Day: 26 May 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.

What happened

A day after Snap (NYSE: SNAP) plunged 43% on a guidance cut, the social media stock was bouncing back as investors seemed to spy an opportunity in the sell-off. 

As of 12:22 p.m. ET today, the stock was up 9.8%.

So what

On Monday night, Snap issued a filing saying it now expected second-quarter revenue and EBITDA to come in below the bottom end of its previous guidance due to a deteriorating macroeconomic environment. In other words, the company now expects revenue growth of less than 20% in the second quarter, and to report an EBITDA loss for the quarter. 

That warning was enough to sink the whole tech sector yesterday with a number of digital advertising stocks falling double digits. However, today investors seemed to spy a buying opportunity in Snap stock, and it’s easy to see why.

If Snap’s argument about macro conditions is correct, then a 43% sell-off in the stock seems excessive. The company isn’t losing market share and its long-term growth plans are still intact. However, there are a number of signs that the overall economy is decelerating. The Federal Reserve is aggressively raising interest rates. Inflation is at a 40-year-high, and a number of tech companies have announced layoffs or hiring freezes.

After yesterday’s plunge, the stock trades at a price-to-sales ratio of just five, the cheapest it’s been since it went public.

Now what

Advertising is cyclical, so it makes sense that companies like Snap would see demand falling in a weakening economy. However, the overall business still looks solid as it continues to grow its user base and remains popular with teens even as TikTok has grown.

While the next few quarters could be tough for Snap, there’s a decent chance the stock could be significantly higher in a few years. 

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

The post Why Snap shares were bouncing back today appeared first on The Motley Fool Australia.

More reading

• Is Snap stock a buy after its spectacular fall from grace?
• What’s happening with ASX 200 tech shares today?
• Why Snap stock cratered on Tuesday
• Here’s why ASX 200 tech shares are under pressure on Tuesday
• Snapchat share price dives 30% pulling Nasdaq futures lower

Jeremy Bowman has positions in Snap Inc. 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 Scott Phillips. 

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

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If you have any spare cash sitting in your account, I believe now would be the time to invest in these ASX shares.

While the S&P/ASX 200 Index (ASX: XJO) has tumbled heavily in recent times, there are some ASX shares that could be cheap.

Below, I have picked out what I think are the best three ASX shares to own at today’s prices.

Altium Limited (ASX: ALU)

The Altium share price hasn’t fared too well amid the constant beating of the S&P/ASX All Technology Index (ASX: XTX).

The 3D printed circuit board maker revealed a solid performance across its half-year results for FY22.

Altium reported US$102 million in revenue, an increase of 28% on the prior comparable period.

On the bottom line, net profit after tax (NPAT) lifted by 38% to US$23 million.

The ASX share upgraded its revenue guidance to the high-end of the range for FY22.

As such, management is targeting revenue between US$213 million to US$217 million. This represents a growth of around 18-20%.

In addition, underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) margin is expected to be roughly 34-36%.

The company said that it’s planning to scale up its leadership recruitment including new cloud and enterprise sales roles.

The Altium share price is trading at $27.78, a 36% discount from its all-time high of $45.30 reached in December.

CSL Limited (ASX: CSL)

This global biotech leader in developing and delivering life-saving medicines has seen its shares tank over the past few months.

In February, the CSL share price touched a 52-week low of $240.10 before moving in circles. This is in stark contrast to when its shares were trading above the $300 mark towards the backend of last year.

Despite keeping a relatively quiet front on the news side, CSL has been restoring its plasma collections to pre-COVID levels.

When the ASX share reported its half-year results, management said that plasma numbers were 18% higher than H1 FY21.

CSL opened 18 new facilities in the first half of FY22 to attract lapsed and new donors through its doors.

There are plans to open another 35 centres, expanding its presence, mostly across the United States.

Possibly weighing down CSL shares is the announced delay in completing the acquisition of Vifor Pharma. Originally, the deal was due to be wrapped up by June 2022, however, receiving regulatory approvals is taking a little longer.

At the time of writing, CSL shares are down 0.64% to $271.86.

Northern Star Resources Limited (ASX: NST)

Every portfolio should have at least one established gold company, and I believe Northern Star should be on your list. 

The current environment is extremely fluid, given the number of macro factors that are occurring on the world stage.

Inflation, rate hikes, geopolitical tensions, and the unpredictability of global markets are influencing the price of gold.

Northern Star is one of the biggest gold miners in Australia, and could benefit from the bullish run on the precious yellow metal.

The market appears to have already priced in potential interest rate rises, which may lead to gold prices surging yet again. This is because of the extremely high levels of inflation which could dent economic growth, leading to slower-than-expected rate hikes.

With this in mind, Northern Star might be in for a bumper result when it reports in August this year.

The Northern Star share price is down 5% in 2022 and 17% over the past month but has began to recover some lost ground in the past week. At the time of writing, it is down 2.4% on the day to $8.89.

The post Why I think these 3 ASX shares are top-quality buying at today’s prices appeared first on The Motley Fool Australia.

More reading

• After being stuck in the mud for 3 years, are CSL shares a buy today?
• Why are ASX gold shares leaping today?
• The best 2 ASX shares money can buy right now: expert
• 5 things to watch on the ASX 200 on Wednesday
• ASX shares paid out a record $98b in dividends in the 12 months to March. Which are the star performers?

Motley Fool contributor Aaron Teboneras has positions in Altium and Northern Star Resources Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium and CSL Ltd. 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 Scott Phillips.

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The Galileo Mining Ltd (ASX: GAL) share price is rocketing higher again on exciting news about the Norseman Project.

Assay results from drilling at the project’s Callisto palladium, platinum, copper, and nickel discovery have confirmed significant zones of mineralisation.

At the time of writing, the Galileo Mining share price is $1.19, 25.93% higher than its previous close.

Let’s take a closer look at the results dubbed “a very important step forward” by the company’s managing director.

Galileo Mining breaks trading halt with assay results

The market is bidding the Galileo Mining share price higher after the company exited a trading halt this morning on the release of assay results from the Callisto discovery.

Assays from six drill holes have confirmed the presence of palladium, platinum, gold, copper, and nickel in the area.

Galileo Mining managing director Brad Underwood commented:

The assays from all drill holes undertaken at Callisto contain significant zones of mineralisation and confirm initial results from the discovery drill hole …

Today’s results are a very important step forward as we have now shown the sulphides are carrying high value metals in all six drill holes completed …

The extensive prospective strike, combined with the thick and consistent mineralisation drilled to date, indicates the potential for a large mineralised system.

The company will begin another round of reserve circulation drilling next week. That will see a further 20 drill holes undertaken, focusing on drilling across the strike to find the thickest, highest grades.

The program will focus on the area east of the six drill holes, labelled a priority target. It will also continue north.

The company is ultimately aiming to move the company’s discovery drilling to advanced and detailed resource drilling.

Additionally, samples from the discovery’s initial drill hole are still being tested for rhodium, osmium, ruthenium, and iridium.

Finding rhodium or other platinum group element metals could add significant prospectivity to the area.

Galileo Mining share price snapshot

The Galileo Mining share price has been roaring higher this month following the announcement of the Callisto discovery.

The stock is currently trading 417% higher than it was at the start of 2022.

The company has a market capitalisation of about $159 million.

The post Galileo Mining share price surges another 25% on ‘very important’ drill results appeared first on The Motley Fool Australia.

More reading

• The Galileo Mining share price has been on a tear, but now it’s halted. What’s happening?
• Here’s why the Galileo Mining share price is up 13% today and 125% this week
• The Galileo Mining share price has rocketed 380% in a week. But this billionaire is still buying up big
• Why is the Galileo Mining share price jumping 42% today?
• Why did the Galileo Mining share price tumble 18% in early trading 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 Scott Phillips.

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The A2 Milk Company Ltd (ASX: A2M) share price has been on a tumultuous ride these past 12 months, sliding 17% in that time.

Downward trends have prevailed this year to date as well with the dairy nutrition company’s shares down by 19%.

But one broker is taking a glass-half-full approach to the future of A2 Milk.

Broker weighs in on A2 Milk share price

Purveyors of infant formula in the US have been biting their nails since February after one of the largest domestic manufacturers made large recalls on its product line.

Abbott Laboratories was forced to immediately shut a manufacturing facility after it discovered bacteria on the site, while simultaneously recalling shelved product and inventory from the market.

The result has been a dramatic wind back in the domestic production of infant formula in the US, resulting in a dislocation between demand and supply.

For these reasons analysts at investment bank Citi are flagging a potential entry into the US market for A2 Milk – something the company has been trying to secure for years.

Previously, Citi says, the US infant formula market has been ring-fenced from outside entrants such as A2 Milk, but that could all be set to change amid the latest challenges.

In a recent note, Citi analysts covered both BUBS Australia Ltd (ASX: BUB) and A2 Milk and reckon both are well positioned to take on a US entry.

As a result, the investment bank revised its targets upwards for the A2 Milk share price, lifting its rating from a sell to neutral in the process.

With that, it values the company at $4.64 per share, well behind the consensus price target of $5.83 apiece, according to Bloomberg data.

From this list of analysts, per Bloomberg, roughly 27% say to buy A2 Milk, whereas 60% say it’s a hold right now. The remaining coverage urges clients to sell their positions in the company.

At the time of writing, the A2 Milk share price is down 0.68% today at $4.38.

The post Low on milk? Fear not, here’s why Citi is bullish on the A2 Milk share price appeared first on The Motley Fool Australia.

More reading

• These 3 ASX shares have plunged this year: Expert reveals what to do
• Can A2 Milk shares benefit from the US baby formula shortage?
• A2 Milk share price wavers amid class action news
• Why is the A2 Milk share price falling today?
• Why A2 Milk, Gold Road, GrainCorp, and Monash IVF shares are dropping

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 recommended A2 Milk and BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Champion Iron Ltd (ASX: CIA) share price has dropped into the red on Thursday.

In morning trade, the iron ore miner’s shares are down 3% to $7.51 following the release of its full-year results.

Champion Iron share price falls on FY 2022 results release

• Revenue up 14% year on year to C$1,460.8 million
• Earnings before interest, tax, depreciation and amortisation (EBITDA) up 13% to C$925.8 million
• Net income up 12.5% to C$522.6 million
• Cash on hand and restricted cash of C$396.4 million

What happened in FY 2022?

For the 12 months ended 31 March, Champion Iron delivered a 14% increase in revenue to C$1,460.8 million and a 13% lift in EBITDA to C$925.8 million.

This was driven by a 14% increase in net average realised iron ore price to C$190.9 per dry metric tonne, which more than offset a small production decline and higher costs.

The company’s production of high-grade 66.2% iron ore fell 1.1% to 7,907,300 wmt during the 12 months, whereas its cash costs rose 8.7% to C$58.9 per dmt.

Champion’s CEO, David Cataford, was pleased with the company’s performance during the 12 months. He said:

Delivering robust operational and financial results for our 2022 fiscal year, while completing our Phase II expansion project is a significant achievement highlighting our team’s professionalism and perseverance.

This year we will work to double Bloom Lake’s nameplate capacity and further position our Company’s contributions towards green steelmaking solutions. In addition to ongoing feasibility studies for our DR pellet feed project and the Kami Project, we also partnered with a global leader in the steel industry, in order to evaluate the opportunity to re-commission our recently acquired Pellet Plant in Pointe-Noire and produce DR pellets.

How does this compare to expectations?

According to a note out of Goldman Sachs, it was expecting Champion to report revenue of C$1,466 million and EBITDA of C$924 million. This means the company has fallen short on revenue but beaten on earnings.

In light of this, the pullback in the Champion Iron share price is likely to have been driven more from sector weakness rather than these results. A number of iron ore miners are also trading notably lower today.

The post Champion Iron share price falls on FY22 results appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday

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 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 Scott Phillips.

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It isn’t easy to decide which horse to back during these volatile times, but top broker UBS has just added two ASX 200 shares to its ‘best ideas’ list.

The list reflects its most preferred and least preferred ASX shares for the next 12 months. The names on the list take into account UBS analysts’ views of individual shares and a macro view of the sectors.

Geopolitical conflict, runaway inflation, supply chain chokes, and rising interest rates are some of the many factors hanging over equities today.

Stagflation risk casts a long shadow

The bad news is that UBS believes the risk of stagflation is increasing. This is when inflation is high but economic growth is low to non-existent.

Such an outcome would be terrible news for ASX 200 shares. But there are some that are well placed to outperform.

In fact, UBS reckons a handful of ASX companies can even deliver solid earnings growth in such an environment.

Why some ASX 200 shares can thrive in the volatility

There are four themes that the broker is expecting. The first is a persistently tight global commodities market. Prices of metals to food have been surging higher and there is no relief in sight in the short to medium term.

The reopening of our domestic economy will also throw up some winners on the ASX 200. This is despite the threat of a global economic slowdown.

Our record low unemployment rate is another tailwind that is hard to ignore. Combined with the high levels of savings that households and businesses have hoarded, you can see why Australian consumers are sitting in a pretty good spot.

The ASX 200 shares to buy in 2022

Based on these factors, UBS has added Wesfarmers Ltd (ASX: WES) to its best ideas list. The broker did this not so much for the conglomerate’s retail operations, but more for its commodities businesses.

Wesfarmers operates chemical, energy, and fertiliser businesses that service a range of sectors in both domestic and international markets. It also owns lithium assets, such as the Mt Holland mine, and is looking to build a lithium refinery in Western Australia.

The second ASX 200 share to make it onto the list is Qantas Airways Limited (ASX: QAN).

The broker explained:

“Qantas is also added to our most preferred as a means to fully capture the domestic economy’s reopening momentum, and the strength in Airlines globally.”

Least preferred ASX 200 shares

On the flipside, the two least preferred ASX 200 shares for the next 12 months are Adbri Ltd (ASX: ABC) and Inghams Group Ltd (ASX: ING).

This is largely because of the broker’s expectation that they will be most impacted by rising input prices.

The post Guess which ASX 200 shares UBS just added to its ‘best ideas’ list appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX shares today
• This is the top ASX 200 share I wish I’d bought when starting out
• Top brokers name 3 ASX shares to buy today
• ASX 200 midday update: BHP and Pilbara Minerals shares tumble

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 positions in and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The experts at Morgans believe there are some compelling ASX tech shares that are looking good value following their share price declines in 2022.

While shifting interest rates do change the theoretical value of businesses, the underlying business hasn’t changed and still has plans for growth.

The share prices of the two businesses below have dropped quite a lot and brokers like the look of them.

TechnologyOne Ltd (ASX: TNE)

TechnologyOne is a global tech business that provides cloud-based enterprise resource planning (ERP) tools for businesses and organisations.

How much cheaper is the ASX tech share now? In early morning trading today, the TechnologyOne share price is $10.22. That’s almost a 22% drop since the start of 2022. And that’s despite the growth that the business continues to report.

The company recently reported its first-half results for FY22. Revenue from its software-as-a-service (SaaS) “and continuing business” went up 21% to $169.5 million. Net profit after tax (NPAT) rose 18% to $33.2 million.

TechnologyOne says it has completed its SaaS transformation, with SaaS annual recurring revenue (ARR) reaching $225.1 million (up 44% year-on-year).

The company continues to win large-scale enterprise customers. It’s growing quickly in the UK, where profit before tax more than doubled to $2.3 million.

TechnologyOne says it sees “significant” growth opportunities in the coming years and it’s on track to deliver continuing strong growth over the full year in the UK. The total addressable UK market is three times larger than the Asia Pacific region.

In the long term, it’s expecting to reach total ARR of at least $500 million by FY26 and achieve a continuing profit before tax margin of 35% over time.

Morgans rates TechnologyOne shares as a buy with a price target of $11.53.

REA Group Limited (ASX: REA)

REA Group owns a group of digital real estate websites including realestate.com.au and realcommercial.com.au.

The business owns stakes in property websites in other countries including the US and India.

This ASX tech share has a leading market position in the property advertising digital space, allowing it to charge higher prices because it gets more eyeballs looking at its listings.

Due to the fact that it gets the most potential buyers, this can attract the most sellers, which attracts more buyers, and so on. Its market power allows it to regularly increase prices.

REA Group saw increased profitability in the latest update – the three months to 31 March 2022.

Revenue rose 23% to $278 million, while earnings before interest, tax, depreciation, and amortisation (EBITDA) increased by 27% to $155 million. Free cash flow jumped 39% to $91 million.

The ASX tech share can use that growing cash flow to pay larger dividends, make acquisitions and/or strengthen the balance sheet.

At the time of writing, the REA share price is $111.32. That’s a 35% drop year to date.

Morgans rates it a buy with a price target of $145.40. That implies a possible upside of 30%.

The post 2 beaten-up ASX tech shares with major upside: experts appeared first on The Motley Fool Australia.

More reading

• Leading broker names the best ASX tech share to buy following 2022’s tech meltdown
• Top brokers name 3 ASX shares to buy today
• The ASX 200 share with ‘hidden value’: fund manager
• 3 ‘disruptive’ ASX companies Aussies now can’t live without
• Why Nufarm, Sayona Mining, Tabcorp, and TechnologyOne shares are falling

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 REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The New Hope Corp Ltd (ASX: NHC) share price is tumbling in early trade, down 7.8%.

New Hope closed yesterday at $4.10 and is currently trading for $3.78 per share.

This comes after the S&P/ASX 200 Index (ASX: XJO) coal miner released its quarterly activities update this morning

What happened during the quarter?

The New Hope share price is sliding despite the company reported on tailwinds from continuing increases in coal prices over the three months.

The miner achieved quarterly underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $358.6 million. That brings its year-to-date underlying EBITDA (as at 30 April) to $913 million.

Russia’s invasion of Ukraine alongside a rising global energy shortage saw thermal coal prices hit all-time highs. In April New Hope received an average of US$326 per tonne for its thermal coal. That average price was 61% higher than the comparative quarter.

14 April marked the ex-dividend date for New Hope’s interim (17 cents) and special (13 cents) dividend payouts. Those were paid on 4 May.

Excluding those dividend payments, the ASX 200 coal miner had cash generation for the quarter of $281.8 million.

The New Hope share price could be coming under pressure from its report that total coal sold during the quarter declined by 26.7% from the prior quarter. The company said labour markets remained tight due to COVID-19 and it was also impacted by heavy rainfall at its Bengalla operations in New South Wales.

However, guidance for total coal sold for the 2022 financial year was lifted by 4.0%, to 9.461million tonnes from the previous 9.085 million tonnes.

Looking ahead the New Hope share price could continue to benefit from elevated coal prices.

According to the company:

Pricing is expected to remain elevated for the foreseeable future, with the potential for the market to structurally shift to materially higher long-term levels than those realised in the past.

New Hope share price snapshot

Despite today’s slide, the New Hope share price remains up 64% in 2022. That compares to 6% loss posted by the ASX 200.

The post Here’s why the New Hope share price is tumbling 8% on Thursday appeared first on The Motley Fool Australia.

More reading

• 3 ASX All Ordinaries shares smashing multi-year highs on Tuesday
• Why are ASX coal shares charging higher again today?
• Here are the best performing dividend shares in the ASX All Ords so far in 2022
• The New Hope share price has rallied 60% in 2022. Is there more to come?
• Why did ASX coal shares having such a stellar run on Thursday?

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 Scott Phillips.

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The Catapult Group International Ltd (ASX: CAT) share price is on the slide on Thursday following the release of the company’s full-year results. This is despite the rest of the tech sector shooting higher today.

At the time of writing, the sports technology company’s shares are down 6% to $1.08.

Catapult share price lower as losses widen

• Revenue up 54% to US$77 million
• Annual contract value (ACV) up 19.7% to US$63.9 million
• ACV churn down by over a third to 3.4%
• Underlying EBITDA loss of US$5.8 million
• Net loss widened by 265% to $32.1 million

What happened during the 12 months?

For the 12 months ended 31 March, Catapult reported a 54% increase in revenue to US$77 million and a 19.7% increase in ACV to US$63.9 million.

However, things weren’t anywhere near as positive for its earnings, with the company reporting a deterioration in its margins. Management advised that this was driven by its additional investment in accelerating ACV growth.

This led to Catapult recording an underlying EBITDA loss of US$5.8 million, compared to positive EBITDA of US$3.5 million in FY 2021 and US$9.4 million in FY 2020.

On the bottom line, Catapult revealed a net loss of US$32.2 million, up from a loss of US$8.84 million a year earlier.

Nevertheless, Catapult ended the period with a strong balance sheet. It reported $26.1 million of cash at bank.

Management commentary

Catapult’s CEO Will Lopes revealed that the company’s shift to a software-as-a-service (SaaS) model is coming along nicely. He said:

With our transition into a fully-SaaS model, we can better serve our customers around the world and provide them the objective data they need for their athletes and teams. As proof, subscription revenue accelerated dramatically after 12 months of strong ACV growth. With the world reopening post-pandemic, sports are delivering excitement and engagement again.

The strong rebound in North America especially, increases our confidence in future ACV growth. In FY22, the P&H vertical has also delivered high growth, and following our acquisition of SBG, we see new demand for our Tactics & Coaching solutions and are starting a second growth engine for the Company. The new customers we added along with new innovations continue to position us well for capturing demand at all levels of sport.

Outlook

Looking ahead, management is forecasting further solid growth over the next 12 months. It is expecting ACV growth of between 20% to 25% in FY 2023 with ACV churn in the range of 4.5% to 6%.

The company also appeared to address concerns that it may soon run out of cash.

It said:

Catapult is confident in its ability to generate strong operating cash flow in the short to long term. Operating cash flow is expected to be positive for FY23. During FY22 Catapult was subject to increasing supply chain challenges and cost inflation. These are expected to continue at a moderate degree throughout FY23, impacting freight, COGS, wage costs, and inventory sourcing. Catapult’s planned organic investments in FY23 are fully funded.

The post Why is the Catapult share price tumbling 6% lower today? appeared first on The Motley Fool Australia.

More reading

• 3 exciting small cap ASX shares to watch

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 positions in and has recommended Catapult Group International Ltd. The Motley Fool Australia has positions in and has recommended Catapult Group International Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Appen Ltd (ASX: APX) share price has come flying out of the gates on Thursday morning.

In early trade, the artificial intelligence services company’s shares were up as much as 35% to $8.64.

The Appen share price has pulled back a touch since then but remains up 29% to $8.29.

Why is the Appen share price rocketing higher?

Investors have been scrambling to get hold of Appen’s shares today after it revealed that it has received a takeover approach.

According to the release, the company has received an unsolicited, conditional, and non-binding indicative proposal from TELUS International to acquire it for $9.50 per share. This values Appen at approximately $1.2 billion.

Based on the Appen share price at the close of play on Wednesday, this offer represents a 46% premium for shareholders. Though, it is still well short of its 52-week high of $14.67 and two-year high of ~$40.00.

Will a deal be made?

Appen advised that it is looking over the offer but doesn’t sound overly keen to accept it. This may explain why the Appen share price is still trading at a sizeable 13% discount to the offer price.

It commented:

The Board is in discussions with Telus to seek an improvement in the terms of the Indicative Proposal. To facilitate this, the Board has offered to provide, on a non-exclusive basis, limited business and financial information, subject to Telus agreeing to enter into a mutually acceptable confidentiality and standstill agreement, which it has yet to execute. At this point in time, no material non-public information has been provided to Telus.

Trading update

It may prove quite fortuitous that the company received a takeover approach, because without it the Appen share price may have come under pressure from the release of a particularly weak trading update.

That update reveals that Appen’s year-to-date revenue was lower than it was at this time last year at the end of April.

In light of this, the company expects its first half earnings before interest, tax, depreciation and amortisation (EBITDA) to be “materially lower than the prior corresponding period.”

And while management expects its second-half performance to be stronger, its guidance has been wide of the mark in recent years so this is far from guaranteed.

The post Appen share price rockets 35% on Telus takeover approach appeared first on The Motley Fool Australia.

More reading

• Appen share price on watch amid $1.2 billion takeover bid
• If you’d invested $10,000 in Appen shares 7 years ago, lucky you! Here’s what you’d have now
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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 positions in and has recommended Appen Ltd. 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 Scott Phillips.

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