Day: 3 June 2022

Shares of Adairs Ltd (ASX: ADH) closed down in May and finished more than 16% in the red. At the time of writing, the Adairs share price is trading at $2.28.

After nudging past $4.05 in early January, the stock has cratered and formed a series of new lows, as seen below.

Murderous May for Adairs

Adairs shares traded sideways from the period of February–April. By the end of May, sellers had pushed prices to a 52-week closing low of $2.32.

However, zooming out, the downside had been in full force over the previous 12 months, along with weakness in the broad sector.

The S&P/ASX 300 Retailing Index (AXRTKD) has followed a similar fate, tumbling more than 22% in the last year. It also closed 6.5% down in May.

Despite a positive retail outlook in 2022 due to diminishing impacts of Covid-19 and record retail sales of $34 billion in April 2022, KPMG says in writing: “it’s not all beer ant skittles”. That’s because retailers face a series of additional headwinds related to supply chain and cost inflation.

The Producer Price Index (PPIs) rose 1.6% this quarter and has climbed around 5% in the past 12 months, according to the Australian Bureau of Statistics (ABS). It has also spiked more than 8.4% since March 2018.

It measures the price change/inflation of products, goods and services for producers. Whereas the Consumer Price Index (CPI) measures the same for consumers.

Since 2017, both indices have curled up. However, since the pandemic, both have really shot north at a rapid pace, as seen below.

Similar trends appear to have swept through the US and retailers there have experienced symptoms such as inventory overbuild, cost pressures and consumer spending shift.

Evidently, investors appear to be pricing in similar risks for ASX retail and consumer cyclical stocks. It’s now a question of how well companies either absorb these pressures into their margins, or pass them onto consumers.

Plus, Adairs already realised a slowdown in sales and earnings in its latest filings.

Group sales were down 50 basis points from 1H FY21, whilst pre-tax earnings also took a hit due to operational disruptions related to COVID-19.

This is despite Australian Consumer spending increasing to its highest level in two years, per Trading Economics data.

In the last 12 months, the Adairs share price has slipped more than 54% into the red.

The post Why was May such a shocker for the Adairs share price? appeared first on The Motley Fool Australia.

More reading

• 3 high-quality ASX 300 shares trading at 52-week lows today
• 3 key reasons why I think the Adairs share price is a buy
• Experts name 2 top ASX dividend shares to buy now
• 2 ASX dividend shares with yields above 5%
• Top ASX dividend shares to buy in May 2022

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 ADAIRS FPO. The Motley Fool Australia has positions in and has recommended ADAIRS 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 Firefinch Ltd (ASX: FFX) share price has been one of the worst performers on the Australian share market on Friday.

In early trade, the gold and lithium explorer’s shares were down as much as 66% to a 52-week low of 32 cents.

The Firefinch share price has since rebounded a touch but remains down 58% at 40 cents.

Why is the Firefinch share price crashing?

The good news for shareholders is that the sell down of the Firefinch share price today isn’t because something bad has happened.

Today’s decline is due to the company following in the footsteps of BHP Group Ltd (ASX: BHP) by undertaking a demerger.

This morning, the company’s shares traded ex-dividend for the in-specie dividend relating to this demerger.

On this occasion, that in-specie dividend relates to shares in the soon-to-be-listed Leo Lithium (ASX: LLL). Eligible Firefinch shareholders will be receiving 1 Leo Lithium share for every 1.4 Firefinch shares they own.

What is Leo Lithium?

Leo Lithium is the owner of 50% of the Goulamina Lithium Project in Mali. This is one of the world’s largest undeveloped high quality spodumene deposits.

In partnership with Chinese giant, Ganfeng, Leo Lithium has commenced initial development activities to bring the Goulamina Lithium Project into production.

Ganfeng has contributed US$130 million in equity funding to the joint venture and will either procure up to US$64 million in external debt, or provide US$40 million of debt itself to fund development of Stage 1 of the project.

Leo Lithium is being led by Simon Hay, who was previously the CEO of Galaxy Resources prior to its merger with Orocobre, which became Allkem Ltd (ASX: AKE).

Leo Lithium shares are scheduled to commence trade later this month on 23 June 2022.

The post Why is the Firefinch share price crashing 66% today? appeared first on The Motley Fool Australia.

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• Why BlueScope, Firefinch, Monash IVF, and South32 shares are pushing higher
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Motley Fool contributor James Mickleboro has positions in Allkem 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 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 Liontown Resources Ltd (ASX: LTR) share price has been up and down in May, but overall it fell slightly.

The lithium explorer’s shares slipped 3% between market close on the last trading day of April and 31 May.

Let’s take a look at what impacted Liontown shares in May.

What has been happening to Liontown shares?

Liontown shares fell 21% between market close on 5 May and 12 May to a monthly low of $1.16.

The company’s share price struggled earlier in the month due to broader market weakness in the lithium industry, my Foolish colleague James reported. ASX lithium shares Pilbara Minerals Ltd (ASX: PLS) and Allkem Ltd (ASX: AKE) fell 13% and 16% respectively in the same time frame.

On 12 May, the Liontown share price hit a monthly low of $1.16 before surging 22% to $1.42 by the end of the month.

ASX lithium shares, including Liontown, received a boost on 24 May when news emerged of a bidding frenzy in China. This sparked concerns that demand would outstrip supply and push up lithium prices.

On 25 May, Liontown analysts at Barrenjoey Markets rated the share as a buy. Analysts placed a $1.80 price target on Liontown shares, a massive 51% upside on the current share price.

Finally, to end the month, Liontown shares jumped on news of an extended offtake term sheet with Tesla Inc (NASDAQ: TSLA).

The termination date was extended to 6 June to enable the company to complete negotiations for a definitive agreement with Tesla. The deal would involve the supply of 150,000 dry metric tonnes of spodumene concentrate. This would be sourced from the company’s Kathleen Valley lithium project in Western Australia.

Liontown price snapshot

Liontown shares have surged 135%% in the past 12 months, but have descended 28% in the year to date. Liontown shares fell 19% on 1 June alone, in what was a horror trading day for multiple ASX lithium shares.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has shed nearly 1% in the past year.

Liontown has a market capitalisation of about $2.6 billion based on the current share price.

The post It was an eventful month for Liontown shares in May. Here’s what went down appeared first on The Motley Fool Australia.

More reading

• Which ASX lithium shares are rebounding on Thursday, and which are not?
• Is this the real reason ASX lithium shares cratered on Wednesday?
• Why is the Liontown share price crashing 16%?
• Why ASX lithium shares have ‘absolutely more room to run’ in 2022: expert
• Liontown Resources share price leaps 4% amid Tesla offtake extension

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 market may be storming higher today but the same cannot be said for the Healius Ltd (ASX: HLS) share price.

In morning trade, the healthcare company’s shares are down 8% to a 52-week low of $3.82.

Why is the Healius share price sinking?

Investors have been selling down the Healius share price on Friday after the healthcare company released a trading update.

According to the release, Healius revealed that trading has been broadly in line with its update from last month. However, in response to ongoing market volatility and the range of broker forecasts, it has provided more colour on what this means for its earnings.

Healius revealed that its unaudited underlying earnings before interest and tax (EBIT) for the year-to-date to May is in the order of $473 million.

This means that it has added less than $100 million of EBIT in the second half, with one month remaining. This compares to EBIT of $376.1 million during the first half.

Management advised that it has been facing difficult market conditions in the second half of the financial year. Though, it has been trading slightly ahead of Medicare in its core businesses and COVID testing remains around 15,000 per working day in May.

Adora sale

In other news, the company has advanced its portfolio simplification as a diagnostics operator with the completion of the Adora Fertility sale this week.

Looking ahead, management advised that it remains focused on growing its core pathology and imaging businesses, where it believes it is well-positioned as an incumbent operator with operating leverage. It will also aim to grow its emerging diagnostic positions, underpinned by its market-leading digital program.

The Healius share price is now down 25% in 2022.

The post Why is the Healius share price sinking to a 52-week low today? appeared first on The Motley Fool Australia.

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Motley Fool Australia Chief Investment Officer Scott Phillips joined Nine’s Late News on Thursday night to discuss a fall for the ASX, the ongoing gas shortage and the future for renewables, plus a bumper trade surplus.

The post A fall for the ASX 200, energy prices soar and a win for trade. Scott Phillips on Nine’s Late News appeared first on The Motley Fool Australia.

More reading

• Was May a good month for the Pilbara Minerals share price?
• Why did crypto prices get massacred in May?
• Silver lining for Appen shares following takeover turmoil 
• Broker tips Pro Medicus share price to shoot 25% higher
• What is the BHP share price forecast for June?

Motley Fool contributor Scott Phillips 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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Last month saw a rocky performance from the Pilbara Minerals Ltd (ASX: PLS) share price. But it was ultimately a good one.

As of the end of May the Pilbara Minerals share price was $2.95, 3.51% higher than where it ended April.

For context, the S&P/ASX 200 Index (ASX: XJO) slipped 3.01% over the course of last month.

So, what led the ASX 200 lithium producer to outperform in May? Let’s take a look.

What drove Pilbara Minerals’ stock last month?

Pilbara Minerals’ stock cratered through the first half of last month before regaining ground and lifting into the green.

Between the final close of April and 12 May, the stock tumbled 14%. Fortunately, the second half of May brought both good news from the company and a rebound for its stock.

Pilbara Minerals announced it and its project partner, Calix Ltd (ASX: CLX), won a $20 million grant for the Pilgangoora lithium project on 17 May.

The cash is specifically earmarked to fund a demonstration scale chemicals facility at the project.

The Pilbara Minerals share price lifted on the back of the grant. However, it tumbled the next time the company released news to the market.

The company released the results of its fifth lithium auction on 25 May.

There, the company offered a cargo of 5,000 dry metric tonnes at a target grade of around 5.5% lithia to bidders. The highest bidder put forward an offer of US$5,955 per dry metric tonne.

On a pro rata basis for lithia content (including fright costs) that came to around US$6,586 per dry metric tonne.

Sadly, the stock tumbled nearly 4.5% on the back of the seemingly positive news.

Pilbara Minerals share price snapshot

As lithium-focused market watchers will be aware, the Pilbara Minerals share price has suffered a major tumble in June. It’s now 22.7% lower than it was at the end of May.

It has also fallen 35% since the start of 2022.

Though, the stock is still swapping hands for 75% more than it was time time last year.

The post Was May a good month for the Pilbara Minerals share price? appeared first on The Motley Fool Australia.

More reading

• Aside from Goldman Sachs, what are other brokers saying about ASX lithium shares?
• Which ASX lithium shares are rebounding on Thursday, and which are not?
• ASX 200 midday update: Pilbara Minerals names new CEO, Wesfarmers’ strategy update
• Is this the real reason ASX lithium shares cratered on Wednesday?
• Pilbara Minerals share price higher on CEO appointment

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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Crypto investors had little to celebrate in May, with the prices of the vast majority of digital assets finishing the month well into the red.

When all was said and done, the market cap of the combined crypto market fell 28% in May.

What went wrong for crypto prices in May?

Investors were hit on several fronts in the month just past.

The biggest drag on crypto prices was rising interest rates from some of the world’s leading central banks.

Market watchers were particularly focused on the US Fed, which boosted the target cash rate by 0.5%. With inflation running hot, the Fed, and here at home the RBA, have flagged a series of additional rate hikes ahead in 2022.

This year has seen digital assets track closely in line with risk assets, like the tech-heavy Nasdaq. While the Nasdaq bounced towards the end of the month, it was down 9% by market close on 24 May.

Most crypto prices were down significantly more, in part due to another big tailwind that surprised investors in May. Namely, the collapse of leading stablecoin – TerraUSD (CRYPTO: UST).

On 12 May, Terra’s UST token lost its peg to the US dollar, eventually falling all the way down to a value of just 10 US cents. Terra (CRYPTO: LUNA) – the token intended to help UST maintain its US$1 peg – lost more than 99% of its value.

News of the collapse roiled the crypto community and saw almost every top crypto sell off.

How did some of the top tokens perform in May?

Size was no comfort for crypto investors in May, with the biggest tokens and most popular names falling heavily during the month.

Bitcoin (CRYPTO: BTC), the world’s original crypto, which commands 46% of the market’s total valuation, dropped 17% in May.

The second-biggest digital token, Ethereum (CRYPTO: ETH), fell 27% over the month.

The popular meme token, Dogecoin (CRYPTO: DOGE), fared even worse, losing 37% in May.

Only a handful of crypto prices managed to finish May even slightly in the green.

Among those, Tron (CRYPTO: TRX) stood out as the clear leader.

Tron, CoinMarketCap tells us, is “a decentralized blockchain-based operating system developed by the Tron Foundation and launched in 2017”.

Depending on your time zone, Tron commenced May trading at 6.8 US cents and finished the month at 8.1 US cents, up 19%.

At the current price of 8.3 US cents, Tron ranks as number 13, with a market cap of US$7.7 billion.

The post Why did crypto prices get massacred in May? appeared first on The Motley Fool Australia.

More reading

• Can the Ethereum price redeem itself in June? Crypto experts weigh in
• Has the Bitcoin price bottomed?
• Why is the Bitcoin price bouncing back this week?
• Down 17%, what went so wrong for the Bitcoin price in May?
• Bitcoin price decouples from tech shares, but not as hoped

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia has positions in and has recommended Bitcoin and Ethereum. 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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Investors holding Appen Ltd (ASX: APX) shares probably have a bad case of whiplash after last week’s wild ride.

A takeover approach from Telus International (owned by Canadian IT giant Telus Corporation) was stripped as quickly as it appeared. Unfortunately for shareholders, this meant the Appen share price yo-yoed from $6.40 to $8.35 and back.

The decision to withdraw its $9.50 takeover bid was made without further comment. However, in light of this drama, there might a silver lining.

Appen shares’ chance to rebuild and recoup

Appen shareholders, prepare yourself for this tough reflection. Once upon a time, Appen shares were commanding a price of $40 per share. Even more painful, anyone who had invested in Appen in the last four years is now in the negative.

As Motley Fool chief investment officer Scott Phillips notes in a recent Motley Fool Money podcast:

[…] if you had bought the shares at $10; $15; $20; $25; $40 — up to 40 bucks. If you had bought at $40 in the middle of 2020 you’ve literally dusted four-fifths of your money… 80% of your cash, even after the takeover premium is put in, and you’re not going to get a chance to get that back.

In other words, if all the Appen shares were acquired it would remove the opportunity for investors to claw back some of their money. By accepting a cash takeover bid, any shareholder losses would be realised. So, the fact that Telus revoked its bid means shareholders hold that chance again.

Now, in saying that, it can obviously work the other way. Without the takeover parachute, Appen shares might proceed to fall even lower. This is a real possibility considering that its last trading update suggests lower revenue and EBITDA compared to the prior year.

However, CEO Mark Brayan is adamant the company is in the midst of a transformation. Part of this entails a goal of doubling revenue by 2026 and an EBITDA margin of 20%. If the company can achieve this while remaining publicly listed, it might heal some of those shareholder wounds.

Based on the current value of Appen shares, the company holds a market capitalisation of $765 million.

The post Silver lining for Appen shares following takeover turmoil  appeared first on The Motley Fool Australia.

More reading

• Where next for the Appen share price after its takeover collapse?
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• ASX 200 midday update: AGL demerger scrapped, A2 Milk jumps
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Motley Fool contributor Mitchell Lawler has positions in Appen Ltd. 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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The Pro Medicus Limited (ASX: PME) share price failed to take off on Thursday due to weakness in the tech sector.

This was despite the health imaging technology company announcing a major new contract win.

What did Pro Medicus announce?

Yesterday, Pro Medicus announced a $28 million, seven-year contract with Allina Health. It is a not-for-profit health care system based in Minneapolis with 28,000 employees across 11 hospitals and more than 90 clinics.

The contract is based on a transactional licensing model and will see the company’s increasingly popular Visage 7 Enterprise Imaging Platform and Visage 7 Workflow module implemented throughout Allina Health. This will provide it with a unified diagnostic imaging platform across the network.

What was the response?

While the market’s response was subdued, analysts at Bell Potter were very pleased with the news.

According to a note, Bell Potter believes this new contract win highlights that Visage could “be the emerging standard for the viewing of radiology images in the US.”

In addition, the broker was pleased to see management commenting that its sales pipeline remains strong.  It said:

[T]he CEO has again described the pipeline as “remaining strong”. The same phrase has consistently been used to describe the pipeline for several years and the company is yet to disappoint the market’s expectation for revenue growth.

We maintain our expectation of ongoing growth in contracts noting that PME has barely scratched the surface of the IDN market in the US. There are approximately 1,000 IDN’s operating in the US Healthcare system.

In light of this, the broker has retained its buy rating and $55.00 price target on the company’s shares.

Based on the current Pro Medicus share price, this implies potential upside of approximately 25% over the next 12 months.

The post Broker tips Pro Medicus share price to shoot 25% higher appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• ASX 200 midday update: Pilbara Minerals names new CEO, Wesfarmers’ strategy update
• Pro Medicus share price falls despite major contract win
• Here are 3 highly profitable shares I’ll be buying this month
• Best ASX shares to buy in June 2022

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 Pro Medicus Ltd. The Motley Fool Australia has positions in and has recommended Pro Medicus 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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Extended rallies in steel and iron ore markets have spurred on shares of BHP Group Ltd (ASX: BHP) in 2022, such that the stock now trades 23% higher year to date.

The BHP share price bounced from a 3-month low on 12 May of $40.02 to finish at $45.61 in yesterday’s session.

Meanwhile, the price of iron ore has levelled off in recent weeks and now trades 2% down over the past month. Steel prices have also tumbled 14% from former highs of $1,075 per tonne on 5 May to rest at $922 per tonne at the time of writing.

Sentiment appears mixed

Despite the relief rally BHP shares exhibited in May, it appears as though market pundits are still cautious on what direction the resource giant’s share price will head next.

Analysts at Barclays investment bank are constructive on the stock and rated it equal weight in a recent note, expecting the stock to “underpin [a] longer-term premium”.

“We expect BHP to be supported by two factors,” Barclay’s analysts wrote.

“[F]irstly that once BHP goes ex the petroleum sale distribution, it is set to leave a relatively attractively valued BHP ex-petroleum…”.

“Secondly,” they remarked, “with BHP having 100% of market cap listed in Australia following the unification earlier this year, we expect BHP’s London line to re-rate over time…”

Meanwhile, JP Morgan reinstated coverage of BHP shares with a neutral stance, having formerly suspended its rating on the stock.

The broker values BHP at $46 per share, having recently updated its ‘iron ore scorecard’ for the mining giant.

“BHP has established a solid iron ore track record over recent years, which will become even more important post the Petroleum exit, given the increased focus,” JP Morgan said.

Referencing the ‘scorecard’, the broker wrote that, compared to other players in the space, “BHP’s 10yr scorecard is more balanced, with 3 years showing upward revisions (twice in FY14), 3 downgrades, and 1 year where the range was narrowed”.

“Importantly,” JP Morgan argued, “guidance was achieved over FY20/21 and FY22 guidance [at 278–288Mt] looks comfortable”.

According to Bloomberg data, 10 analysts covering the stock have it rated as a buy, whereas 14 analysts rate it a hold. There are five analysts on this list urging clients to sell BHP shares.

The consensus price target is $43.62 per share, indicating the potential for a small correction should that number be correct.

In the last 12 months, the BHP share price has clipped a 3.3% gain.

The post What is the BHP share price forecast for June? appeared first on The Motley Fool Australia.

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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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