Day: 17 February 2023

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a disappointing note. At the time of writing, the benchmark index is down 0.8% to 7,353.3 points.

Four ASX shares that are not letting that stop them from climbing today are listed below. Here’s why they are racing higher:

A2 Milk Company Ltd (ASX: A2M)

The A2 Milk share price is up 5% to $7.02. Investors have been buying this infant formula company’s shares after it revealed that its dairy processor is being audited by Chinese regulators next week. If everything goes to plan, this would allow A2 Milk to continue supplying its China label infant formula to the lucrative market.

Piedmont Lithium Inc (ASX: PLL)

The Piedmont Lithium share price is up 3% to $1.06. This morning, this lithium developer announced that it has signed a deal with LG Chem for an equity investment and binding offtake agreement. LG Chem will invest $75 million into the company and commit to the offtake of 200,000 metric tonnes of spodumene concentrate from the North American Lithium project over a four-year term.

QBE Insurance Group Ltd (ASX: QBE)

The QBE share price is up over 8% to $14.54. This follows the release of the insurance giant’s full year results. QBE reported cash earnings of $842 million and net profit after tax of $847 million for FY 2022, which was well ahead of expectations. Goldman Sachs, for example, was expecting cash earnings of $676 million and described it as a “strong beat.”

Super Retail Group Ltd (ASX: SUL)

The Super Retail share price is up 4.5% to $13.07. This morning, analysts at Citi responded positively to the retailer’s half year results and retained their buy rating with an improved price target of $14.50. Although the results were largely pre-released, Citi was pleased to see that sales have been strong so far in the second half.

The post Why A2 Milk, Piedmont Lithium, QBE, and Super Retail shares are racing higher appeared first on The Motley Fool Australia.

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More reading

• QBE share price leaps 10% amid explosive dividend growth
• Should I pour in and buy A2 Milk shares before the ASX 200 company reports on Monday?
• Why term deposits can’t compete with these 5 ASX dividend machines
• 5 things to watch on the ASX 200 on Friday
• Super Retail share price roars on 30% profit boost

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 Super Retail Group. The Motley Fool Australia has positions in and has recommended Super Retail Group. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The last fortnight has been rough for those invested in Sayona Mining Ltd (ASX: SYA), with the lithium favourite’s share price crashing 19.6% in that time.

Right now, the Sayona Mining share price is trading at 21.7 cents – 1.36% lower than its previous close.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has fallen around 2% in that time.

Meanwhile, many of the company’s unprofitable lithium peers have been hit harder. Here’s how three market favourites have been performing over the last fortnight:

• Shares in Core Lithium Ltd (ASX: CXO) have slumped 15% in that time
• Those of Liontown Resources Ltd (ASX: LTR) have also dropped 15%
• Stock in Lake Resources N.L. (ASX: LKE) has fallen around 22%

Let’s take a closer look at all that’s been going down in Sayona Mining’s camp lately.

Sayona Mining set to kick off lithium production in March

The Sayona Mining share price has been struggling in recent weeks amid a number of updates from the company.

First, it corrected an error found in its most recent quarterly report. The non-price sensitive announcement saw its stated estimated quarters of funding available increase from 3.5 to 5.1 – a notable jump. It also released an investor presentation to the market late last week.

But what’s likely the most exciting news was published this morning.

The company announced its North American Lithium (NAL) operation remains on track to restart production next month.

That’s said to see Sayona Mining on the path to becoming the North American lithium industry’s leading hard rock producer.

Progress aiming to restart the operation’s concentrator and construction process had both reached 96% at the end of January, with commitments and costs in line with budget. And in a notable milestone, the operation recently saw ore fed into the crushing plant.

The next goal from here is production, after which the first shipment of spodumene concentrate is tipped to go ahead in July.

The company is targeting four shipments in the first half of financial year 2024. It’s aiming to produce between 85,000 tonnes and 115,000 tonnes in that time.

Commenting on the news failing to bolster the Sayona Mining share price today, managing director Brett Lynch said:

I congratulate the project team for delivering the NAL restart on time and on budget ‐ a remarkable achievement in the current inflationary environment and amid supply chain pressures.

With lithium demand continuing to rise and supply limited, NAL is in an excellent position to benefit.

Sayona Mining share price snapshot

While the last few weeks have been rough on the Sayona Mining share price, it’s been outperforming over the longer term.

The stock has gained 14% since the start of 2023. It’s also 67% higher than it was this time last year.

For comparison, the ASX 200 has gained 6% year to date and 1% over the last 12 months.

The post Why has the Sayona Mining share price crashed 20% in 2 weeks? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• 4 ASX 200 lithium shares being targeted by short sellers
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Here are the top 10 ASX 200 shares 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 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 Inghams Group Ltd (ASX: ING) share price is in the red today after the company released its FY23 half-year results.

The Inghams share price opened at $2.63, down 4.4% on yesterday’s close, before falling to an intraday low of $2.55, down 7.3%.

It has since recovered somewhat to $2.71, down 1.45% for the day at the time of writing.

Let’s take a look at the company’s results.

Inghams share price punished after 44% dividend cut

Inghams said its 1H FY23 results represented “a significant improvement” on 2H FY22, but were below the prior corresponding period (pcp) of 1H FY22.

The interim dividend was cut to 4 cents per share, down from 6.5 cents per share in FY22. This reflects lower earnings but remains within the company’s payout policy range.

Here are the key points for the six months to 31 December 2022:

• Group core poultry sales volume down 0.6% pcp
• Revenue increased 8.9% but the cost of sales increased 10.9% pcp
• Earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $197 million, down 10.6%
• Net profit after tax (NPAT) of $17.2 million, down 55.2%
• Interim fully franked dividend of 4.5 cents per share, down 44% pcp.

What else happened in 1H FY23?

Inghams said inflation was impacting the company on several fronts, with the cost of many inputs rising, including feed, fuel and transport, packaging, and ingredients. Feed costs increased by $57.9 million pcp.

Inghams said it has increased its prices and will “pass on further price increases as required”.

Inghams reported net debt of $294.2 million, up 10.1% on FY22 due to reduced operating earnings and increased working capital expenditure.

Debt leverage is 2.5 times, which is outside the company’s comfort zone of 1–2 times. The company extended its $345 million debt facilities for an extra two years to November 2025.

Inghams said it completed the design phase of its business transformation program but will postpone its implementation “for the medium term” to focus on other priorities, including higher return projects.

What did management say?

Ingham’s CEO and managing director, Andrew Reeves, said:

Our results for the first half represent a significant improvement for the business over second half of FY22, and we expect this positive momentum to continue as we proceed through the second half of the financial year.

While it is clear the business is successfully transitioning from the various operational challenges experienced over the past 12 months, our farming operations are taking longer to return to normal levels, resulting in lower than required poultry volumes.

We also continue to manage a number of general market headwinds including supply chain disruptions and broad inflationary pressures, that are a feature of the current operating environment.

What’s next?

In a statement, the company said it has implemented initiatives to address reduced farming performance, with more chickens expected to become available later in 2H FY23.

The company said that in today’s economy, poultry has an advantage over red meat because it’s cheaper.

Inghams share price snapshot

The Inghams share price has decreased by 23% over the past 12 months.

Inghams has vastly underperformed its peers, with the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) up 6.1% over the period.

The post Inghams share price dives 7% on slashed dividend appeared first on The Motley Fool Australia.

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More reading

• CBA shares ‘do not look cheap’ despite recent selloff: broker
• Santos share price edges lower amid allegations of disastrous deception
• Passive income watch: 3 ASX 200 shares that announced boosted dividends this week
• Mineral Resources share price slumps despite major Norwest takeover milestone
• Own Coles shares? Here’s what the market is expecting from its half year results

Motley Fool contributor Bronwyn Allen 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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Commonwealth Bank of Australia (ASX: CBA) shares are back on form on Friday.

In afternoon trade, the banking giant’s shares are up almost 1% to $102.38.

Though, that doesn’t take away from the fact that CBA’s shares are still down over 8% from the 52-week high they reached this month.

This weakness has been driven by the release of the bank’s half year results, which appeared to indicate that its net interest margin (NIM) has peaked well ahead of expectations.

Are CBA shares in the buy zone now?

Analysts at Morgans have been looking over CBA’s half year result and have given their verdict. The broker said:

The 1H23 result was solid, with strong operating profit growth partly offset by the reversal of credit impairment releases into expensing. Cash returns were lifted via higher dividends and buybacks. The key negative was the seemingly early peak in the NIM and concerns for a weakening domestic economy and mortgagor.

In light of this, the broker has not seen enough to change its recommendation and has reaffirmed its hold rating with a $96.11 price target. This implies potential downside of 6.1% for CBA’s shares over the next 12 months.

Though, this is partly offset by Morgans’ forecast of a $4.50 per share fully franked dividend in FY 2023. This equates to a 4.4% dividend yield at current prices.

Shares do ‘not look cheap’

Overall, the broker is a fan of CBA but would rather pick up shares at a cheaper level. It concludes:

While our valuation has increased and the share price has fallen from recent all-time highs, the stock still does not look cheap on either DCF or historical trading multiple ranges. For income investors, CBA’s current forward cash yield of c.4.4% now looks compressed vs deposit rates.

Furthermore, there is potentially more downside risk if we are at peak earnings and the narrative is cyclically changing away from NIM expansion to cost growth (including normalising credit impairment expense) and risks to asset quality. CBA remains a core long term portfolio holding, and is the highest quality major bank, but its short term investment performance may be limited.

The post CBA shares ‘do not look cheap’ despite recent selloff: broker appeared first on The Motley Fool Australia.

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More reading

• Passive income watch: 3 ASX 200 shares that announced boosted dividends this week
• Is the CBA share price a buy following Wednesday’s 5% fall?
• Earnings preview: Here are the ASX shares reporting on Thursday
• 5 things to watch on the ASX 200 on Thursday
• Will ASX 200 shares crash in 2023?

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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The Santos Ltd (ASX: STO) share price is down 1.3% in early afternoon trading. 

The S&P/ASX 200 Index (ASX: XJO) energy stock closed yesterday trading for $7.01 per share with shares currently trading for $6.92 apiece.

That’s largely in line with the wider market, with the S&P/ASX 200 Energy Index (ASX: XEJ) down 1.2% at this same time.

The Santos share price appears resilient today, despite media reports the oil company deceived the public about the severity of an offshore oil spill last March.

What allegations were levelled?

As The Sydney Morning Herald reports, Santos was responsible for some 25,000 litres of oil spilling into the sea off Western Australia’s Pilbara coast in March 2022.

Santos did not publicly report on the spill at the time.

When the SMH reported on the incident in April, a Santos spokeswoman reportedly called it a “minor spill” with a “negligible” impact on the environment.

But in a fresh development, which has yet to have a material impact on the Santos share price, an anonymous whistleblower said the oil slick caused the deaths of numerous marine animals, including dolphins.

The informant’s statement was heard at a Senate committee yesterday.

“Tens of thousands of litres of oil in the ocean, dead dolphins and sea snakes. How was this negligible?” they said.

“I felt strongly that Santos’ comment was baseless, designed to mislead and avoid accountability,” they added, noting that the company didn’t send experts to the site until a week following the mishap.

At the time of writing, Santos has not yet responded to the allegations.

Santos share price snapshot

As you can see in the chart below, the Santos share price is down 2% over the past 12 months.

Longer-term shares in the ASX 200 oil company are up 35% over five years.

At the current price, Santos has a market cap of approximately $23 billion.

The post Santos share price edges lower amid allegations of disastrous deception appeared first on The Motley Fool Australia.

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More reading

• ‘Attractive opportunities’: Fund reveals why 2 ASX 200 shares are its biggest holdings
• Power up your passive income with these high yield ASX dividend shares: expert
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday
• Why is the Santos share price lifting on Tuesday?

Motley Fool contributor Bernd Struben 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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Reporting season is now in full swing. Certainly, there has been some impressive dividend growth revealed this week by S&P/ASX 200 Index (ASX: XJO) shares.

After such a strong period for a number of industries through the COVID-19 period, FY23 is a new phase, with high interest rates and higher costs.

But, some businesses are managing to deliver higher profits and dividends for investors. These are the increases from some of the biggest blue-chip ASX 200 shares.

Wesfarmers Ltd (ASX: WES)

Wesfarmers is the owner of businesses like Bunnings, Kmart, and Officeworks. Each of those businesses reported an increase in earnings before tax (EBT).

As a whole, Wesfarmers reported that revenue (excluding Wesfarmers Health) saw 11.4% revenue growth, with net profit after tax (NPAT) growth of 14.1% to $1.38 billion. Earnings per share (EPS) grew by 14% to $1.22.

That profit growth enabled the ASX 200 share to grow its dividend by 10% to 88 cents per share.

It also said that retail trading results in the first five weeks of the FY23 second half were “broadly in line with growth reported for the first half”.

Telstra Group Ltd (ASX: TLS)

Telstra was another business to report this week. Total income increased 6.4% to $11.6 billion, earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 11.4% to $3.9 billion, and EPS jumped 27.1% to 7.5 cents.

It continues to see growth in users in its mobile division.

The ASX 200 telco revealed a 6.3% increase in its dividend, equating to an 8.5 cents per share payment.

Telstra is benefiting from a combination of revenue increasing and cost-cutting. The telco is expecting EPS to keep growing as part of its T25 strategy, which is about increasing profit, being the 5G leader, and being a great workplace for employees.

In FY23, it’s expecting to generate underlying EBITDA of between $7.8 billion to $8 billion and free cash flow after lease payments of between $2.6 billion to $3.1 billion.

Commonwealth Bank of Australia (ASX: CBA)

CBA revealed a 9% increase in cash NPAT to $5.15 billion, while pre-provision profit jumped 18% to $7.82 billion. The net interest margin (NIM) improved to 2.10%, up 23 basis points (0.23%) from the FY23 second half.

This enabled the ASX 200 share to grow the interim dividend by 20% to $2.10 per share. This represented a dividend payout ratio of 69%.

CBA noted that households are feeling “significant strain” from interest rates, though consumer spending remains “resilient”. It also said that “the fundamentals of the economy remain solid, with low unemployment, strong exports and returning migration.”

The post Passive income watch: 3 ASX 200 shares that announced boosted dividends this week appeared first on The Motley Fool Australia.

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More reading

• Broker gives its verdict on the Telstra share price post-results
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• Why did the ASX 200 leap higher on rising unemployment data?
• Here are the 3 most heavily traded ASX 200 shares on Thursday

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 positions in and has recommended Telstra Group and Wesfarmers. 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 Mineral Resources Ltd (ASX: MIN) share price is tumbling on Friday despite the company officially taking control of takeover target Norwest Energy NL (ASX: NWE).

The market is reacting poorly to today’s news with the Mineral Resources share price currently 1.23% lower at $85.60.

Meanwhile, the Norwest share price has slumped 2.26% to trade at 6.5 cents.

Let’s take a closer look at the latest from the S&P/ASX 200 Index (ASX: XJO)’s mammoth miner.

Mineral Resources share price plunges on takeover milestone

Major acquisition news appears to have failed to bolster market sentiment in Mineral Resources shares today.

The company revealed its voting power in Norwest surged to 53.86% on Thursday. That leaves it with control over the $425 million energy outfit.

The now-majority stakeholder offered one of its own shares for every 1,300 Norwest stocks held last month. The bid secured the approval of the takeover target’s board after a lower offer was rejected in December.  

That implied an offer price of 7.41 cents per share at the time. It also represented a 65% premium on the takeover target’s last undisturbed share price.  

Mineral Resources managing director and billionaire Chris Ellison has urged remaining Norwest shareholders to accept the offer, saying it’s a “no brainer”:

Those who don’t accept will be left behind in a MinRes-controlled company with none of the upside of being a MinRes shareholder or exposure to our world-class portfolio of diversified assets.

Those who fail to promptly accept our revised offer will also miss out on receiving our interim dividend and risk having their own share price and liquidity diminish – but will still have to shoulder the burden of their share of significant Perth Basin exploration and development risk.

Mineral Resources’ offer has been extended to 2 March on the milestone. It will be able to acquire all Norwest shares if its interest reaches 90%.

The ASX 200 mining giant is gearing up to release its earnings for the first half of financial year 2023 next Friday.

The post Mineral Resources share price slumps despite major Norwest takeover milestone appeared first on The Motley Fool Australia.

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• Why this US$1 trillion milestone matters for ASX 200 lithium shares
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• Get an income boost with these ASX dividend shares: broker
• Why Morgans just added these ASX 200 shares to its best ideas list
• These ASX 200 shares are top picks in Macquarie’s growth portfolio

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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Coles Group Ltd (ASX: COL) shares will be watched closely next week when the supermarket giant releases its half year results.

Ahead of the release, let’s look at what the market is expecting from the company on 21 February.

What is the market expecting from the Coles half year result?

According to a note out of Goldman Sachs, its analysts expect first half group sales of $21,354 million, up 3.7% over the prior corresponding period. This comprises supermarket sales of $18,729 million, liquor sales of $2,014 million, and convenience sales of $611 million.

However, unlike rival Woolworths Group Ltd (ASX: WOW), which is expected to deliver strong earnings growth, Goldman Sachs expects Coles to report a decline in profits. It is forecasting underlying net profit after tax of $542 million. This will be a 1.3% decline over the prior corresponding period and driven by margin contraction. The broker explained:

From a margin perspective, we also expect COL to see ~10bps EBIT margin contraction in 1H23 on the back of lower GPM and higher implementation cost for supply chain transformation including Witron and Ocado. This is in contrast to ~30bps EBIT margin expansion we expect for WOW. Net net, we are looking for flat EBIT growth YoY for COL vs. +11% for WOW in 1H23. We are ~3.6% below Visible Alpha consensus EBIT for 1H23.

And while Goldman hasn’t provided an interim dividend estimate, for the full year it is forecasting a 60.9 cents per share fully franked dividend. This will be down 1.1% year over year and could mean the interim dividend will be down by a similar percentage.

Finally, the broker has warned that if its forecasts are accurate, it could cause Coles shares to tumble. It concludes:

COL is currently trading at 23.3x FY24 P/E on vs. historical average of 21.6x, and is only at ~1x P/E discount vs. historical average of ~4x relative to WOW. We expect that a disappointment in 1H23 margins will result in stock underperformance.

The post Own Coles shares? Here’s what the market is expecting from its half year results appeared first on The Motley Fool Australia.

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More reading

• These are the growing ASX dividend shares to buy now: analysts
• Can Coles shares deliver 8% upside AND tasty dividends in 2023?
• Get an income boost with these ASX dividend shares: broker
• With interest rates heading higher again, the risk is to the downside for these popular blue chip ASX shares
• 2 ASX stocks I’d buy in February for lifelong passive income

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 positions in and has recommended Coles Group. 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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ASX buy now, pay later (BNPL) shares are under selling pressure on Friday.

While the All Ordinaries Index (ASX: XAO) is also down 0.61% as we head into the lunch hour, the BNPL companies are faring significantly worse.

The pay-by-instalment industry looks to be under pressure after the Australian Securities and Investments Commission (ASIC) came out in support of stringent new regulatory proposals.

At the time of writing, here’s how these ASX BNPL shares are faring:

• Shares in Block Inc (ASX: SQ2), which acquired Afterpay in January last year, are down 7.62%
• Zip Co Ltd (ASX: ZIP) shares are down 3.33%
• Sezzle Inc (ASX: SZL) shares are down 3.8%

Here’s what’s happening.

What new rules is ASIC proposing?

ASX BNPL shares have been in limbo for some time now as to what types of lending standards they’ll be held to.

Treasury is considering three options in a bid to protect consumers from taking on too much debt.

Yesterday, ASIC came out in favour of the most stringent of those three alternative proposals.

Should the government adopt ASIC’s decision, ASX BNPL shares will be facing largely the same regulatory hurdles as credit card companies. That means they may need to dig into their customers’ financial health before opening a line of interest-free credit.

That could prove an onerous burden in the current environment of high inflation and rising interest rates.

According to the ASIC report (courtesy of The Australian Financial Review):

Products with similar characteristics and the same purpose and function should be treated the same way in the regulatory framework.

Uniform regulation under the National Credit Act would bring a more consistent regulatory framework across all buy now, pay later providers and a standardised regime that could be enforced by ASIC.

Commenting on the development putting ASX BNPL shares under pressure today, analysts at Moody’s Investors Service said (quoted by the AFR):

Regulation remains a continuing hurdle for fintechs In Australia, the once fast-growing BNPL sector is facing scrutiny as the government is considering a number of options to enhance the regulation of consumer credit.

More regulatory burdens will result for all BNPL providers, including Afterpay and Zip.

But no final decision has been made. Financial Services Minister Stephen Jones said the government was still working through the specifics of the pending regulations.

How have these ASX BNPL shares performed over a year?

With today’s falls factored in, the ASX BNPL shares listed above have sunk even deeper into the red.

Here’s how they’ve performed over the past 12 months:

The Block share price is down 24%:

The Zip share price is down 78%:

And the Sezzle share price is down 70%:

Whether buying these stocks at these prices represents grabbing a bargain or catching a falling knife remains to be seen.

With that said, should the government opt for a lighter regulatory approach, they could well enjoy a healthy bounce.

Stay tuned.

The post ASX BNPL shares deep in the red as ASIC turns up the regulatory heat appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why did the ASX 200 leap higher on rising unemployment data?
• Why are ASX 200 tech stocks like Xero having such a cracking run today?
• Why is the Zip share price rocketing 7% today?
• Here are the 10 most shorted ASX shares

Motley Fool contributor Bernd Struben 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 Block and Zip Co. The Motley Fool Australia has positions in and has recommended Block. 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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Earlier today, the Telstra Group Ltd (ASX: TLS) share price hit a new 52-week high of $4.24.

Investors have been buying the telco giant’s shares this week following the release of its half year results.

Telstra reported a result a touch ahead of expectations with its 6.4% increase in total income to $11.6 billion and 11.4% jump in EBITDA to $3.9 billion. This allowed the Telstra board to increase its fully franked interim dividend by 6.3% to 8.5 cents per share.

Can the Telstra share price keep rising?

The good news is one leading broker believes the Telstra share price can keep rising from here.

A note out of Morgans reveals that its analysts have retained their add rating with an improved price target of $4.70.

Based on the current Telstra share price of $4.22, this implies potential upside of over 11% for investors over the next 12 months.

In addition, Morgans is now expecting a 17 cents per share fully franked dividend in FY 2023. This equates to a 4% yield and boosts the total potential return beyond 15%.

What did the broker say?

Morgans was pleased with Telstra’s result and believes it is well-placed to deliver achieve its earnings guidance in FY 2023. It said:

Doubling 1H23 underlying EBITDA gets most of the way to the bottom end of the guidance range. Given the business has positive earnings momentum, guidance looks comfortably achievable, in our view.

And with the mobile market in good shape and potential asset divestments on the horizon, Morgans is positive on the future. It adds:

Telco has the strongest tailwinds in a decade with an increasingly rational market, price rises across the majors and the criticality of telco increasingly recognised. The last major mobile operator Vodafone/TPG increased mobile prices by ~$5 per month in January 2023 and all key players are behaving economically rational.

This combines with catalysts including the potential for InfraCo value release following the legal restructure. Add retained, TP increased to $4.70.

The post Broker gives its verdict on the Telstra share price post-results appeared first on The Motley Fool Australia.

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More reading

• Why Bapcor, Magellan, Sonic Healthcare, and Telstra shares are charging higher
• Everything you need to know about the boosted Telstra dividend
• Telstra share price higher on half-year revenue and earnings beat
• Telstra share price on watch amid strong half-year profit growth
• 5 things to watch on the ASX 200 on Thursday

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 positions in and has recommended Telstra Group. 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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