Author: openjargon

If you told most investors that there was an ASX 200 stock on the share market that hasn’t cut its dividend in 121 years, they’d probably want to know a little more.

After all, a company’s dividend history is arguably an effective barometer of how financially successful it is and how it has delivered for shareholders over long periods of time.

Management teams can talk about future growth, exciting opportunities, a stock market that isn’t seeing true value, or how their company’s shares are on the precipice of exploding all they want. But seeing cash move from a company to its shareholders over many years instils confidence like nothing else. It’s the corporate equivalent of putting one’s money where one’s mouth is.

An ASX 200 stock that happens to be able to boast of a 121-year streak of delivering absolute dividend stability is Washington H. Soul Pattinson and Co Ltd (ASX: SOL). So I guess you might want to hear some more about this white whale.

An ASX 200 stock with a 121-year history

Washington H. Soul Pattinson and Co, or Soul Patts for short, is an ASX 200 stock that functions as an investing house. It managed a huge portfolio of diverse assets on behalf of its shareholders.

This company’s portfolio has changed considerably over time. It used to be locked up in large stakes of a very exclusive set of other ASX shares. It still has this ‘Strategic Portfolio’, with substantial stakes in TPG Telecom Ltd (ASX: TPG), Brickworks Ltd (ASX: BKW), New Hope Corporation Ltd (ASX: NHC) and more.

But Soul Patts also owns a large and diversified portfolio of ASX 200 blue chip stocks. This includes everything from Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP) to CSL Ltd (ASX: WOW) and Macquarie Group Ltd (ASX: MQG).

This ‘Large Caps’ portfolio is part of Soul Patts, thanks to its acquisition of its old owner, Milton Corporation, a few years ago.

In addition to these share-based investments, this ASX 200 stock also has other investments, including property, unlisted stock, private credit and venture capital.

What about the dividends?

But let’s get down to the dividend talk.

Soul Patts has been around since the 19th century, but was first listed on the ASX in 1903. Since then, this ASX 200 stock has paid out a consistent dividend every single year. The interim dividend that investors will enjoy on 11 May later this month will mark the 121st year this streak has continued.

What’s more, Soul Patts has also increased its annual dividend every year since 2000. That’s a feat no other ASX 200 stock, or any stock on the ASX for that matter, can boast of.

So it’s clear that Soul Pattinson’s diversified approach is successful, literally paying dividends for more than a century. Let’s see if it can keep it up over the next 121 years.

The post This ASX 200 stock hasn’t cut its dividend for 121 years appeared first on The Motley Fool Australia.

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More reading

• Morgans names more of the best ASX 200 shares to buy in May
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• Buy BHP and these ASX dividend shares in May
• Buying the dip: Managers spend millions on Soul Patts shares

Motley Fool contributor Sebastian Bowen has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks, Macquarie Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, Macquarie Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Woodside Energy Group Ltd (ASX: WDS) share price is charging ahead today, even as the S&P/ASX 200 Index (ASX: XJO) sinks deep into the red.

In afternoon trade on Thursday, the ASX 200 is down 0.8%.

The Woodside share price, on the other hand, is surging 1.4% at the time of writing to $28.26 a share.

Indeed, it’s a good day for all the big ASX 200 oil and gas stocks. Santos Ltd (ASX: STO) shares are up 0.7% to $7.68, while Beach Energy Ltd (ASX: BPT) shares are leaping 2.0% to $1.62 apiece.

While the Brent crude oil price is up 0.5% overnight to US$83.91 per barrel, I suspect much of today’s outperformance comes thanks to the federal government’s future gas plan.

Woodside share price catching tailwinds

The Woodside share price, along with competitors Santos and Beach Energy, could enjoy sustained tailwinds from the government’s long-term views on the need for Australian-produced gas.

This morning, Federal Resources Minister Madeleine King said (quoted by The Australian Financial Review):

We will need affordable gas to support energy reliability for households and businesses as we move to a more renewable grid. We need gas to support Australian manufacturing and Australian industry, and tens of thousands of Australian jobs in the manufacturing sector.

King noted that Australia’s gas industry, “creates highly paid and skilled jobs. It pays for roads, hospitals, schools and our security.”

Indeed, companies like Woodside, Santos, Beach Energy and the rest of the Aussie gas industry are reported to support more than 80,000 jobs. The industry also provides energy to more than five million homes.

King said Australia’s producers supply some 20% of the world’s gas. This delivered $72 billion of export income for Australia’s economy in 2023-24.

And King highlighted how the government’s gas plan can work to help the nation and its trading partners reach their emissions reduction goals.

“We need gas to help us achieve our commitment to net zero. Our trading partners depend on our gas to meet their commitments to net zero.”

Investors may also be bidding up the Woodside share price based on the lengthy timelines at stake here.

“Australia will also need gas into the future, to firm renewables and ensure the reliability of the grid,” King said. She added that, “Gas is needed out to 2050 and beyond.”

She continued:

Australia is committed to reaching net zero emissions by 2050, and we will need gas to get there, which means we must manage the emissions from gas. And gas must remain affordable for Australian customers. To achieve this, we will need new sources of gas to meet long-term demand as existing fields deplete.

In a blow to environmental activists – but a nod to reality and a boon for the Woodside share price today – King said, “Turning off gas overnight would do untold damage to our economy, impede efforts to get to net zero, and have a severe impact on our region.”

To help Australia reach its emissions reduction goals, she said, “I will release more greenhouse gas acreage for carbon capture, use and storage.”

King also addressed the ‘use it or lose it’ provisions that have concerned the ASX oil and gas companies.

“Australia will need continued investment to develop gas supplies to get us through the energy transition with thriving industries. That will mean a continued commitment to exploration,” she said.

“We will assess so-called use it or lose it provisions for retention leases, to get the gas we have already discovered flowing sooner.”

Santos CEO responds

Like the Woodside share price, Santos shares could benefit over the longer term from the government’s new gas policy.

Santos CEO Kevin Gallagher responded to the new policy, saying (courtesy of The Australian), “I’m pleased that the recognition of the role of gas is beginning to be better understood.”

Gallagher noted that around the world he’s seeing “a recognition of the importance of gas in the energy mix of the future”.

And Santos has long been a supporter of increasing carbon capture and storage to help tackle emissions.

“The future of our industry is abated oil and gas, and the only way you can really abate it effectively and at scale, is through carbon capture and storage,” Gallagher said.

As for any pending ‘use it or lose it’ provisions, he added, “We have just gone through a couple of years where you could ‘use it’ but get nothing done because we were held up with approval and regulatory roadblocks… We all want to ‘use it’.”

How has the Woodside share price been tracking?

Despite today’s boost, the Woodside share price remains down 10% in 2024.

Santos shares are just about flat.

And the Beach Energy share price is down 1% year to date.

The post Woodside share price smashes benchmark as government demands ‘more gas!’ appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Woodside shares are down 17% in 6 months. Is now the right time to buy?
• Morgans names the best ASX 200 stocks to buy in May
• 5 things to watch on the ASX 200 on Wednesday
• 3 ASX dividend stocks to buy for an income boost

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.

Are you on the lookout for some ASX shares to buy this month? Well, with the market down in the dumps today, now could be a good time to pounce.

But which ASX shares would be good options? Let’s take a look at five buy-rated stocks that brokers are tipping to generate big returns for investors.

IDP Education Ltd (ASX: IEL)

The team at Goldman Sachs thinks that this language testing and student placement company is an ASX share to buy right now.

It feels that recent weakness has created a compelling buying opportunity in a quality company that is going through a temporary headwind. Its analysts note that “we are nearing the base for FY25E earnings and are now capitalising what we see as trough earnings/growth at a historically low multiple. IEL’s structural growth outlook and business quality remain unchanged in our view.”

The broker currently has a buy rating and $25.30 price target on its shares.

Lovisa Holdings Ltd (ASX: LOV)

Bell Potter is feeling very bullish about fashion jewellery retailer Lovisa. In fact, the broker has just lifted its valuation for the company because it believes it can grow its store network at an even quicker than expected rate.

Bell Potter estimates that Lovisa can grow its network by 10% per annum between FY 2023 and FY 2034. It expects this to underpin strong earnings growth over the period.

The broker has a buy rating and $36.00 price target on Lovisa’s shares.

Megaport Ltd (ASX: MP1)

Another ASX share that has been named as a buy is Megaport. It is a leading global provider of elastic interconnection services.

Macquarie is a big fan of the company and is forecasting rapid growth over the coming years. This is thanks to strong near-term operating leverage and the growth of its Megaport Cloud Router (MCR) and Megaport Virtual Edge (MVE) products.

Macquarie currently has an outperform rating and $18.30 price target on Megaport’s shares.

Qantas Airways Limited (ASX: QAN)

Over at Goldman Sachs, its analysts also think that this airline operator’s shares are great value at current levels.

Especially given the way the company’s post-COVID transformation has created structurally stronger earnings.

Goldman has a buy rating and $8.05 price target on its shares.

Xero Ltd (ASX: XRO)

Finally, another ASX share that Goldman Sachs is bullish on is Xero. It is a rapidly growing cloud accounting platform provider with a huge market opportunity.

And when I say huge, I mean it. The broker believes Xero is “very well-placed to take advantage of the digitisation of SMBs globally, driven by compelling efficiency benefits and regulatory tailwinds, with >100mn SMBs worldwide representing a >NZ$100bn TAM.”

Goldman has the company on its Asia-Pacific conviction list with a buy rating and $156.00 price target,

The post 5 ASX shares to buy following the market selloff appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Lovisa and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group, Idp Education, Lovisa, Macquarie Group, Megaport, and Xero. The Motley Fool Australia has positions in and has recommended Macquarie Group and Xero. The Motley Fool Australia has recommended Idp Education, Lovisa, and Megaport. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It was the ASX 200 healthcare stock of the year in 2023, with its share price catapulting 214% in just 12 months.

But today is a challenging one for Neuren Pharmaceuticals Ltd (ASX: NEU), with its share price crashing 10.6% to an intraday low of $17.97 this morning.

This followed the release of its Q1 FY24 update on sales of its maiden drug, Daybue.

The ASX 200 biotech has since retraced some of those losses. Neuren shares are changing hands for $18.97 apiece, down 5.62%, at the time of writing.

It appears investors aren’t too pleased with the progress of DAYBUE sales in the US.

Let’s look into the details of the update.

ASX healthcare star falls on Q1 sales update

The update issued by Neuren Pharmaceuticals today contains highlights of the Q1 FY24 earnings reported by its United States partner, Acadia Pharmaceuticals (NASDAQ: ACAD).

Acadia is responsible for the global sales and commercialisation of Neuren’s first approved drug, DAYBUE, which received US Food and Drug Administration (FDA) approval last year.

DAYBUE is a world-first drug treatment for Rett syndrome. It’s approved in the US for adults and pediatric patients aged two years and up.

Acadia announced that Q1 net sales of DAYBUE in the US totalled US$75.9 million. This only just missed the guidance range of US$76 million to US$82 million.

Neuren anticipates it will receive royalty revenue of A$11.6 million for the quarter. It expects full-year FY24 royalties of between A$61 million and A$70 million.

That’s on top of sales milestone revenue of A$77 million, assuming Acadia meets its guidance range and the US/AUD exchange rate is 65 cents.

Today’s sales data for 1Q FY24 was lower than last quarter’s net sales of US$87.1 million.

Arcadia reiterated its full-year 2024 guidance for net sales of between US$370 million and US$420 million.

Why were 1Q FY24 sales lower than 4Q FY23?

Neuren has previously explained that seasonal effects negatively impacted 1Q FY24 sales.

These included refills that were due in January and actioned in December, prior to the holidays, and reduced Rett clinic days in January.

The company said discontinuations during Q1 were higher following a surge in new patient starts in the previous quarters.

Gross-to-net discounts were slightly higher in Q1, too.

Net patient additions have resumed, with increases in each of the past six weeks.

The company said:

Approximately 25% of the 5,000 diagnosed Rett syndrome patients in the United States have initiated therapy.

Persistence on therapy continues to track more than 10% higher than the clinical trial experience, with 58% remaining on therapy after treatment for 9 months. 862 patients are currently on therapy.

What’s next for this ASX healthcare stock?

Neuren Pharmaceuticals said Acadia had made good progress on its international expansion for DAYBUE.

A New Drug Submission in Canada was accepted for filing, and priority review was granted, with
potential for approval around the end of 2024.

A pediatric investigation plan (PIP) was filed with and accepted by the European Medicines Agency,
with a Marketing Authorisation Application anticipated in Q1 2025.

A formal meeting with the Japanese regulatory agency (PMDA) to discuss the clinical plan is
scheduled in Q2 2024.

What’s next for Neuren Pharmaceuticals?

Neuren’s second drug candidate, NNZ-2591, is in Phase 2 development for Phelan-McDermid syndrome (PMS), Angelman syndrome, Pitt-Hopkins syndrome and Prader-Willi syndrome.

Neuren is focused on developing new drug therapies to treat serious childhood neurological disorders
that have no or limited approved treatments available.

All of its drugs have ‘orphan drug’ designation for rare and serious diseases in the US, which gives Neuren access to incentives to support its work.

Typically, an orphan drug is not profitable to produce without government assistance, as the diseases they treat are rare and affect only small portions of the population.

Neuren Pharmaceuticals share price snapshot

Over the past 12 months, this ASX healthcare share has risen 39.5%. Obviously, that encapsulates part of that magnificent 214% gain over the 12 months to 31 December.

But the company hit a snag in February, which impacted its share price trajectory, as shown below.

Neuren Pharmaceuticals was hit with a short seller’s report on 15 February.

The report described DAYBUE as a “flop” amid “horror stories” of side effects among patients.

Neuren’s response was not enough to stop the ASX healthcare share tumbling, and it’s moved sideways ever since.

The post Why this high-flying ASX 200 healthcare stock just crashed 11% appeared first on The Motley Fool Australia.

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More reading

• Why is this ASX 200 stock avoiding the market selloff and pushing higher?
• Why Baby Bunting, JB Hi-Fi, Temple & Webster, and Westpac shares are falling today
• Why 4DMedical, Orica, PSC Insurance, and REA shares are rising today
• Why are CBA shares sliding following the bank’s quarterly update?
• Why are Westpac shares slumping 5% on Thursday?

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.

The REA Group Ltd (ASX: REA) share price is avoiding the market selloff on Thursday.

In afternoon trade, the ASX 200 stock is up over 1% to $187.09.

This compares favourably to a 0.8% decline by the benchmark ASX 200 index today.

Why is this ASX 200 stock avoiding the market selloff?

Investors have been fighting to get hold of the property listings company’s shares on Thursday after it release its third quarter update.

For the three months ended 31 March, the ASX 200 stock reported a 24% increase in revenue to $334 million and a 30% lift in operating EBITDA to $177 million.

This is a quicker rate of growth than the company delivered in the first half. As a result, financial year to date, revenue is now up 20% to $1,060 million and operating EBITDA is up 24% to $616 million.

Commenting on the quarter, REA Group’s CEO, Owen Wilson, said:

The Australian property market maintained its strong momentum during the quarter with seller confidence and healthy buyer demand driving activity. Australian consumers’ preference for our premium products and our focus on customer value delivered an exceptional result in this strong market.

The ASX 200 stock advised that national listings were up 6% year on year in the third quarter thanks largely to the key Sydney and Melbourne markets. Listings in these markets were up 20% and 18%, respectively, compared to the prior corresponding period.

Market leadership continues

REA Group continues to be the market leader by some distance. It notes that its network of brands holds three of the top four rankings across all Australian property websites.

In addition, 11.2 million people visited realestate.com.au each month on average during the quarter, with 52% exclusively using realestate.com.au.

There were also 130 million average realestate.com.au monthly visits, which is 4.1 times more visits than its nearest competitor each month on average.

Outlook

The ASX 200 stock’s CEO remains positive on the future and has reiterated its target of positive jaws (revenue growing quicker than costs) in FY 2024. Wilson concludes:

REA is well positioned for a strong finish to the financial year. The property market should continue to benefit from the belief that interest rates have reached, or are near the peak, providing buyers and sellers with confidence. We’re excited by our development pipeline and look forward to delivering new products and experiences that will continue to drive growth and further enhance the value of our audience.

Broker reaction

Goldman Sachs was impressed with the update, noting that it came in ahead of expectations. The broker said:

REA delivered a strong 3Q24 update, with Sales/EBITDA +24%/+24% vs. pcp and +3%/+5% vs. GSe.

The post Why is this ASX 200 stock avoiding the market selloff and pushing higher? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and REA Group. The Motley Fool Australia has recommended REA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a disappointing decline. At the time of writing, the benchmark index is down 0.8% to 7,741.2 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are sinking:

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price is down almost 22% to $1.49. Investors have been hitting the sell button today after the baby products retailer released a trading update. That update revealed that the cost of living crisis has been weighing on its performance. So much so, Baby Bunting expects FY 2024 pro forma net profit after tax to be in the range of just $2 million to $4 million. This will be down from FY 2023’s net profit after tax of $14.5 million, which itself was down 51% on FY 2022’s numbers.

JB Hi-Fi Ltd (ASX: JBH)

The JB Hi-Fi share price is down almost 4% to $57.75. This has been driven by the release of a trading update from the retailer. JB Hi-Fi’s sales were down across its Australia and The Good Guys businesses during the third quarter. The company advised that it is currently experiencing a “challenging and competitive retail market.”

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price is down 11% to $11.26. This is despite the online furniture retailer revealing strong sales growth so far during the second half. The company’s sales were up 30% through to 5 May compared to the same period last year. Management has also reiterated its full year EBITDA margin guidance range of 1% to 3%. CEO Mark Coulter said: “We reiterate our EBITDA guidance of 1-3%, targeting the mid-point of the range as we continue to invest in growing our market share and delivering on our key growth pillars. We look forward to updating the market further at the full year result in August.”

Westpac Banking Corp (ASX: WBC)

The Westpac share price is down over 5% to $26.42. There are a couple of reasons for this decline. One is weakness in the banking sector following the release of an update from a big four rival. The other is Westpac’s shares going ex-dividend this morning for its interim and special dividends. Earlier this week, the bank released its half year results and declared a fully franked interim dividend of 75 cents per share (up 7.1%) and a special fully franked 15 cents per share dividend. These dividends will be paid to eligible shareholders on 25 June.

The post Why Baby Bunting, JB Hi-Fi, Temple & Webster, and Westpac shares are falling today appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Temple & Webster Group. The Motley Fool Australia has recommended Jb Hi-Fi and Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) has run out of steam and is tumbling into the red on Thursday. In afternoon trade, the benchmark index is down 0.9% to 7,732.1 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are rising:

4DMedical Ltd (ASX: 4DX)

The 4DMedical share price is up 2% to 57 cents. This follows news that the medical technology company has been notified that it may utilise two existing Category III CPT codes for the reimbursement of CT LVAS technology in the United States. From today, CT LVAS scans conducted in a U.S. hospital outpatient facility for Medicare beneficiaries may be billed to Centers for Medicare & Medicaid Services (CMS) with a reimbursement of US$650.50. CEO and Founder Andreas Fouras said: “I am very excited by this progress in the commercialisation of our technology, and the positive impact this CPT code and associated reimbursement will have upon doctors and their patients.”

Orica Ltd (ASX: ORI)

The Orica share price is up over 1% to $18.50. This follows the release of the commercial explosives company’s half year results. Orica reported a statutory net profit after tax of $337.5 million for the six months. This is almost triple the $122.6 million recorded in the prior corresponding period. Though, it does include $158.4 million of profit from significant items after tax. Management advised that its “core blasting business continued to strengthen this half, supported by strong customer demand as well as increased earnings from high margin premium products and technology.”

PSC Insurance Group Ltd (ASX: PSI)

The PSC Insurance share price is up 5% to $6.02. This follows news that the diversified insurance services provider has accepted a takeover offer. According to the release, PSC Insurance has entered into a binding scheme implementation deed with the Ardonagh Group. This will see the latter acquire all of the issued ordinary shares in PSC Insurance for $6.19 in cash per share. Its chairman said: “We believe this transaction maximises value for PSC shareholders while also providing an excellent platform for growth for PSC employees and clients.”

REA Group Ltd (ASX: REA)

The REA Group share price is up over 1% to $187.09. Investors have been buying the property listings company’s shares following the release of its third quarter update. The realestate.com.au operator reported a 24% increase in revenue to $334 million and a 30% lift in operating EBITDA to $177 million. These growth rates are stronger than what was achieved in the first half of FY 2024. CEO Owen Wilson said: “REA is well positioned for a strong finish to the financial year. The property market should continue to benefit from the belief that interest rates have reached, or are near the peak, providing buyers and sellers with confidence.”

The post Why 4DMedical, Orica, PSC Insurance, and REA shares are rising today appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended PSC Insurance Group and REA Group. The Motley Fool Australia has recommended PSC Insurance Group and REA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Commonwealth Bank of Australia (ASX: CBA) shares are in the red today.

Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed yesterday trading for $119.74. In early afternoon trade on Thursday, shares are swapping hands for $117.59, down 1.8%.

For some context, the ASX 200 is down 0.9% at this same time.

This comes following the release of CBA’s quarterly update for the three months ending 31 March.

What did the big four bank report?

Among the key financial metrics for the quarter, the bank reported a 1% year on year decrease in operating income. That dip came along with a 2% increase in operating expenses.

Combined, this saw CommBank’s unaudited statutory net profit after tax fall 5% from the prior corresponding quarter to $2.4 billion, which could explain why CBA shares are underperforming today.

From a risk perspective, the bank remains well capitalised with a Common Equity Tier 1 (CET1) ratio of 11.9%. That’s well above the minimal 10.25% ratio required by the Australian Prudential Regulation Authority (APRA).

Why are CBA shares under pressure today?

CBA shares are sliding today despite what Citi called a “positive result” for the quarter, citing the improvement of net interest margins (NIM).

According to Citi analyst Brendan Sproules (quoted by The Australian), “The stabilisation and likely modest improvement in the NIM reflects, in our view, the stabilisation in retail banking, augmented by better channel mix in mortgages.”

Sproules added, “We expect the market to receive the result well from a fundamental perspective, although the valuation still remains very challenging from our perspective.”

Indeed, it’s the often-cited overvaluation of CBA shares relative to its peers that has a number of brokers forecasting price targets well below current levels.

With the bank’s $2.4 billion quarterly profit modestly exceeding consensus expectations, Evans & Partners expects we may see analysts boost their profit forecasts.

“We expect consensus core profit upgrades of ~2 per cent for FY25F and FY26F. Asset quality is deteriorating in similar fashion to that generally seen in other major bank results over the last week,” the broker said (quoted by The Australian Financial Review).

Despite that expectation, Evans & Partners has a ‘sell’ rating on CBA shares with an $80 price target.

UBS also has a ‘sell’ rating on the biggest Australian bank, though with a higher price target of $105 a share.

According to UBS (quoted by the AFR):

Despite a visible deterioration in asset quality metrics, we think the credit impairment charges today suggest some consensus upgrades are likely for 2H 24 cash earnings…

CBA continues to lean on its proprietary distribution channels to defend and drive volume growth in mortgages – a strategy which has so far seen CBA grow at 0.7x system. Defending back-book profitability remains a key imperative for management.

Despite today’s retrace, CBA shares remain up a healthy 21% since this time last year.

The post Why are CBA shares sliding following the bank’s quarterly update? appeared first on The Motley Fool Australia.

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More reading

• CBA share price on watch following $2.4b third quarter profit
• 5 things to watch on the ASX 200 on Thursday
• Are CBA shares a buy or a sell ahead of Thursday’s update?
• After hitting all-time highs in March, why did the CBA share price tumble 5% in April?
• Own CBA shares? Here’s what to look out for with the bank’s Q3 update

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.

An under-the-radar ASX All Ords stock is doing more than its share of the heavy lifting today.

On Thursday, the All Ordinaries Index (ASX: XAO) was down 0.8% in early afternoon trade.

But shares in ASX All Ords diversified insurance services company PSC Insurance Group Ltd (ASX: PSI) are heading the other way, up 4.9% to $6.02 apiece.

That sees the PSC Insurance share price up an impressive 36% over the past six months.

Investors are snapping up the stock after long-simmering takeover rumours were confirmed.

ASX All Ords insurer soars on takeover deal

After the market closed yesterday, PSC Insurance reported that it had entered into a binding Scheme Implementation Deed with The Ardonagh Group.

Under the scheme, Ardonagh, one of the world’s leading independent insurance broking groups, will acquire all of PSC’s shares for $6.19 apiece.

That’s still 2.8% above where the ASX All Ords stock is trading at the time of writing.

And it represents an implied equity value of $2.26 billion.

The PSC board unanimously recommended shareholders of the ASX All Ords company vote in favour of the scheme.

The board said it believed merging with Ardonagh was a “complementary fit” for its businesses, calling the proposed acquisition “a transformational step in contributing to the creation of an impactful global broking group”.

Founded in 2017, Ardonagh is now a top 20 global broker with more than 10,000 employees across 30 countries. The company reported 2023 revenue of £1.6 billion (AU$3.0 billion).

What did management say?

Commenting on the proposed takeover sending the ASX All Ords stock sharply higher today, Paul Dwyer, non-executive chairman of PSC Insurance, said:

Today marks an important day in PSC’s history. This transaction recognises the quality and strength of PSC’s people and business that has developed over the last 18 years.

We believe this transaction maximises value for PSC shareholders while also providing an excellent platform for growth for PSC employees and clients.

David Ross, CEO of The Ardonagh Group, added:

The acquisition, which has secured the unanimous recommendation of PSC’s board, is a significant milestone in the global growth of Ardonagh and underlines our strong commitment to the markets we serve.

Ardonagh has been assembled as a bastion of independence and scale, aligning high calibre businesses and management teams around quality advice for clients and entrepreneurial connectivity within the group.

PSC’s journey and values align with our own and its portfolio of highly complementary businesses provides an abundance of opportunity to strengthen our positions in Australia and wholesale and specialty markets.

The takeover deal lifting the ASX All Ords insurer today still requires shareholder and court approval before moving forward.

Stay tuned.

The post Under-the-radar ASX All Ords stock soars on confirmed takeover news appeared first on The Motley Fool Australia.

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