Month: May 2022

Shares of Cochlear Ltd (ASX: COH) have struggled this year to date, dipping 8% in the past week of trade alone.

The Cochlear share price pushed another 6% lower in the past month of trade, coming off a high of $236 in late April. Now trading at around $211, this represents an overall drop of almost 3% since January.

In wider market moves, the S&P/ASX 200 Health Care Index (ASX: XHJ) has slipped 10% this year to date but is up 3% in the last month of trade.

Is the Cochlear share price a buy?

Broker sentiment is mixed on which direction the Cochlear share price will travel in the next 12 months. In terms of ratings, calls are split evenly between buys and holds, according to Bloomberg data.

Specifically, 42.1% of coverage has it rated a buy or hold, with the remaining 16% of brokers urging their clients to sell Cochlear shares.

A flurry of broker updates came through in late April for Cochlear. Goldman Sachs pointed out that the company’s acquisition of Oticon Medical could be a net positive to boost industry pricing.

That’s because Oticon was previously a challenger to Cochlear, albeit with a lower pricing point, and the acquisition also folds in additional research and development (R&D) opportunities for the company.

The broker retained its buy rating and values Cochlear at $237 per share, well ahead of Morgan Stanley, which values it at $208 per share with a neutral stance.

Still, those at Morgan Stanley reckon the Oticon transaction shouldn’t face any issues from regulators, and that the company won’t add a material impact to Cochlear’s bottom line.

That view differs from analysts at Macquarie, however. The Macquarie team reckon that the $170 million Oticon transaction could spell earnings dilution in the short term for Cochlear.

Analysts reckon that there will be a range of $30 million–$60 million in integration costs and that Cochlear only acquired Oticon to boost its market share of the implant device market.

Macquarie is neutral on Cochlear as well, albeit values the company at $215 per share.

Opinion differs at Citi however, with analysts there rating the stock a buy with a $235 per share price target – right near Cochlear’s former highs.

The team at Citi made an interesting report noting the Oticon transaction is both an opportunistic and defensive play by Cochlear.

One curious point is the broker reckons Cochlear could even be capitalising on Oticon’s recall of its Neuro Zti implant in 2021, due to malfunction issues.

This made entry into the US difficult for Oticon, Citi says, but the transaction also consolidated Cochlear’s position towards becoming a market leader in the bone-anchored hearing aid segment as well.

The consensus price target for Cochlear according to Bloomberg data is $223.90 per share, implying around 6% upside potential should this come to fruition.

The post Down 8% in a week, is the Cochlear share price in the buy zone? appeared first on The Motley Fool Australia.

More reading

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• Broker says the Cochlear share price is in the buy zone following Oticon acquisition
• Top brokers name 3 ASX shares to buy today
• 2 medical tech ASX shares Morgans loves right now
• Cochlear share price falls on ‘loss making’ Oticon Medical acquisition

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 positions in and has recommended Cochlear Ltd. The Motley Fool Australia has recommended Cochlear 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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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 

Tesla (NASDAQ: TSLA) investors have been seeing the electric vehicle stock stumble as of late and they aren’t getting any reprieve today. The company’s stock was stumbling once again today, likely as investors processed several bits of news including the Securities and Exchange Commission (SEC) scrutiny of CEO Elon Musk’s Twitter purchase, rising inflation, and an analyst’s price cut for Tesla’s stock. 

The EV maker fell by as much as 7.4% this morning and was down by 1% as of 12:28 p.m. ET. 

So what 

First up is the SEC’s probe into Musk’s purchase of Twitter. Yesterday, The Wall Street Journal reported that the SEC was looking into whether or not Musk broke a rule when he disclosed his stake in Twitter. 

According to the report, Musk reported his stake a week later than he should have and also used a filing that’s usually reserved for passive investors.

Tesla investors aren’t keen to have Musk in the sights of the SEC again and it’s likely that some of them are selling off shares as a result today. 

Additionally, Tesla’s shares may be falling in response to an investor note by Wells Fargo analyst Colin Langan, who maintained an equal-weight rating on Tesla’s stock today but lowered his price target from $960 to $900. 

And if all that wasn’t enough to send Tesla’s share price falling today, general worry from investors about the U.S. economy isn’t helping either. An inflation report came out yesterday showing that inflation is still stubbornly high — at 8.3% in April — and that’s making investors increasingly concerned that aggressive interest rate hikes by the Federal Reserve will be needed. 

With more rate hikes likely on the way this year, investors are fleeing high-growth stocks in search of seemingly more stable investments.

Now what 

Tesla investors have already been on a wild ride lately, with this stock plunging 31% over the past six months.

Musk’s purchase of Twitter isn’t making things easier for himself or Tesla shareholders. And with investors already nervous about rising inflation and a potential economic slowdown, I think Tesla investors should continue to keep a bottle of antacid handy, at least for a little while. 

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

The post Why Tesla stock is falling again today appeared first on The Motley Fool Australia.

More reading

• The US stock market just took a major dive. What’s going on?
• Why Tesla stock dropped this morning
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• Elon Musk just sold $5.6 billion of Tesla shares. What’s the deal?

Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Chris Neiger 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 Tesla and Twitter. 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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The A2 Milk Company Ltd (ASX: A2M) share price and the Bubs Australia Ltd (ASX: BUB) share price have both suffered in recent times.

Over the last six months, the Bubs share price is down around 33%. The A2 Milk share price is down a similar level, around 35%.

From the peak in July 2020, A2 Milk shares are down around 80%. Looking at Bubs, it has declined more than 60% since July 2020.

Both businesses have seen similar falls, but which one is the better buy?

What’s the problem?

China is a key market for infant formula from both of these businesses. The country had a population of around 1.4 billion in 2021, so that’s a very large potential market of families that may want to buy infant nutrition.

A2 Milk blamed the decline on the prolonged impact of COVID-19 and a rapidly changing infant formula market. In FY21, it said that over the year the Chinese market growth reduced significantly from “globally high rates to be flat, and cross-border trade has been disrupted significantly which has had a profound impact on the company’s results”.

A2 Milk shares faltered as sales through the daigou/reseller and e-commerce channels suffered.

In FY21, the company saw revenue fall 30.3% to $1.21 billion and net profit after tax (NPAT) sank 79.1% to $80.7 million. A2 Milk took action to address excess inventory. It said this was reducing channel inventory, improving product freshness, and market pricing.

Bubs also saw a significant drop in daigou sales in FY21, with gross revenue dropping 24% to $46.8 million. It also suffered from an inventory write-down to the tune of $12.6 million.

Growth returning?

While FY21 saw a lot of disruption, things are improving.

A2 Milk is expecting to deliver revenue growth in FY22. The HY22 revenue was slightly down by 2.5% to $660.5 million. The overall Chinese infant formula market declined by 3.3% in value during the first half due to the impact of a lower birth rate.

A2 Milk is expecting the FY22 second-half revenue to be much more than that in the FY21 second half.

The latest update we’ve seen from Bubs is the FY22 third quarter. Gross revenue was up 49% to $17.6 million, the third consecutive quarter of growth on the prior year. Domestic retail infant formula sales rose 108% year on year. Total Chinese sales were up 8%. Excluding China, international gross revenue was up 153%, with international sales of Bubs-branded products growing by 63%.

Profitability

Bubs is not yet profitable, while A2 Milk is. Profitability can be a help for the A2 Milk share price.

A2 Milk made an NPAT of $56.1 million in the first half of FY22, though this was down 53.3%.

Despite the revenue growth expectations, A2 Milk isn’t expecting higher earnings as it “significantly” invests in the market and other activities related to its growth strategy.

Which one is better?

It may be that A2 Milk has a stronger brand, for now at least.

But Bubs is growing quickly. It’s growing strongly internationally, in Asian countries outside of China.

The broker Citi currently rates Bubs as a buy, with a price target of 59 cents. That implies a possible upside of around 57% on its current price of 37.5 cents. It noted the Chinese lockdowns could slow growth in the short term. It also noted Bubs’ new A2 beta-casein protein infant formula range, with the corporate daigou partner Willis Trading putting in an order valued at $32.9 million.

Citi rates A2 Milk shares as a sell, with a price target of $4.80. Citi thinks that A2 Milk could suffer from the lockdowns.

In my opinion, Bubs has managed to turn things around over the last several months. Its growth is now looking stronger than A2 Milk, it’s growing its product range and it’s setting the scene for good growth internationally by expanding its footprint in the US. For those reasons, I’d pick Bubs of the two. But share market volatility could remain elevated for a while.

The post Which is the better beaten-up buy, Bubs or A2 Milk shares? appeared first on The Motley Fool Australia.

More reading

• Bubs share price sinks 29% in a month. Top broker tips 60% upside
• Why A2 Milk, Imugene, Liontown, and Magellan shares are tumbling lower
• A2 Milk share price sinks to multi-year low following broker downgrade
• What’s the outlook for the A2 Milk share price in May?
• The A2 Milk share price plunged 15% in April. What went wrong?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 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 Infomedia Limited (ASX: IFM) share price isn’t going anywhere on Friday morning.

Just before the market open, the automotive industry software company’s shares were placed in a trading halt.

Why is the Infomedia share price in a trading halt?

The Infomedia share price was placed in a trading halt at the company’s request this morning while it prepares to make an announcement.

According to the request, that an announcement will relate to the receipt of a takeover approach. It explained:

The trading halt is requested pending the release of a material announcement by the Company in relation to receipt of a formal change of control proposal from an Interested Party.

The Company requests that the trading halt remains in place until the earlier of the time the Company makes an announcement in relation to the proposal, or commencement of trading on Tuesday 17 May 2022.

Who is attempting to acquire Infomedia?

Infomedia hasn’t revealed who has tabled the change of control proposal. However, it did release a separate announcement this morning which revealed a new substantial shareholder.

According to the release, the TA Consortium has become a substantial shareholder with 54.3 million shares. This equates to a ~14.5% stake based on Infomedia’s 375.76 million shares on issue.

Based on the release, the consortium appears to comprise Boston-based private equity firm TA Associates and Australian Viburnum Funds.

TA Associates, which has over US$47 billion of assets under management, has a track record of investing in technology shares, so it would be a likely suitor for Infomedia. Furthermore, it is no stranger to Australia. Last year it made a major investment in ETF provider BetaShares.

As things stand, no details have been released in respect to the proposal. Stay tuned for that on Tuesday.

The post Infomedia share price halted amid takeover approach appeared first on The Motley Fool Australia.

More reading

• Why Tesla stock is falling again today
• Which is the better beaten-up buy, Bubs or A2 Milk shares?
• Avita Medical share price tumbles 7% on declining Q1 revenue
• Own ASX 200 retail shares? Here’s how the majors are tackling climate change
• Is the BHP share price too exposed to the downside risks of China?

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 Infomedia. The Motley Fool Australia has recommended Infomedia. 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 Avita Medical Inc (ASX: AVH) share price is down 7.2% to $1.62 in early trade.

Avita focuses on regenerative medicines. Its spray-on Recell medicine is used to treat burn patients.

Below we look at the ASX healthcare share’s first-quarter results for the three months ending 31 March (Q1 2022).

What was reported for the quarter?

The Avita Medical share price is sliding after the company a 14% decrease in revenue compared to Q1 2021. Revenue for the quarter came in at $7.5 million.

The company reported the decline was largely due to its recognition of $4.1 million in Biomedical Advanced Research and Development Authority (BARDA) related revenue in 2021.

Avita’s Q1 2022 commercial revenue increased 61% year-on-year to $2.8 million. It attributed the lift to “broader utilisation among our customer base as well as deeper penetration within individual customer accounts”.

Gross profits of $5.7 million were down 13% from the $6.6 million reported in the prior corresponding period. Gross profit margin of 76% was identical to Q1 2021.

Operating expenses increased $2.8 million to $16.0 million, 21% higher than the corresponding quarter.

On the bottom line, and likely pressuring the Avita Medical share price today, the company reported a net loss of $9.5 million. That’s 58% more than the $6.0 million net loss reported for the first three months of 2021.

What’s next?

The company intends to use its cash reserves until US sales of its products ramp up to levels where those revenues can fund its ongoing operations. As at 31 March, Avita reported it has enough cash reserves to fund operations for the next 12 months.

Avita added, “We have no committed plans to issue further shares on the market.”

As for dividends?

“There were no dividends paid and we have no plans to commence the payment of dividends.”

Avita Medical share price snapshot

With this morning’s intraday losses factored in, the Avita Medical share price is down a painful 53% in 2022. That compares to a year-to-date loss of 9% posted by the All Ordinaries Index (ASX: XAO).

The post Avita Medical share price tumbles 7% on declining Q1 revenue appeared first on The Motley Fool Australia.

More reading

• Own ASX 200 retail shares? Here’s how the majors are tackling climate change
• Is the BHP share price too exposed to the downside risks of China?
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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Avita Medical Limited. The Motley Fool Australia has recommended Avita Medical 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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It’s often not the first sector that comes to mind when assessing the impacts of a changing climate, but ASX 200 retail shares bear plenty of brunt when it comes to weather-related disasters.

Just take recent floods in South Australia, New South Wales, and Queensland for example.

Woolworths Group Ltd (ASX: WOW) blamed the floods for supply chain disruptions and certain disappointing customer metrics over the third quarter. Meanwhile, Coles Group Ltd (ASX: COL) reported the events wiped $30 billion from its bottom line.

On top of that, a huge chunk of Australians are concerned about climate change. The ABC‘s Vote Compass has found climate change is the most important issue for 29% of voters in this year’s federal election.

And reflecting customer concerns is important for retailers’ business. Research by Ipsos in 2021 revealed 70% of customers chose to buy from brands they felt reflected their personal values.

So, what are the major ASX 200 retail shares doing to tackle climate change? Let’s take a look.

ASX 200 retail majors stepping up for climate

Wesfarmers Ltd (ASX: WES) is stepping up to the plate when it comes to climate change. The major conglomerate – which many Australians will know for its key retail businesses, Bunnings, Kmart, and Officeworks – has notable renewable energy goals.

The company lowered its scope one and two emissions by 9% last financial year. It’s also working to run all its retail business on renewables by 2025.

That goal is shared by supermarket giant Woolworths. The ASX 200 retail major currently uses around 1% of Australia’s electricity. Perhaps unsurprisingly, energy use is the biggest contributor to its carbon emissions.

It’s aiming to be carbon positive – removing more carbon from the atmosphere than it emits – by 2050 at the latest.

Coles’ goals differ slightly. It’s targeting 100% renewable energy by the financial year 2025 and plans to hit net zero by 2050.

Also by FY25, the ASX 200 retail giant expects to have diverted 85% of its solid food waste from landfill. For context, it diverted 80.6% of its solid waste from landfill last financial year.

Woolworths is one step ahead, aiming to redistribute all food waste from its operations away from landfill by 2025.

Wesfarmers is also working to recycle more of its raw materials through its circular economy strategy while Woolworths is working with suppliers to ensure its own brand products are created sustainably and sold in sustainable packaging.

Coles operates REDcycle, letting Australians recycle soft plastics in store. The recycling program was put in place in 2011.

Finally, Wesfarmers and Woolworths have both issued sustainability-linked bonds.

The former is also looking at the possibility of powering the production facility of its chemicals, energy, and fertiliser business – the group’s largest emitter – using green hydrogen.

The post Own ASX 200 retail shares? Here’s how the majors are tackling climate change appeared first on The Motley Fool Australia.

More reading

• Analysts name 2 ASX dividend shares to buy to beat inflation
• What’s with the Woolworths share price on Wednesday?
• Why is the Wesfarmers share price beating the ASX 200 this week?
• Do Coles shares offer a dividend reinvestment plan?
• Leading brokers name 3 ASX shares to sell today

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 positions in and has recommended COLESGROUP DEF SET and 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 BHP Group Ltd (ASX: BHP) share price has tracked down this past month and is now trading 12% lower in that time.

As the fallout from snap lockdowns in China continues to flow through to global equity markets, diversified mining giants like BHP haven’t been immune to the spillover.

In wider market moves, the S&P/ASX 300 Metals & Mining Index (ASX: XMM) is down by almost 14% on the month, suggesting weakness in the broader sector.

Is BHP too exposed to China?

If asking those at JP Morgan, this might not be the case. In a recent note to clients, the broker acknowledged weakness in the miner’s most recent earnings, but also noted BHP’s cash generating engine.

This ties into themes of inflation, which could be a net positive for BHP in the short term, the broker reckons.

“[T]hese inflationary pressures are supportive for most commodity prices and miners’ earnings have higher operational leverage to prices vs costs,” it said in a recent note.

“Despite downside risk to earnings due to the highest industry cost inflationary pressures in around 10 years, at spot commodity prices the sector carries significant mark-to-market upgrades; at spot prices, our revised BHP FY22/23E EPS [earnings per share] is +8%/+75% above Bloomberg consensus,” it added.

This view is supported by those over at Citi, with the broker baking in considerable upside over the coming periods for BHP as well, not in the least with beefed-up dividends to shareholders.

As reported by the Motley Fool, “Citi is expecting this cash flow to support fully franked dividends per share of ~$4.86 in FY 2022 and then ~$4.89 in FY 2023”.

However, this sentiment isn’t shared equally, as Kate Howitt, portfolio manager of the Fidelity Australian Opportunities Fund, reckons it could potentially be hurt by its concentration risk in China.

Howitt said she “likes BHP’s positioning, its proactive approach to securing social licence to operate and its strong cash flows”, she was quoted as saying by the Australian Financial Review.

“[B]ut,” she continued, “there’s no denying the stock will be pulled around by perceptions of China’s economic outlook and by commodity price swings.”

BHP has a 12-month consensus price target of $49.12 per share according to Bloomberg data.

In early trading today, the BHP share price is up 1.09% to $45.44. In the last 12 months, BHP shares have slipped around 10% despite a 7% gain this year to date.

The post Is the BHP share price too exposed to the downside risks of China? appeared first on The Motley Fool Australia.

More reading

• Brokers name 2 ASX 200 dividend shares to buy now
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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 Scott Phillips.

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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

The crypto sell-off continued today, as investors continued to shun riskier assets amid high levels of inflation and the Federal Reserve’s ongoing tightening of its monetary policy. The entire cryptocurrency market recently lost $200 billion in a single day.

Over the last 24 hours, the price of the world’s largest cryptocurrency, Bitcoin (CRYPTO: BTC), traded down roughly 2.5% as of 12:57 p.m. ET. The price of Bitcoin is currently hovering below $30,000. The world’s second-largest cryptocurrency, Ethereum (CRYPTO: ETH), had fallen more than 9%, with the price of one token now around $2,000. Finally, the meme token Dogecoin (CRYPTO: DOGE) traded about 5% lower.

So what

The Fed has now raised its overnight benchmark lending rate, the federal funds rate, by roughly 0.75% in just two meetings, including a full half-point move at its latest meeting. When interest rates rise, so do the yields on safer assets like U.S. Treasury bills, which are backed by the U.S. government. This leads investors to demand higher returns from riskier assets and turn away from riskier assets if they don’t see a path to those higher returns.

Additionally, the Fed has indicated that it will begin reducing its $9 trillion asset balance sheet and will eventually ramp up to running off $95 billion of bonds by September. This will effectively remove liquidity for the markets, which means there could be less money to support riskier assets and higher valuations. Although many believe Bitcoin could be a hedge for inflation given its finite supply of 21 million tokens, the thesis has not played out so far and Bitcoin has acted similarly to tech and growth stocks, taking an absolute beating this year. The price of Bitcoin is down close to 55% over the last six years, and some think more difficulties lie ahead.

“My chart picture is calling for a fall to the $17,000 region and Bitcoin would need to close above $33,000 to give pause for thought,” said Oanda analyst Jeffrey Halley, according to Barron’s.

Broader crypto concerns have also arisen due to issues with stablecoins, which are digital assets pegged to some kind of commodity or fiat currency. One of the more notable ones, TerraUSD (CRYPTO: UST), which is pegged to the U.S. dollar and is therefore supposed to trade around $1, has seen its price plunge to below $0.30 per token, which is a huge red flag.

TerraUSD is an algorithmic stablecoin, meaning it is not actually backed by any real-world assets but uses complex technology, coding, and algorithms to maintain its price of around $1. TerraUSD’s sister token, Terra (CRYPTO: LUNA), which is important for helping it maintain its peg to the dollar, has billions of reserves in Bitcoin.

“I think the market is expecting some forced selling [of Bitcoin] here on the part of Terra and the reserve,” Nic Carter, co-founder of Coin Metrics, told CNBC earlier this week. “It is a calamity but very expected. No algorithmic stablecoin has ever succeeded and this is no exception.”

Now what

Whether it’s inflation, the Fed’s unwinding of its balance sheet, or the chaos with TerraUSD and Terra, the crypto market is in a very precarious state right now and investors are rushing to safety.

While I have no idea how low the crypto market will go, I definitely expect Bitcoin and Ethereum to survive and be good long-term buys, given that these are the two most important cryptocurrencies and that crypto adoption continues to move forward.

I suspect Dogecoin will be around as well but have never seen it as a good investment and do not recommend it. 

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

The post Crypto crash: Why Bitcoin, Ethereum, and Dogecoin are struggling again appeared first on The Motley Fool Australia.

More reading

• Is this the start of a long crypto winter?
• How are Australia’s Ethereum and Bitcoin ETFs faring on their first day?
• Why Dogecoin and Shiba Inu are tumbling today
• Bitcoin price plunges below US$30,000. What’s going on?
• Why Ethereum, Solana, and Cardano all plunged today

Bram Berkowitz has positions in Bitcoin and Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia owns and has recommended Bitcoin, Ethereum and Luna. 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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The Bigtincan Holdings Ltd (ASX: BTH) share price is on the rise on Friday morning.

At the time of writing, the sales enablement automation platform provider’s shares are up 10% to 57.5 cents.

Why is the Bigtincan share price jumping?

Investors have been bidding the Bigtincan share price higher today after the company released a business update.

That update reveals that the company has signed a deal with tech giant Oracle, has set itself a cash flow breakeven target, and is on track to achieve its guidance in FY 2022.

In respect to the former, Bigtincan has signed a partnership with Oracle to join the Oracle Partner Network. This this program allows Bigtincan to create new technology offerings that work on the Oracle Cloud and integrate with existing Oracle solutions including Oracle CRM.

The release notes that the integration with Oracle allows sales reps to view client information from Bigtincan, create custom presentations, and send data to Oracle systems for updates.

This adds to Bigtincan’s Salesforce partnership and increases its addressable market to 24% of the global CRM market.

Cash flow target

Given how hard unprofitable tech shares have been hit during recent market volatility, news that management believes it can reach cash flow breakeven in the near future is likely to have been a boost to the Bigtincan share price.

Bigtincan has set a target of being cash flow breakeven in the FY 2023 year. And with a cash balance of $45.5 million at the end of March, it appears to have more than enough funds to see it through to that point.

FY 2022 guidance

Based on current planned new product releases, continuing logo wins, and upselling to its expanded existing customer base in the fourth quarter, Bigtincan believes it is on track to meet or exceed its FY 2022 guidance of $119 million in annual recurring revenue.

It also highlights that there are encouraging signs of increased cross sell and upsell opportunities in the Brainshark customer base.

The company’s CEO and Co-Founder, David Keane, said:

Building on the strong Q3 results, and with Bigtincan’s recurring revenue business continuing to grow in Q4, based on our multi-hub product strategy, and together with scale gained from the Brainshark acquisition we are seeing ongoing benefits for the short and longer term outlook.

The post Here’s why the Bigtincan share price is jumping 10% today appeared first on The Motley Fool Australia.

More reading

• Cash bonanza: Here’s why the Bigtincan share price is leaping 8%
• Is this opportunity knocking? 3 ASX shares hitting 52-week lows 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. has positions in and has recommended BIGTINCAN FPO. The Motley Fool Australia has positions in and has recommended BIGTINCAN 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 Xero Limited (ASX: XRO) share price is rebounding this morning following a savage selloff on Thursday.

At the time of writing, the cloud accounting platform provider’s shares are up 4% to $80.11.

Why is the Xero share price rebounding?

The Xero share price is rebounding on Friday amid a recovery in the tech sector and the release of a bullish broker note.

According to a note out of Goldman Sachs, its analysts have retained their buy rating but trimmed their price target on the company’s shares by 11% to $118.00.

Based on the current Xero share price, this implies potential upside of 47% for investors over the next 12 months.

What did the broker say?

Goldman notes that Xero’s full-year results fell a touch short of its expectations on nearly all key metrics.

However, it still saw enough in the result to remain positive on the future. For example, its analysts highlight that price rises have not had a negative impact on churn levels.

Xero continues to scale in all markets, with +17% annualized sub growth and positive momentum in all geographies (albeit slightly weaker than GSe). Despite recent price rises, Xero also delivered a better than expected churn outcome, highlighting the stickiness of the customer (and pricing power that Xero has).

The broker also note the strong organic growth the company is delivering and the early progress with its app store. The latter is something which Goldman has previously suggested could be a big boost to future revenues.

Organic growth in platform revenues accelerated (+37%/+49% in 1H/2H22) driven by increased invoice payments (Mar-22 +41% vs. PcP), Payroll & initial app store fees (although still small). We estimate +$14mn of organic platform revenue was added in 2H, which if sustained, will contribute +2.1% of ARPU growth into FY23.

Finally, Goldman was pleased to see that management is guiding to improved margins in FY 2023. This is despite investing for growth.

Despite the companies global growth aspirations, positive FCF and $1.1bn of liquidity, Xero still guided to an improved margin in FY23 of c.300-400bps. Although needing to ensure an adequate ROI (particularly in the Americas – we estimate +21% underlying growth in 2H22 vs. +15% in 1H22) we are comfortable with this balance between short & long term focus, and note: (1) XRO proved its strong operating leverage in 1H21; (2) Positively, R&D spend is now in-line with marketing; (3) Improvement in all cost lines is expected over time.

Foolish takeaway

Based on the above, Goldman appears to see the recent weakness in the Xero share price as a buying opportunity. I would have to agree given its strong long-term growth outlook and the points outlined by the broker.

The post Xero share price rebounds: Is now the time to invest? appeared first on The Motley Fool Australia.

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• Xero share price sinks 10% to 52-week low following FY22 results miss
• Xero share price in focus amid strong FY22 revenue growth but full-year loss

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