Author: therawinformant

The Oil Search Limited (ASX: OSH) share price crashed on Friday after brokers downgraded their recommendation on the stock.

The Oil Search share price tumbled 5.6% during lunch time trade to $3.52 – making it the worst performer on the S&P/ASX 200 Index (Index:^AXJO).

In case you are wondering, the Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) share price is the second worst with a 4.1% slump after Regis Healthcare Ltd (ASX: REG) rejected its takeover offer.

The Orica Ltd (ASX: ORI) share price is in third position with a 4% drop to $16.30 after it posted a disappointing profit result.

Oil Search share price slumps on broker downgrades

However, it was the OSH share price that’s holding the wooden spoon even as the oil price inched up. This is because at least two brokers cut their rating on the stock following its 2020 Investor Day event.

Management didn’t reveal anything untoward. In fact, JP Morgan noted a few positive bits of news including a sizable lift in OSH’s estimated resources in Alaska.

The estimated 2C resources at its Alaska project was increased to 968 million barrels of oil equivalent (mmbbl) on a gross basis. The key driver for the upgrade came from the satellite deposits.

Oil Search also received the green light from its joint-venture partners for the Papua LNG project.

Good news priced into the OSH share price

“Notwithstanding these positive outcomes, the stock price has increased 49% this month alone (ASX200 +10%) and is now in line with our revised NPV so we downgrade to Neutral,” said JP Morgan.

The broker isn’t alone in thinking the stock has shot up to fair value. UBS also downgraded the stock to “neutral” from “buy” as it believes the stock is pricing in an oil price of US$58 a barrel, the highest among the energy stocks under its coverage.

How the OSH share price compares to the oil price

The Brent crude price is currently trading at US$44.21 a barrel after it crashed by around 27% over the past year.

“At the current price, the market is paying A$0.93/sh for exposure to growth projects in Alaska and Papua LNG with an FID [final investment decision] on either unlikely within 12 months, we move Oil Search to least preferred across our Energy coverage,” said UBS.

Despite the recent jump in the Oil Search share price, the stock is still the worst performer among its large cap peers.

Oil Search lost 52% of its value over the past 12 months. The Woodside Petroleum Limited (ASX: WPL) share price fell 36% and the Santos Ltd (ASX: STO) share price surrendered 27% of its value.

More reading

• Why Kogan, Oil Search, Orica, & Soul Pattinson shares are dropping lower
• What would it take for the ASX 200 to hit 7,000 again?
• Why Accent, Mesoblast, Redbubble, & Regis Healthcare shares are charging higher
• Takeover battle for Regis (ASX:REG) share price triggers sector-wide upgrade
• ASX 200 up 0.1%: CBA’s APRA update, Mesoblast rockets, Oil Search sinks

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the Oil Search (ASX:OSH) share price is the worst performer today appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) has fought back from a weak start and is on course to end the week on a positive note. In afternoon trade the benchmark index is up 0.2% to 6,559 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

Kogan.com Ltd (ASX: KGN)

The Kogan share price is down over 2% to $17.91. This morning the ecommerce company held its annual general meeting and defended the issuing of options to its CEO and CFO. The options were narrowly approved by shareholders. However, its renumeration report was given a first strike with 43.74% votes against it. Kogan also provided a trading update which revealed that its strong growth has continued during the first four months of FY 2021, albeit at a slightly slower rate to the first two months.

Oil Search Limited (ASX: OSH)

The Oil Search share price has fallen 5% to $3.54. This follows a touch of weakness in oil prices overnight and the release of a bearish broker note out of Credit Suisse this morning. Its analysts have downgraded the energy producer’s shares to an underperform rating with a $3.10 price target.

Orica Ltd (ASX: ORI)

The Orica share price has dropped 4% to $16.29 following the release of its full year results. For the 12 months ended 30 September, the commercial explosives company reported a 31% decline in net profit after tax to $168 million. Orica’s Chief Executive, Alberto Calderon, advised that the company was battling extremely difficult conditions as COVID-19 severely impacted its customers in the emerging markets countries.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

The Washington H. Soul Pattinson share price has fallen 4% to $28.02 after Regis Healthcare Ltd (ASX: REG) rejected its takeover approach. The investment house tabled an offer of $1.85 per share, but the aged care operator believes it undervalues the company. Judging by the share price reaction, Washington H. Soul Pattinson shareholders don’t appear keen on the move.

More reading

• Why Accent, Mesoblast, Redbubble, & Regis Healthcare shares are charging higher
• Takeover battle for Regis (ASX:REG) share price triggers sector-wide upgrade
• ASX 200 up 0.1%: CBA’s APRA update, Mesoblast rockets, Oil Search sinks
• Here’s why the Regis (ASX:REG) share price has soared by 21% today
• The Orica (ASX:ORI) share price falling, profits down 31%

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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Today, the S&P/ASX 200 Index (ASX: XJO) has reached a new post-March high of 6,562 points. That’s 6% higher than where the index was a month ago, 17.6% higher than where it was 6 months ago and 44% higher than the low point we saw on 23 March during the coronavirus-induced market crash. However, it’s also 2% below the level the ASX 200 started 2020 at, and 8.5% below the all-time high of 7,162 points it reached in February.

Yes, the ASX 200 has only crossed 7,000 points at one period in its entire history, and that was for a period of fewer than 2 months at the start of this year.

So what would it take for the ASX 200 to go back over 7,000 points?  One might think, due to the effects and maladies from the coronavirus pandemic, that reaching a pre-pandemic stock market high is unfeasible in the current climate.

However, that view could be rendered moot by looking at the United States markets right now. The Dow Jones Industrial Average Index (DJX: .DJI) (one of the benchmark indexes for the US markets) has just made a new high. Not a 2-month or a 6-month high, but an all-time high. On Monday this week, the Dow closed at 29,950 points, a level it has never closed at or above in history, including the ‘golden’, pre-COVID months of January and February this year.

Why the markets are surging to new highs might be a question for another time, but let’s see what would need to happen for the ASX 200 to follow the Dow and make new highs of its own.

How do banks fit into the ASX 200?

The ASX 200 is a market capitalisation-weighted index. This means that the largest companies (by market cap) within the index have the most influence on the index. To illustrate, the ASX 200’s largest holding is CSL Limited (ASX: CSL) with a 7.78% weighting. The smallest constituent is Western Areas Ltd (ASX: WSA) with a 0.03% weighting. That means if CSL goes up 2% on any day, it’s going to have more of an impact on the ASX 200 than if Western Areas goes up 200%.

Together, the top 10 shares in the ASX 200 make up roughly 43% of the total weighting. Of those top 10, 5 are banks: Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking Group Ltd (ASX: ANZ), Westpac Banking Corp (ASX: WBC) and Macquarie Group Ltd (ASX: MQG).

Together, these ASX bank shares have a collective weighting of 21.4% in the ASX 200. Why is this important? Well, because all 5 of these companies (we might make an exception to Macquarie here), operate in the same industry, in the same market and under the same conditions. The big four especially have an oligopolistic hold on the Australian retail banking market. That, in turn, means the factors that affect one bank’s share price are likely to affect them all.

For the ASX 200 to reach 7,000 points, it’s likely that the ASX banking sector will need to carry the load, as it were. Remember, last time the ASX 200 was over 7,000 points, the big four were trading with valuations far above what we see today.

Foolish takeaway

Looking at the numbers, a logical conclusion could draw us to this scenario: the only way the ASX 200 is going to go back over 7,000 points is if the ASX banks appreciate considerably, or else the rest of the ASX 200 has an exceptional growth period and picks up the slack.

More reading

• Takeover battle for Regis (ASX:REG) share price triggers sector-wide upgrade
• ASX 200 up 0.1%: CBA’s APRA update, Mesoblast rockets, Oil Search sinks
• Why the Atlas Arteria (ASX:ALX) share price is falling today
• CBA (ASX:CBA) share price in focus after APRA Remedial Action Plan update
• Harmoney (ASX:HMY) share price drops lower following IPO

Sebastian Bowen owns shares of National Australia Bank Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post What would it take for the ASX 200 to hit 7,000 again? appeared first on Motley Fool Australia.

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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a positive note. At the time of writing, the benchmark index is up slightly to 6,550.9 points.

Four shares that are climbing more than most today are listed below. Here’s why they are charging higher:

Accent Group Ltd (ASX: AX1)

The Accent share price has climbed 5% to $1.87. This follows the release of a trading update at its annual general meeting. That update revealed that the footwear retailer’s sales were well ahead of expectations during the first 20 weeks of FY 2021. Accent revealed that like for like sales are up 15.7% over the period excluding its Auckland and Victorian stores.

Mesoblast limited (ASX: MSB)

The Mesoblast share price has rocketed 14% higher to $3.73 after announcing a major deal with pharma giant Novartis. The biotech company has signed an exclusive worldwide license and collaboration agreement with Novartis for the development, manufacture, and commercialisation of its mesenchymal stromal cell (MSC) product remestemcel-L. Novartis will make a US$50 million upfront payment and could then pay over US$1.25 billion in milestones to Mesoblast.

Redbubble Ltd (ASX: RBL)

The Redbubble share price has jumped over 7.5% higher to $4.89 after the ecommerce company named its new CEO. Redbubble has appointed former SEEK Limited (ASX: SEK) executive, Michael Ilczynski, as its new chief executive. Mr Ilczynski, who was formerly the CEO of SEEK Asia Pacific and Americas, will replace interim CEO, Martin Hosking, on 27 January 2021.

Regis Healthcare Ltd (ASX: REG)

The Regis Healthcare share price has surged 22% higher to $1.80. This follows the receipt of a takeover approach by investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) on Thursday. Washington H. Soul Pattinson tabled an offer of $1.85 per share, which has since being rejected by the aged care operator.

More reading

• Takeover battle for Regis (ASX:REG) share price triggers sector-wide upgrade
• ASX 200 up 0.1%: CBA’s APRA update, Mesoblast rockets, Oil Search sinks
• Here’s why the Regis (ASX:REG) share price has soared by 21% today
• Mesoblast (ASX:MSB) share price rockets higher on major Novartis agreement
• Accent (ASX:AX1) share price on watch after strong trading update

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Accent Group and SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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Redcape Hotel Group Pty Ltd (ASX: RDC) has stepped back into the buyers’ circle. At the time of writing, the Redcape share price is trading flat at $1.00 despite the company announcing it has acquired the Gladstone Hotel in Dulwich Hill, Western Sydney, for $38 million. The deal does, however, represent Redcape’s first acquisition since it returned to full operations and resumed dividend distributions to shareholders.

How has the Redcape share price been performing?

Redcape owns and operates a portfolio of 33 pubs and hotels across New South Wales and Queensland. The company’s shares first began trading on the ASX on 30 November 2018.

From there, the Redcape share price gradually moved higher with little volatility, for a gain of 9% by 4 March 2020.

I’m sure you know what happened next.

Like most every share trading on the ASX, especially those tied to hospitality and leisure, the Redcape share price was savaged during the wider COVID-19 market rout.

From 4 March through to 20 March, the share price dropped a gut-wrenching 61%.

Since then, Redcape shares have rebounded strongly, up more than 127% from the March lows. Year to date, the Redcape share price remains down nearly 11%.

By comparison, the All Ordinaries Index (ASX: XAO) is down nearly 1% since 2 January.

A word from Redcape’s CEO

Commenting on Redcape Hotel Group’s $38 million acquisition of the Gladstone Hotel, CEO Dan Brady said:

We are delighted to announce the addition of such a quality asset to our portfolio. Being our first acquisition since returning to full operation and with distribution reinstated, the purchase signifies a return to our strategy of active portfolio optimisation and growing sustainable distributions for our securityholders over the long term. Our vision is to create and nurture sociable and sustainable communities.

Brady added his company plans a major refurbishment program for the Gladstone Hotel, including a focus on developing hospitality professionals. “We look forward to immersing ourselves in the Dulwich Hill community and learning about the Gladstone Hotel’s customers and staff as we look to drive even better outcomes for our staff, our customers and our securityholders.”

With the same family holding ownership of the hotel for the past 40 years, Redcape expects the asset to benefit from its operational platform and refurbishment capabilities.

The company stated it will fund the acquisition from its existing resources. It expects settlement before March 2021, subject to customary conditions.

More reading

• What’s lifting the Platinum Asset Management (ASX:PTM) share price today?
• Landlease (ASX:LLC) share price falls on subdued earnings
• Takeover battle for Regis (ASX:REG) share price triggers sector-wide upgrade
• ASX 200 up 0.1%: CBA’s APRA update, Mesoblast rockets, Oil Search sinks
• Orthocell (ASX:OCC) share price jumps 17% on positive clinical trials

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 Platinum Asset Management Ltd (ASX: PTM) share price is 2.59% higher to $3.56 per share at the time of writing, following the chair’s address to Platinum’s annual general meeting (AGM) on Friday. 

The Platinum share price has experienced downward, whipsaw-like action in recent years, driven by disappointing earnings. Despite the consistent dividend yield from the company, the $3 share price level represents 12-year lows for Platinum.

What was shared at the Platinum AGM?

In today’s AGM address, Platinum chair Michael Cole said, “it has been a somewhat challenging year for Platinum with investment returns for our flagship International Fund overshadowing some strong investment performance in other areas, most notably our Asia ex-Japan and Healthcare focused investment strategies.” 

The underperformance in its flagship fund translated into net fund outflows and lower funds under management (FUM). Platinum’s overall revenues were flat for the year and profit after tax was down only slightly, by 2% on the prior corresponding period. 

FUM at 30 June 2020 was $21.4 billion, a decrease of 14% from the 30 June 2019 closing FUM of $24.8 billion. The reduction in FUM was driven primarily by net fund outflows of $3.0 billion. 

Strong dividend yield to continue 

The board declared a 2020 final fully franked dividend of 11 cents per share. Together with its interim fully franked ordinary dividend of 13 cents per share, Platinum’s total dividends for FY20 come to 24 cents per share. The 24 cents per share annual dividend represents a 6.4% annualised yield (based on the company’s share price at 30 June 2020). 

The board noted that over the past decade, it has consistently paid shareholders over 90% of the company’s profit after tax as dividends. This is because the company’s capital requirements have been limited. In today’s announcement the Platinum board indicated it generally expects that most, if not all, future profits will continue to be distributed by way of dividends. 

FY21 outlook 

At 31 October 2020, Platinum’s FUM was $21.8 billion, which represents an increase of 1.9% from the 30 June 2020 FUM of $21.4 billion. 

The company also highlighted that the financial markets have continued to appreciate in the first four months of the new financial year, and this appreciation has more than offset net outflows from its funds.

Platinum reports its early positioning in COVID recovery cyclical stocks has begun to be rewarded in recent weeks as equity markets start to digest the future implications of a vaccine-led economic recovery in more cyclical stocks. 

More reading

• 5 things to watch on the ASX 200 on Friday
• Why Platinum, ReadyTech, Tabcorp, & Whitehaven shares are dropping lower

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 Lendlease Group (ASX: LLC) share price has fallen slightly today after the company advised its earnings for FY21 will still be subdued due to uncertainties surrounding COVID-19. At the time of writing, the Lendlease share price is trading 1.62% lower at $14.59. During Lendlease’s annual general meeting (AGM) this morning, the company also announced that it has multiple pipeline projects to be executed in FY21 and beyond.

What’s in the pipeline?

Landlease says that while the financial result announced in August was disappointing, it has made substantial progress on its strategic agenda, including the development of its project pipeline, and creating new investment partnerships.

The company says it added two new major residential projects to its portfolio – Thamesmead Waterfront in London and a partnership with Alphabet Inc‘s (NASDAQ: GOOGL) (NASDAQ: GOOG) Google in the San Francisco Bay Area. These projects have a combined estimated end development value of $37 billion.

Landlease also announced today that several other pipeline projects have emerged that will produce profit and investment grade product beyond FY21. The most notable is the major urbanisation project, Java Street New York, alongside its partner, Aware Super. This project, with an estimated end value of $1 billion, will transform a full city block into more than 800 residential for-rent apartments. The company says it is also making good progress in securing additional projects in Los Angeles and Singapore.

The group says its plan to divest non-core assets was executed after the sale of its engineering business to Acciona in September. This sale follows separate divestments in United States telecommunications and energy businesses. Potential buyers of Landlease’s services business are also in the pipeline for the the new year after the sales process was paused in the wake of COVID-19. 

Despite all these upcoming projects, Lendlease still expects earnings in the first half of FY21 to be subdued due to the pandemic.

However, Lendlease Chief Executive, Steve McCann, remains optimistic for the year ahead, saying:

Despite these impacts, we remain confident that the significant growth in the secured pipeline, the achievement of planning milestones, and expected investment partner appetite, provides the foundation for accelerating development activity to our target of more than $8 billion of completions per annum. That is an increase of more than 80 per cent on our historical completion rate of $4.3 billion per annum over the last 5 years.

How has the Lendlease share price performed in 2020?

In August, Lendlease posted a net loss of $310 million in its full year results for FY20. Like most property companies with international operations, this was mainly due to its exposure to markets with mandated coronavirus shutdowns. The company also said that, at the time, about 207 of its workers had tested positive to the virus, but fortunately none had died.

The Lendlease share price has lost almost 19% in 2020, as the depressed property market took its toll on the company’s business model. The Lendlease share price began the year at $17.95 before dropping to $9.50 in March during the height of the pandemic. Based on its current share price, Lendlease commands a market capitalisation of $9.9 billion.

More reading

• 5 things to watch on the ASX 200 on Friday
• Why the Downer (ASX:DOW) share price is outperforming today
• Are these beaten down ASX shares bargain buys?
• Why REITs led the pack on the ASX today
• Elections, pandemics and rate cuts. Where to next for ASX share prices?

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 takeover bid didn’t only send the Regis Healthcare Ltd (ASX: REG) share price soaring. It triggered a re-rating among its peers with at least one leading broker upgrading the whole sector.

The Regis share price surged 21.4% to $1.79 in morning trade when the retirement accommodations operator rejected a $1.85 a share bid by Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Takeover bid triggers rally in ASX aged care stocks

With the cat out of the bag, Regis’ rivals like the Japara Healthcare Ltd (ASX: JHC) share price and Estia Health Ltd (ASX: EHE) share price leapt 23% and 17%, respectively.

In contrast, the S&P/ASX 200 Index (Index:^AXJO) is trading 0.2% higher after reversing its morning loss.

It seems opportunistic suitors may be scouring for targets ahead of the aged care Royal Commission’s final report next February.

ASX aged care sector gets an upgrade

“While the recommendations and the resulting Govt policy and funding decisions are uncertain we believe it is reasonable to assume FY21 will be a low point,” said JP Morgan.

“We believe investors should consider building a position in the sector now despite the continuing uncertainty.”

Based on this belief and the prospects for mergers and acquisitions (M&As), the broker upgraded its recommendation on the Japara share price and Estia share price to “overweight” (or “buy).

Royal Commission’s final report not a big risk

What’s more, the release of the Royal Commission’s findings may hold some positives for the aged care sector.

Given that around 60% of aged care facilities are running at a loss, the Royal Commission is likely to recommend increased government funding for the sector.

This doesn’t mean there aren’t risks. The biggest is increased regulation, which JP Morgan warns may offset the benefits from increased funding.

Risk-reward starting to look appealing

However, the broker doesn’t believe this is a key risk as regulators will not want new rules to lead to poor care outcomes.

Two other risks to the sector also looks to be easing. These are occupancy and property price risks.

“Falling occupancy has been a key challenge over the last year. While pressure remains, we believe it has likely bottomed given the non-discretionary nature of the demand and reduced negative media coverage,” said JP Morgan.

“Concerns over the impact of a drop in residential property prices have also receded as asset prices have stabilised and the pandemic has been well managed in Australia.”

Further, the ongoing rotation into value stocks may provide an extra tailwind for the sector.

More reading

• ASX 200 up 0.1%: CBA’s APRA update, Mesoblast rockets, Oil Search sinks
• Why the Atlas Arteria (ASX:ALX) share price is falling today
• Here’s why the Regis (ASX:REG) share price has soared by 21% today
• Harmoney (ASX:HMY) share price drops lower following IPO
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) has fought back from a weak start and is pushing higher. The benchmark index is up 0.1% to 6,556.8 points.

Here’s what is happening on the market today:

CBA’s APRA update.

Commonwealth Bank of Australia (ASX: CBA) is the only big four bank pushing higher today. Australia’s largest bank was given a boost this morning when APRA gave it a thumbs up for its progress with the Prudential Inquiry Remedial Action Plan. As a result of this, the operational risk overlay imposed on the bank has now been reduced from $1 billion to $500 million with immediate effect. Commonwealth Bank notes that this reduction represents an increase in Common Equity Tier 1 capital of 17 basis points.

Mesoblast share price rockets.

The Mesoblast limited (ASX: MSB) share price is rocketing higher on Friday after announcing a major deal with pharma giant Novartis. The two parties have signed an exclusive worldwide license and collaboration agreement for the development, manufacture, and commercialisation of its mesenchymal stromal cell (MSC) product remestemcel-L. Novartis will make a US$50 million upfront payment and could pay over US$1.25 billion in milestones.

Sydney Airport traffic update.

The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is dropping lower after releasing its traffic update for the month of October. During the month, Sydney Airport’s total passenger traffic was 94.3% lower than the prior corresponding period. A total of 225,000 passengers were passing through its gates during the month. Domestic traffic was down 92.6% on the same period last year.

The best and worst ASX 200 performers.

The Mesoblast share price is far and away the best performer on the ASX 200 today with a 15% gain. This follows its agreement with Novartis. The worst performer has been the Oil Search Limited (ASX: OSH) share price with a 6% decline. Oil price weakness and a broker downgrade are weighing on its shares.

More reading

• Takeover battle for Regis (ASX:REG) share price triggers sector-wide upgrade
• Sydney Airport (ASX:SYD) share price resilient despite plummeting passenger traffic
• Why the Atlas Arteria (ASX:ALX) share price is falling today
• Mesoblast (ASX:MSB) share price rockets higher on major Novartis agreement
• CBA (ASX:CBA) share price in focus after APRA Remedial Action Plan update

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 Orthocell Ltd (ASX: OCC) share price is 17% higher this morning, after the company released positive results in its CelGro nerve repair study. At the time of writing, Orthocell shares are trading at 44 cents per share.

About Orthocell 

Orthocell is a regenerative medicine company dedicated to the development of novel collagen medical devices and cellular therapies for the repair and regeneration of human tendons, bone, nerve and cartilage defects. 

The company’s regenerative medicine products include CelGro, a naturally derived collagen medical device for tissue repair. CelGro is designed for use in multiple indications to augment the surgical repair of tendons, bone, peripheral nerves and articular cartilage.

The product is approved for sale within the European Union for a range of dental bone and soft tissue procedures and is being readied for its first approval in the US and Australia. 

Positive results in CelGro nerve repair study 

On Friday, the company announced that its patient enrolment for the CelGro nerve regeneration trial is now complete. To date, this includes the repair of 35 nerves in 19 patients. Positive long-term clinical data shows nerve repair with CelGro results in predictable and consistent restoration of upper limb function. 

Patients in the clinical trial suffered traumatic nerve injuries following motor vehicle, sporting and/or work-related incidents, resulting in partial or total loss of use of their arms and, in more severe cases, also their legs and torso. 

Results from 10 participants (19 nerves) 24 months after treatment with CelGro showed upper limb function was restored in 17 of 19 (89%) nerve repairs. These results follow the clinical data of the same ten participants 12 months after surgery, announced on 9 October 2019. Patients ceased, or significantly reduced, prescription pain medication, and in many cases returned to work and participation in recreational activities. 

This news was well received by the market, with the Orthocell share price up 17.33% at the time of writing. 

Next steps 

Orthocell managing director Paul Anderson said:

Following these positive results validating the interim data, our team is progressing regulatory applications in Australia and will commence the US regulatory study shortly to make this treatment accessible to the millions of people who experience nerve damage annually.

CelGro’s global addressable market in peripheral nerve repair is estimated to be worth more than US$7.5 billion per annum, with approximately 3,000,0000 procedures that could use CelGro completed each year. 

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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