financial year 2022 last Thursday.

Over the half, the company’s revenue more than doubled ­to reach $2.4 million last half. That’s a 118% increase on that of the prior comparable period.

Additionally, its reoccurring revenue grew 104% to $2 million.

WhiteHawk Ltd (ASX: WHK)

The WhiteHawk share price began trading after an extended freeze late on Thursday. It has since gained 34% to trade at 16 cents.

The trading halt was imposed by the ASX as it ran a fine-toothed comb through the company’s recent disclosures.

The following day, WhiteHawk dropped its preliminary report for 2021.

Last year, the company’s revenue increased 180% on that of 2020 while it posted an after-tax loss of US$2.5 million.

The post 2 ASX cybersecurity shares going gangbusters this week appeared first on The Motley Fool Australia.

More reading

• Here’s how these top 3 ASX 200 mining shares performed in February
• Here’s why the Boss Energy (ASX:BOE) share price has surged 37% in a week
• This commodities index just saw its biggest rise in over 10 years. What might this mean for ASX 200 shares?
• Top brokers name 3 ASX shares to buy today
• Why did the ANZ (ASX:ANZ) share price lag the other banks in February

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. owns and has recommended CrowdStrike Holdings, Inc. The Motley Fool Australia owns and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended CrowdStrike Holdings, 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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The Boss Energy Ltd (ASX: BOE) share price has been soaring recently despite no official news from the company. The price surge has coincided with a rise in energy prices across the board.

At the time of writing, the Boss Energy share price is up 2.82% to $2.55. To compare, the ASX All Ordinaries Index (ASX: XAO) is up just 0.11%.

So what’s been going on with the uranium producer?

Uranium prices surge

The last we officially heard from the company, it had appointed a new non-executive director. The appointee had previously worked at Boss’s new joint venture partner, the Canadian-listed First Quantum Minerals Limited.

The Boss Energy share price jumped 8% on the joint venture announcement on 10 February.

And since its last announcement to the market on 21 February, the Boss Energy share price has jumped by 30%.

However, it’s not just Boss Energy shares seeing price increases. At the time of writing, the S&P/ASX 200 Energy Index (ASX: XEJ) is up 3.78% — making it the best performing sector so far today.

It coincides with uranium’s performance on commodities markets. At the time of writing, it’s trading at US$50.35 a pound, according to Trading Economics. That’s up 5% on the day and more than 11% in the past month.

Gas prices up amid Ukraine crisis

Its energy sector cousins are also soaring. At the time of writing, the price of natural gas is US$4.64/MMBtu, up 5% in the past week. Similarly, Brent crude oil is currently fetching US$108.77 a barrel — its highest price in five years.

The surge in energy prices during the last month have been attributed to”supply disruption” concerns surrounding the Russian invasion of Ukraine.

“The traders are becoming increasingly reluctant to buy Russian oil and are dancing payment and delivery difficulties,” according to Trading Economics.

Meanwhile, The Wall Street Journal is reporting the US and “other major oil-consuming nations” are tossing up whether to dip into emergency oil stockpiles due to the conflict.

Once Boss Energy restarts uranium operations at its flagship site in South Australia, the miner may have a hungry market waiting. Already many major consumers are looking to switch to carbon-free energy sources — as seen in France and Germany.

Boss Energy share price snapshot

Over the last 12 months, the Boss Energy share price increased by 125%. In that time, Boss shares have seen a 52-week low of 31 cents and a high of $3.08.

The company has a market capitalisation of $719 million and a price-to-earnings ratio (P/E) of around 666.7.

The post Here’s why the Boss Energy (ASX:BOE) share price has surged 37% in a week appeared first on The Motley Fool Australia.

More reading

• Here’s why the Boss Energy (ASX:BOE) share price is racing 8% higher today

Motley Fool contributor Alice de Bruin 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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With the recent geopolitical turmoil, spurred on by already hot-running inflation throughout global markets, commodities are now well within another supercycle.

The last we saw was roughly 10 to 15 years ago. That’s when metals such as gold, iron ore and steel surged on the back of global demand and limited supply.

Fast forward to 2022, it’s battery metals like lithium and copper. Whilst the macro-narrative is slightly different, the raw data is no different. Inflation is at 40-year highs, there is conflict between major global powers in Europe, we’re overcoming a pandemic; alas, it’s not just investors feeling the pain.

Nevertheless, commodities are front and centre once more considering the demand-supply dynamic that’s vice-gripped essential energy and metals segments in 2022.

The Bloomberg Commodity Index (BCOM) tracks a global basket of commodities and reflects movements in 33 commodity futures contracts, per Bloomberg.

It has gained 4% overnight and is up more than 20% this year to date. That’s as key weightings like oil, gold and natural gas each soar this year.

The largest weighting, the gold 100 oz future contract for 22 April settlement, comprises almost 14%, whereas oil collectively makes up over 16%, and natural gas another 8.5% (shown below).

With each of these segments – and just about every other commodity segment – entering the cycle, it’s no wonder the index is one of the best-performing instruments out there in 2022.

Just take a look at Brent Crude Oil. No one thought it would reach US$100 per barrel again. Yet, here we are today with Brent above US$106.80.

What does this mean for ASX 200 shares?

Taking a high-level look, apparently not much. Whilst the commodities sector is roaring 20% higher in 2022, the S&P/ASX 200 Index (ASX: XJO) has plunged 5% into the red.

In fact, 151 out of the 200 companies are in the red today. Just 42 are posting a gain at the time of writing.

But digging a little further reveals some more accurate results.

Let’s zoom out and see what shares are performing well over the last 12 months, seeing as the index itself is up just 5% in that time.

Of the top 10 performers in the past year, nine are resources, mining, minerals, energy or metals companies that each have some level of direct or indirect exposure to commodities.

Looking at today’s session, of the top 10 performing stocks there is only one company without exposure to commodities. All the rest do, and are firmly in the green at the time of writing.

What about the top 20 performers today?

Funnily enough, 19 out of the 20 top-performing stocks on Wednesday have exposure to commodities. The results are very similar over a 12-month timeframe as well.

So, on re-evaluation – what does this mean for ASX 200 shares? Taking a more pragmatic look, it appears it means a lot for the ASX 200 basket.

With the major performers each being companies that have some exposure to commodities, it’s abundantly clear what is driving returns in 2022.

Hence, the rally that commodities are staging in 2022 appears to be weighing in significantly on ASX 200 shares and keeping things afloat.

The post This commodities index just saw its biggest rise in over 10 years. What might this mean for ASX 200 shares? appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Rio Tinto, South32 storm higher, PointsBet sinks
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX shares today
• ASX 200 shrugs off today’s RBA interest rate decision
• The Soul Pattinson (ASX:SOL) share price has lost 17% so far this year. Is it a buy?

Motley Fool contributor Zach Bristow 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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Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a large number of broker notes this week.

Three ASX shares brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $30.00 price target on this banking giant’s shares. This follows news that the bank is combining its Digital Division, including ANZx, and its Australian retail business. Morgan Stanley is positive on the news and sees it as a good way to strengthen the all-important digital proposition and help turnaround its retail market share losses. The ANZ share price is currently trading at $25.76.

Block Inc CDI (ASX: SQ2)

A note out of Macquarie reveals that its analysts have initiated coverage on this payments giant’s shares with an outperform rating and $230.00 price target. The broker believes that Block is well-placed to grow its ARPU thanks to management’s plan to leverage its Afterpay and Cash Card offerings. The latter reached 13 million monthly active users at the end of December, representing more than 30% of its 44 million monthly transacting active user base. The Block share price is fetching $173.75 this afternoon.

Zip Co Ltd (ASX: Z1P)

Analysts at Morgans have retained their add rating but slashed their price target on this buy now pay later provider’s shares down to $3.94. According to the note, the broker sees positives in its plan to acquire Sezzle Inc (ASX: SZL). It notes that the deal has the potential to help Zip win more merchants thanks to its larger combined customer base. The Zip share price is trading at $1.95 on Wednesday afternoon.

The post Top brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

More reading

• Why did the ANZ (ASX:ANZ) share price lag the other banks in February
• ‘Strategic sense’: What brokers are saying about the Zip (ASX:Z1P)-Sezzle deal
• These 3 ASX 200 shares are topping the volume charts this Tuesday
• Why Dubber, Evolution, Sandfire, and Zip shares are dropping
• Leading brokers name 3 ASX shares to sell today

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 Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended Block, 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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The S&P/ASX 200 Index (ASX: XJO) enjoyed a month of tentative gains over Febraury, as it turns out. Fresh from January’s disappointing returns, February saw the ASX 200 gain 1.1% for the month. Unfortunately, the Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price wasn’t so lucky.

ANZ shares spent February going backwards. This ASX 200 big four banking share began the month that was at $26.53 a share, but finished it up this week at $26.01. That’s a loss of 1.96%. And an underperformance of more than 3%. Ouch.

But perhaps more disappointingly for investors, ANZ was also one of the worst performing ASX bank shares over February.

The worst-performing ASX 200 bank share?

Commonwealth Bank of Australia (ASX: CBA) shares lost 0.3% of their value over last month. So not quite as bad as ANZ.

But National Australia Bank Ltd. (ASX: NAB) had a corker, rising 6.67% over the same period. 

Westpac Banking Corp (ASX: WBC) really came out on top though. As my Fool colleague Brooke dug into this morning, Westpac ended up giving investors a very pleasing 12.3% gain over February. 

So why were investors leaving ANZ shares in the relative dust?

Well, it might come down to a lack of exciting news for the bank. Take a comparison to Westpac, for instance. Westpac seemed to excite investors with the completion of a $2.5 billion on-market share buyback program mid-month. It also dropped a set of quarterly results, which saw investors push up Westpac shares at the time. 

Something similar happened with NAB.

But although ANZ released its own quarterly update on 10 February, it doesn’t seem to have had the same kind of wow factor. 

Another issue at play could be the falling owner-occupied mortgage market share issues that my Fool colleague Tony dug into last month. 

So after ANZ’s lacklustre February, could this ASX bank share be in the buy zone today? 

Are ANZ shares a buy today?

Well, one broker who thinks they might be is Goldman Sachs. Last month, Goldman kept its buy rating on ANZ intact, complete with a revised 12-month share price target of $30.84 a share (down from $31.82). That still implies a potential upside of more than 19% over the coming year. 

The broker reckons the softness that the bank is currently experiencing is “contained”. Further, Goldman notes that ANZ is “making progress to improve systems and processes for simple home loans”. 

At the current ANZ share price, this ASX 200 bank share has a market capitalisation of $72.58 billion, with a dividend yield of 5.5%. 

The post Why did the ANZ (ASX:ANZ) share price lag the other banks in February appeared first on The Motley Fool Australia.

More reading

• Own ANZ shares? Here’s the bank’s latest move to ‘better prepare for future growth’
• Greater Certainty: Why this top broker is bullish on ANZ (ASX:ANZ) shares in 2022
• Bad ATM? The ANZ share price was hammered more than any other ASX 200 bank today
• Should you be buying ASX 200 bank shares in February?
• Why ANZ (ASX:ANZ) shares have been punished, but experts are now bullish

Motley Fool contributor Sebastian Bowen owns National Australia Bank Limited. 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 Westpac Banking Corporation. 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 A2 Milk Company Ltd (ASX: A2M) share price has gone on a rollercoaster ride since COVID-19 came along.

But the last 12 months show a sizeable decline. A2 Milk shares have plunged 42%.

The company sold vast amounts of infant formula as consumers stocked up their shelves for the lockdowns in 2020. But then demand shrank. The daigou significantly slowed down their purchasing. Chinese customers bought more products from Chinese companies.

A2 Milk ended up with more inventory and lower revenue. It had to take, and is taking, significant action to try to remedy things. An improving profit situation could provide a boost for the A2 Milk share price.

But the recent profit is still showing profit damage and decline.

Half-year result

It recently announced the report for the first six months of FY22.

A2 Milk said that market conditions continued to be challenging, with the Chinese infant formula market declining by 3.3% in value during the first half due mainly to the cumulative impact of a lower birth rate.

The company also said the Australian and US premium liquid milk markets saw growth.

Year on year, revenue was down 2.5% to $660.5 million. But this represented 24.8% growth in the second half of FY21.

Chinese label infant formula sales were constrained by A2 Milk in the first quarter to rebalance distributor inventory levels with sales down 11.4%. However, consumer offtake growth in-store and online was up by “double-digits” with a higher market share.

English and other label infant formula sales were down 9.8%, with a lower market share, but with an improvement in the sales trajectory during the half, particularly in the ANZ reseller channel.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 45.3% to $97.6 million. The EBITDA margin was 14.8%, down from 26.4% a year ago. Net profit after tax (NPAT) fell 53.3% to $56.1 million.

But there may be promising times ahead, according to management.

Outlook for A2 Milk and the share price

It couldn’t give any specific guidance for the rest of FY22.

However, it did say it’s expecting Chinese label infant formula sales to be up in FY22. The second half is expected to be up “significantly” compared to the first half of FY22. This is due to the first half of FY22 having been impacted by distributor inventory rebalancing and in the second half as the company’s growth strategy starts to have a positive impact on sales.

English label infant formula sales are also expected to be up in FY22, with growth in the second half of FY22 compared to the first half due to improved inventory levels and pricing, as well as improved execution in the ANZ reseller and cross-border e-commerce channels.

Liquid milk sale growth is also expected in Australia and the US.

The company said that growth is going better than expected, though the gross profit margin isn’t expected to improve because of increasing milk, ingredient and packaging costs.

It’s focused on a number of initiatives to drive future growth.

Analyst rating on the A2 Milk share price

Opinions are mixed. Macquarie still rates the business as ‘underperform’ because of strong competition and higher spending (particularly on marketing).

Meanwhile, Citi rates it as a buy with a price target of $7.02 because of expectations for being able to increase prices and the tactics to improve things despite the difficulties.

The post What’s next for the A2 Milk (ASX:A2M) share price? appeared first on The Motley Fool Australia.

More reading

• Why the A2 Milk (ASX:A2M) share price can climb 40%: broker
• Top brokers name 3 ASX shares to buy next week
• Leading brokers name 3 ASX shares to sell today
• ‘The sleeper has awakened’: Top broker gives its verdict on the A2 Milk (ASX:A2M) share price
• ASX 200 shares stage comeback amid Russia optimism

Motley Fool contributor Tristan Harrison 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 Webjet Limited (ASX: WEB) share price edged almost 10% higher last month after a sluggish performance in late January.

Indeed, it was a strong finish, considering its shares touched a three-month high of $6.18 on 11 February.

Nonetheless, investors appear to have mixed feelings when it comes to deciding the value of Webjet shares in the current climate. Its shares have wobbled towards the back-end of February given the tense geopolitical standoff between the West and Russia.

At the time of writing, the online travel agent’s shares are down 3.80% to $5.32.

Is a full-recovery nearby for Webjet’s earnings?

It has been relatively quiet on the news front from Webjet, with its shares in a sideways channel of late.

Before ascertaining as to when Webjet’s earnings will return to normal levels, we take a look at its latest financials.

In November, the company released its first-half results for FY22, highlighting a rebound across the international travel industry.

Webjet reported a cash surplus of $3.5 million per month, a significant turnaround compared to FY21. Severe lockdowns led the company to record an average monthly cash burn of $5.5 million in the previous financial year.

Total Transaction Volume (TTV) revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) all soared over the 6-month period. TTV stood at 63% of pre-COVID volumes in its WebBeds’ B2B business with many travel markets still yet to reopen.

Revenue on the other hand, came to $55.4 million, more than double the $22.6 million achieved in H1 FY21. EBITDA registered a loss of $38.2 million, an improvement from the $114.4 million loss in the prior corresponding period.

Expenses were also down materially compared to pre-COVID, reflecting strategic initiatives implemented by the company.

If the microenvironment goes on to be stable, Webjet’s TTV could reach pre-COVID levels by the second-half of FY23. On top of that, its group portfolio will be a much leaner business, having trimmed 20% of operating costs.

Looking ahead, Webjet is scheduled to report its FY22 results towards the backend of May 2022.

Webjet share price summary

In the last 12 months, Webjet shares have lost around 5% after hitting the brakes in late January 2022. The share price closed at an eight-month low of $4.61 on 27 January.

Nonetheless, the company has gradually been moving on an upwards trend, but is still a long way off from pre-pandemic levels.

Based on valuation grounds, Webjet has a market capitalisation of around $2.02 billion, with approximately 380.51 million shares on issue.

The post How did the Webjet (ASX:WEB) share price travel in February? appeared first on The Motley Fool Australia.

More reading

• Why is the Webjet (ASX:WEB) share price having such a lousy start to the week?
• These are the 10 most shorted ASX shares
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• Is the Webjet (ASX:WEB) share price about to fly higher?
• The Webjet (ASX:WEB) share price has climbed 17% so far this year. Is it still a bargain?

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. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Webjet 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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At lunch on Wednesday, the S&P/ASX 200 Index (ASX: XJO) has bounced back from a poor start and is trading higher. The benchmark index is currently up 0.2% to 7,113.1 points.

Here’s what is happening on the ASX 200 today:

Mining sector lifts ASX 200

The mining sector has played a major role in driving the ASX 200 index into positive territory on Wednesday. The likes of Rio Tinto Limited (ASX: RIO) and South32 Ltd (ASX: S32) are storming higher following a strong night for commodity prices. According to CommSec, the spot iron ore price rose 3.8%, the aluminium price climbed 3.3%, and the thermal coal price jumped 14%.

PointsBet shares sink

The PointsBet Holdings Ltd (ASX: PBH) share price is tumbling lower today amid weakness in the tech sector and in response to a broker note out of Goldman Sachs. The latter has seen the broker retain its buy rating but slash its price target by a further 32% to $6.74. Goldman made the move to reflect a de-rating of peer multiples and lower earnings estimates.

Woodside shares hit 52-week high

The Woodside Petroleum Limited (ASX: WPL) share price has continued its impressive run on Wednesday. This morning the energy producer’s shares hit a new 52-week high of $29.72. This means the company’s shares are now up 31% in 2022. This appears to have been driven by a jump in oil prices to seven-year highs overnight.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Wednesday has been the PolyNovo Ltd (ASX: PNV) share price with a 5.5% gain. This is despite there being no news out of the medical device company. Going the other way, the PointsBet share price is the worst performer with a 9% decline following Goldman’s broker note.

The post ASX 200 (ASX:XJO) midday update: Rio Tinto, South32 storm higher, PointsBet sinks appeared first on The Motley Fool Australia.

More reading

• Why is the PointsBet (ASX:PBH) share price sinking 13% today?
• This broker tips South32 (ASX:S32) as one of the best ASX 200 mining shares to buy
• Own Woodside (ASX:WPL) shares? Here’s the latest on the energy giant’s major court win
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX shares today

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 POLYNOVO FPO and Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet 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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The PointsBet Holdings Ltd (ASX: PBH) share price is having another disappointing day.

In morning trade, the sports betting company’s shares are down 13% to $3.62.

This means the PointsBet share price is now down by almost 50% since the start of the year and 75% over the last 12 months.

Why is the PointsBet share price sinking today?

Today’s decline by the PointsBet share price appears to have been driven by a combination of weakness in the tech sector and the release of a broker note out of Goldman Sachs this morning.

In respect to the latter, Goldman has been one of PointsBet’s biggest supporters over the last couple of years.

For example, when the broker initiated coverage on PointsBet in March 2021, it put a buy rating and $17.50 price target on the company’s shares.

Unfortunately, since then, although the broker has continued to hold onto its buy rating, its price target has been moving lower and lower.

So much so, approximately two years after initiating coverage on PointsBet, this morning the broker retained its buy rating but slashed its price target by a further 32% to $6.74.

And while this price target continues to offer significant upside for investors, it appears as though the market is concerned that it will eventually be cut lower like previous targets.

Why has its price target been slashed?

Goldman explained that it made the move to reflect a de-rating of peer multiples and lower earnings estimates.

It commented: “Overall we have made some minor EBITDA changes across FY22-23E by -3/-2%, and larger 16% cuts in FY24 in account of further costs associated with planned state rollouts. Our MT to LT forecasts remain largely unchanged, premised on our house US$61 bn US TAM; however our 12-mo TP (SOTP based) falls to A$6.74 (from A$9.97 prior) driven by a MtM of peer multiples, consistent with our US Gaming revisions overnight.”

“Given the significant multiple compression of high growth names and the OSB sector, we now value PBH’s US business at maturity at 12.5x FY30 EV/EBITDA (discounted back at 10.4%, Cost of equity). Consistent with prior, we continue to apply a 5x discount to PBH’s US franchise vs. our US team’s revised DKNG 17.5x multiple,” Goldman added.

The post Why is the PointsBet (ASX:PBH) share price sinking 13% today? appeared first on The Motley Fool Australia.

More reading

• These were the worst performing ASX 200 shares in February
• These were the worst performing ASX 200 shares last week
• PointsBet (ASX:PBH) share price rising despite $131 million EBITDA loss
• Why Altium, PointsBet, Tyro, and Zip shares are sinking today
• Why is the PointsBet (ASX:PBH) share price crashing 11% today?

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 Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet 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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The AGL Energy Limited (ASX: AGL) share price has enjoyed a reversal in fortunes recently as it outperformed the market and its key rival.

The AGL share price added 2.3% over the past month and has gained around 18% since the start of 2022.

In contrast, the Origin Energy Ltd (ASX: ORG) share price slumped around 3.5% in the past month. That takes its gains since January to a modest 2.4%.

Even the S&P/ASX 200 Index (ASX: XJO) couldn’t keep pace with the AGL share price. It’s barely in the black in February and has dropped 6.5% this year.

Why the AGL share price is rebounding

The turnaround in AGL’s fortunes will be a welcome relief for shareholders who have seen its shares plunge over 20% in the past year.

The recent change in sentiment is largely thanks to a takeover offer by Atlassian Co-CEO Mike Cannon-Brookes and Brookfield Asset Management.

AGL has rejected the unsolicited offer, claiming it undervalues the whole business. But some believe the company is still in play as it attempts a messy demerger.

No credible transition plan out of coal

AGL’s ownership of fossil-fuel-burning power plants is one of the big reasons why the AGL share price has fallen out of favour.

There isn’t a clear plan on how the power plant and energy retailer can transition to a net-zero future.

Its plan to spin off the problematic coal-fired power assets into a new listed ASX entity isn’t much of a solution. Many current AGL shareholders who will get shares in “Dirty Co” through the spinoff don’t want to own dying assets.

AGL share price still a hostage to low carbon future

There is also no guarantee that AGL can pull off the demerger as some shareholders think it is “value destructive“.

Selling Dirty Co to a group with the resources and means to more quickly replace the coal power plants with renewables is a simpler solution for shareholders – if all parties can agree on a price.

How management navigates the transition will be a more important determiner of the longer-term performance of the AGL share price.

Origin vs AGL

Being stuck with assets is the key reason why the Origin share price has delivered superior returns over the past year or more.

Like AGL, Origin has a retail business. But unlike AGL, Origin owns LNG assets. While some might say LNG contributes to climate change, gas is still regarded as a better alternative to coal.

The post Why did AGL (ASX:AGL) shares smash Origin in February? appeared first on The Motley Fool Australia.

More reading

• Why is the Origin (ASX:ORG) share price edging lower today?
• Origin (ASX:ORG) share price lifts amid green hydrogen news
• Shareholder calls out AGL (ASX:AGL) planned demerger as ‘value destructive’
• These 5 ASX 200 shares are trading ex-dividend today
• Here’s why Mike Cannon-Brookes isn’t giving up on AGL (ASX:AGL)

Motley Fool contributor Brendon Lau 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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