Author: therawinformant

The New Century Resources Ltd (ASX: NCZ) share price is up by 8.57% today, thanks to a market announcement that revealed significant increases in the miner’s quarterly production, alongside cost reduction measures.

The news will be well received by shareholders, after the New Century share price has tumbled from its $0.45 high in the past year.

What happened?

In its announcement, New Century Resources declared commercial production at its Century Zinc Mine operation in Queensland, meaning that production from the mine begins to make operations economically feasible. This follows the mine recording a 22% increase in zinc metal production during the quarter ended June 2020, hitting 34,500 tonnes. The mine also saw a large decrease in direct costs, which were down to about US$0.79/lb on payable metal.

This increase is the 7th consecutive quarter in which the mine has seen not only increased zinc production but also the reduction in costs.

New Century managing director Patrick Walta confirmed that the company remains focused on continuing this trend, and commented that the mine is “now re-established as a top 10 zinc producer just 3 years since being shutdown for closure.”

Goro nickel and cobalt mine acquisition

Towards the end of May, New Century made an announcement that it had entered a 60-day exclusivity period with Vale in relation to the potential acquisition of the Goro nickel and cobalt mine in New Caledonia. The company is continuing to move forward with negotiations for the provision of suitable funding and long-term working capital for the operation.

If the acquisition of the Goro operation is successful, it would result in New Century Resources becoming a major supplier of nickel and cobalt for the growing electric vehicle industry.

About the New Century share price

Despite the zinc price remaining near 4-year lows, Walta stated that the company sees “potential for a price rebound due to additional metal demand from increased global infrastructure development linked to Covid-19 government stimulus.” Any price rebound in the zinc price will have a corresponding impact on the New Century share price.

The New Century share price has been wildly volatile since it listed in mid 2017, going from $1.50 to lows of $0.05 in March, before rebounding to $0.19 a share, or an increase of 280% since March.

However, New Century does remain one of the most shorted shares on the ASX. 

More reading

• ASX stock of the day: Phoslock share price surges 21% on business update
• 3 ASX tech shares to buy and hold
• Why the Mesoblast share price is leading the ASX 200 on Monday
• Afterpay share price pushes higher on Qantas partnership
• Adacel Technologies share price soars 19% on updated profit guidance

Motley Fool contributor Daniel Ewing 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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Technology has revolutionised how we work and play. Furthermore, being technology focused has enabled some companies to weather the coronavirus crisis far better than others. Social distancing measures have hammered the economy this year. But some companies, as well as their investors, have reaped the benefits that stem from operating tech-focused businesses in the current environment. 

Let’s discuss 3 such ASX tech shares that I believe will reward long-term investors.

NextDC Ltd (ASX: NXT)

New contract wins have helped the NextDC share price surge to new highs over the past 12 months. In an update released to the market on 1 July 2020, CEO and managing director Craig Scroggie stated: “The demand for our data centre services continues to accelerate and exceed expectations”.

NextDC was also admitted as a top 100 ASX listed company in the June S&P/ASX Indices quarterly rebalance.

In May of this year, the Aussie data centre operator also completed a $191 million share purchase plan. This followed a $672 million institutional placement completed on 8 April. The funds will assist the company with pursuing growth opportunities including the proposed development of a new data centre in Sydney.  

Technology One Ltd (ASX: TNE)

Technology One is an Australian Software as a Service (SaaS) provider. The company’s diversified client base and global expansion plans are helping it to consistently deliver stable and increasing earnings.

In fact, in an announcement on 19 May, Technology One advised it anticipates annual recurring revenues (ARR) to grow to $500 million by FY24. ARR in FY19 was $202 million. Furthermore, the company reported a low churn rate of 0.45% for the half year ended 31 March.

CEO Edward Chung said: “With a strong pipeline, a high proportion of locked in recurring revenues, no debt and a strong balance sheet, we are well positioned to deliver continuing strong growth over the full year”.

Xero Limited (ASX: XRO)

Xero offers cloud-based accounting software for small and medium sized businesses. The software is designed to make record keeping simple and user-friendly.

The group has been successfully expanding and now operates in Australia, New Zealand, the United Kingdom, North America, and other parts of the world.

In its FY20 investor presentation on 14 May this year, the company announced subscribers have grown 467,000 to 2.285 million. As a result, revenue climbed 30% year-on-year to $718.2 million. Earnings before interest, taxation, depreciation and amortisation (EBITDA) has also increased $64.6 million year-on-year to $137.7 million.

Its successful growth strategy is a key reason the Xero share price has been surging. While the company cautioned about the uncertainty surrounding COVID-19, it remains committed to its growth targets and long-term strategy.

CEO Steve Vamos said on 14 May 2020: “…Now more than ever, small businesses are recognising the benefit of being able to use the cloud to run their businesses and manage their finances.”

Foolish takeaway

I believe technology is driving flexibility of operation in the modern world. As a result, barriers such as physical location are now declining allowing us to increasingly work and play online.

I’m confident an investment in the companies listed above has the potential to reward long-term investors with capital growth due to the increasing demand for their products and services. 

More reading

• These were the 5 best performing ASX shares last week
• Is the NextDC share price still a buy despite hitting an all-time high?
• Altium and 2 more ASX 200 shares to watch this week
• ASX 200 Weekly Wrap: Afterpay, Tech push ASX 200 back above 6,000
• Top brokers name 3 ASX shares to buy next week

Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. 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 best performer on the S&P/ASX 200 Index (ASX: XJO) on Monday has been the Mesoblast limited (ASX: MSB) share price by some distance.

In afternoon trade the allogeneic cellular medicines developer’s shares are up a sizeable 8% to $3.65.

Why is the Mesoblast share price storming higher today?

Investors have been buying the company’s shares after it provided an update on its allogeneic mesenchymal stem cell (MSC) product candidate, remestemcel-L.

According to the release, an expanded access protocol (EAP) has been initiated in the United States for compassionate use of remestemcel-L in the treatment of COVID-19 infected children with cardiovascular and other complications of multisystem inflammatory syndrome (MIS-C).

This means that patients aged between two months and 17 years may receive one or two doses of remestemcel-L within five days of referral under the EAP.

The company advised that the protocol was filed with the United States Food and Drug Administration (FDA) and provides physicians with access to remestemcel-L for an intermediate-size patient population under its existing Investigational New Drug application.

What is MIS-C?

MIS-C is a life-threatening complication of COVID-19 in otherwise healthy children and adolescents. It includes massive simultaneous inflammation of multiple critical organs and their vasculature.

In approximately 50% of cases this inflammation is associated with significant cardiovascular complications that directly involve the heart muscle and may result in decreased cardiac function.

Furthermore, the virus can result in dilation of coronary arteries with unknown future consequences.

Remestemcel-L is believed to have immunomodulatory properties to counteract the inflammatory processes by down-regulating the production of pro-inflammatory cytokines, increasing production of anti-inflammatory cytokines, and enabling recruitment of naturally occurring anti-inflammatory cells to involved tissues.

The therapy comprises culture-expanded mesenchymal stem cells that are derived from the bone marrow of an unrelated donor. It is then administered in a series of intravenous infusions.

Important therapeutic benefits.

Mesoblast’s Chief Medical Officer, Dr Fred Grossman, appears optimistic that remestemcel-L can offer important therapeutic benefits to MIS-C patients.

He commented: “The extensive body of safety and efficacy data generated to date using remestemcel-L in children with graft versus host disease suggest that our cellular therapy could provide a clinically important therapeutic benefit in MIS-C patients, especially if the heart is involved as a target organ for inflammation.”

“Use of remestemcel-L in children with COVID-19 builds on and extends the potential application of this cell therapy in COVID-19 cytokine storm beyond the most severe adults with acute respiratory distress syndrome,” he concluded.

More reading

• Cochlear and these ASX 200 shares could be fantastic buy and hold investments
• The latest ASX 200 stocks crashing on broker downgrades
• Analysis: Is the Polynovo share price good value?
• ASX 200 edges higher: Afterpay and Qantas join forces, big four banks push higher
• These were the 5 best performing ASX shares last week

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 Afterpay Ltd (ASX: APT) share price is pushing higher on Monday after announcing an exclusive new partnership with Qantas Airways Limited (ASX: QAN).

The buy now pay later provider’s shares were up 2% to $68.80 at one stage, but have since pulled back a touch.

The Afterpay share price is currently 0.7% higher at $67.95.

What did Afterpay and Qantas announce?

This morning Afterpay and Qantas announced the launch of a new partnership allowing Qantas Frequent Flyers to earn Qantas Points with the buy now pay later platform.

From later this week, Qantas Frequent Flyers will be able to earn up to 5,000 Qantas Points when they link their membership number to their Afterpay account.

Qantas Loyalty CEO, Olivia Wirth, notes that earning points with Afterpay will be advantageous for the large number of users classed as frequent buyers. These are users that maximise their points earn on everyday spending and not just flights.

She added: “Financial services is one of the most popular ways to earn points in the program, it’s the quickest and easiest way to build your points balance. With our 13 million members all having different spending habits and financial preferences, it’s great to be able to offer more options and more rewards.”

Afterpay’s CEO and Co-Founder, Anthony Eisen, was pleased to be partnering with one of Australia’s largest and most recognised loyalty programs. He feels it will provide significant upside for Afterpay customers.

Mr Eisen said: “We are always looking for ways to add value for our customers and this partnership between two iconic Australian brands is a great way to reward them for shopping with Afterpay. Now our customers can earn Qantas Points on their purchases at no additional cost, just by using Afterpay as they normally would.”

How do you earn points?

If you’re not an Afterpay customer already, you’ll earn 500 Qantas Points for joining and adding your Qantas Frequent Flyer membership number to your Afterpay account.

After which, you’ll earn 1 Qantas Point per $1 spent, up to a total of 5,000 Qantas Points.

If you’re already an Afterpay user, you’ll have to wait a little longer before you start accruing points. Once you’ve spent $1,000, you’ll earn 1 Qantas Point per $1 spent. This is also up to a total of 5,000 Qantas Points.

Though, it is worth noting that the offer to existing Afterpay customers is limited to the first 50,000 members who link their membership number to their Afterpay account.

Foolish Takeaway.

I think this is a positive move by Afterpay and could pull in more new customers of an attractive demographic.

Though, given the limitations on the points you can accrue, it won’t be sending you to Europe or even interstate on a Qantas plane any time soon.

More reading

• ASX 200 edges higher: Afterpay and Qantas join forces, big four banks push higher
• These were the 5 best performing ASX shares last week
• ASX 200 Weekly Wrap: Afterpay, Tech push ASX 200 back above 6,000
• The Webjet share price is dividing analysts even as it becomes a likely takeover target
• These were the best performing ASX 200 shares last week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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 Adacel Technologies Limited (ASX: ADA) share price is up by more than 19% today after the company updated the market with its revised profit before tax guidance.

It is welcome news for the technology company, which has been hard hit this year, with shares falling from $0.61 in January to a low of $0.30 cents on 23 March. The Adacel Technologies share price sits at $0.52 at the time of writing.

What did Adacel Technologies announce?

This morning, Adacel Technologies advised the market it has updated its profit before tax guidance to $4.8 million following strong operational execution. This represents a 20% increase on the guidance that was released to the market in mid-April.

Despite the continuing impact of COVID-19, the company reported that it was able to expedite a number of key infrastructure installations for existing customers in Australia and the US. Furthermore, Adacel was able to complete 2 traffic management projects in Fiji and Portugal.

Adacel also updated its cash balance to approximately $5 million – an increase of around 150% on its forecasts in April. This increased cash balance was attributed to the early completion of the upgrades in the US and Australia, ongoing operating efficacies, and improved cash management.

In the announcement, CEO Daniel Verret expressed his pleasure at the “progress despite the challenges our teams faced with COVID-19.” He was also encouraged looking forward into FY2021, and anticipates “continued improvement in our financial performance,” assuming “modest and steady recovery from the COVID-19 disruption.”

What does Adacel Technologies do?

Adacel Technologies is a global software technology company headquartered in Melbourne and is involved with the design and application of air traffic management and simulation. According to the company, more than 21% of the world’s airspace is controlled using its air traffic management technology.

In late June, Adacel received a US$2.8 million order from the US Army for its air traffic control common simulator (ACS) program, demonstrating the ongoing partnership that started in 2013. These simulators will be installed in multiple military locations around the world.

Adacel supports customers worldwide from North and South America, to Europe, Asia Pacific, Africa, Australia and New Zealand. The company has been working with military, defence and security customers, airport authorities and universities for over 30 years.

About the Adacel Technologies share price

Adacel shares have returned more than 23% since this time last year, however are down by 14.75%, year to date. The Adacel Technologies share price is up by 19.54% in today’s trade to $0.52 at the time of writing.

More reading

• Afterpay share price pushes higher on Qantas partnership
• Cochlear and these ASX 200 shares could be fantastic buy and hold investments
• Why Adbri, Domino’s, Event, & Viva Energy shares are dropping lower
• 3 innovative ASX shares to buy
• The latest ASX 200 stocks crashing on broker downgrades

Motley Fool contributor Daniel Ewing 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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Among the 200 shares trading on the S&P/ASX 200 Index (ASX: XJO), I believe there are a number that standout as great buy and hold options.

Three top ASX 200 shares that tick a lot of boxes for me are listed below. Here’s why I would buy them:

Altium Limited (ASX: ALU)

The first ASX 200 share to consider buying is Altium. It is a provider of printed circuit board (PCB) design software and other related services. The Altium share price has been one of the best performers on the ASX over the last few years. And while its business performance this year will disappoint because of the pandemic, I believe it remains well-placed to resume its strong form once the crisis passes. This is due to its exposure to the Internet of Things market which continues to grow at a rapid rate. As the majority of connected devices require PCBs inside them to function, demand for Altium’s software looks set to continue to increase and drive strong profit growth.

Cochlear Limited (ASX: COH)

Cochlear is a manufacturer and distributor of cochlear implantable devices for the hearing impaired. I think it could be a great long-term investment option due to its leadership position in a structural growth market which has high barriers to entry and attractive demographics. Combined with its high level of investment in research and development, I feel Cochlear is positioned to continue growing its earnings at a solid rate over the next decade. I expect this to lead to the Cochlear share price outperforming the ASX 200 over the 2020s.

REA Group Limited (ASX: REA)

Another quality ASX 200 share to buy is this property listings company. I’m a big fan of REA Group because of the way it has continued to deliver profit growth during both the housing market downturn and the pandemic. I feel this bodes well for the company when trading conditions improve. Especially given the sizeable cost cutting it has undertaken during the crisis. Overall, I believe REA Group is in a position to grow its earnings at an above-average rate for a number of years from FY 2021 onwards. This could make REA Group shares a great buy and hold option.

More reading

• The latest ASX 200 stocks crashing on broker downgrades
• Analysis: Is the Polynovo share price good value?
• ASX 200 edges higher: Afterpay and Qantas join forces, big four banks push higher
• These were the 5 best performing ASX shares last week
• These were the 5 worst performing ASX shares last week

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 Altium and Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. and REA 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 Cochlear and these ASX 200 shares could be fantastic buy and hold investments appeared first on Motley Fool Australia.

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After a poor start to the day, the S&P/ASX 200 Index (ASX: XJO) is in positive territory in afternoon trade. At the time of writing the benchmark index is up 0.1% to 6,065.3 points. 

Four shares that are acting as a drag on proceedings are listed below. Here’s why they are tumbling lower today:

The Adbri Ltd (ASX: ABC) share price is down a further 7% to $2.18. Investors have been selling the building materials company’s shares after it announced last week that Alcoa of Australia will not be renewing its lime supply contract when it expires at the end of June 2021. A number of brokers have responded negatively to the news, such as UBS. This morning its analysts downgraded the building materials company’s shares to a sell rating (from buy) and slashed the price target on them to $2.00.

The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is down 0.5% to $71.96. Investors have been selling the pizza chain operator’s shares on Monday after it was downgraded by a leading broker. Analysts at Ord Minnett have downgraded Domino’s to a hold rating with an improved price target of $70.00. It made the move on valuation grounds after strong gains in 2020.

The Event Hospitality and Entertainment Ltd (ASX: EVT) share price is down 3.5% to $8.57 following the release of a business update. Event revealed that it has taken on more debt to see it through the crisis. It has increased its debt facilities by $205 million to $750 million. This gives it ~$320 million of liquidity. In addition to this, it revealed that the majority of its cinemas are now open in the ANZ region.

The Viva Energy Group Ltd (ASX: VEA) share price is down almost 2% to $1.76 on the day of its annual general meeting. At the meeeting, Viva Energy noted that it experienced a sharp reduction in demand for its fuel from consumers and the aviation industry during the pandemic. However, it advised that retail sales have begun to recover as restrictions ease and domestic flights return.

More reading

• The latest ASX 200 stocks crashing on broker downgrades
• ASX 200 edges higher: Afterpay and Qantas join forces, big four banks push higher
• These were the 5 worst performing ASX shares last week
• Why Domino’s and these ASX 200 shares have just hit new highs
• ASX 200 Weekly Wrap: Afterpay, Tech push ASX 200 back above 6,000

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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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Australia is an amazingly innovative country – from the medical application of penicillin, the invention of WiFi, right through to the cochlear implant or bionic ear. Heck, Australia was even the birthing ground for what would become Google Maps. It should come as no surprise then that there are a multitude of innovative ASX shares to buy.

If you’re looking for ASX shares to buy that capitalise on our Aussie innovation, here are 3 very inventive smaller companies that are all working on groundbreaking technologies.

Avita Therapeutics Inc (ASX: AVH)

Professor Fiona Wood is the director of the Royal Perth Hospital burns unit, the inventor of spray-on skin, and the founder of Avita Therapeutics. This company develops spray-on skin technologies. The company’s flagship product is RECELL. The primary use of the product is for burns, paediatric scalds and large surface area wounds, but the opportunities in genetic skin diseases, vitiligo and even aged skin rejuvenation are even more exciting.

The Food and Drug Administration (FDA) finally approved RECELL in September 2018. It recently redomiciled in the US where its major growth market lies. Its Q3 sales more than doubled compared the prior corresponding period. 

Although all technology companies are risky, I think this is a good ASX share to buy and likely to perform well from here. 

Electro Optic Systems Hldg Ltd (ASX: EOS)

Founded in 1983 from the privatisation of Commonwealth of Australia space activity, Electro Optic Systems develops advanced optical sensors. These have been applied to many high technology solutions, including the space situational awareness network in conjunction with the US. This monitors and tracks orbiting space-based objects such as satellites and debris using ground-based radar and optical stations. 

In the defence sector, it develops a range of remote weapons systems for use on tactical vehicles – products that are battle-proven technology, as well as world-leading counter-drone technology. On Friday, the company announced it was in negotiations with the Commonwealth Government over the purchase of 251 remote weapon stations and related material. This is part of the federal government’s $270 billion capability upgrade for the Australian Defence Force.

Electro Optic saw its share price rise by 11.53% last week and has shot up by a whopping 21.99% today.

Brainchip Holdings Ltd (ASX: BRN)

Former West Australian Peter Van der Made has been at the forefront of computer innovation for 40 years. IBM and First International Computer in Taiwan own his past technology companies. 

He is also the founder of Brainchip Holdings, a company working in artificial intelligence (AI) headquartered in the US. Brainchip is the only pure play AI company on any share market globally. The company is working on semiconductor technologies to advance the capability of artificial intelligence. Its existing products reduce the carbon footprint of data centres, as their ultra low power use requires less cooling.

The company has developed a software package called BrainChip Studio to commercialise its technology. Uses of the technology include facial recognition in anti-terrorism and airport security, as well as pattern recognition in casinos. The company’s share price finished the week up by 26.5% after announcing an important milestone in the progress of a first of a kind AI technology. 

The company continues to commercialise its technology. I think this company has the potential to be to AI what intel was to personal computing.

Foolish takeaway

From mundane products like the garage roller door and the humble notepad, through to the first in-vitro fertilisation birth and the world’s first vaccine to prevent cervical cancer, Australians are an inventive people. In my view, we are also getting a lot better at commercialising our discoveries.

BrainChip, Electro Optic and Avita are just some of the great innovative ASX shares to buy, but there are many others. These include exciting companies like Osteopore Ltd (ASX: OSX), Nanosonics Ltd. (ASX: NAN) and Polynovo Ltd (ASX: PNV).

More reading

• Analysis: Is the Polynovo share price good value?
• Why Electro Optic Systems, Mayne Pharma, Tyro, & WAM Leaders are racing higher
• EOS share price on watch following defence spending talks
• Electro Optic Systems share price on watch after winning major government defence contract
• Bring your portfolio to life with these stellar ASX healthcare shares

Daryl Mather owns shares of Electro Optic Systems Holdings Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited, Electro Optic Systems Holdings Limited, Nanosonics Limited, and POLYNOVO FPO. The Motley Fool Australia has recommended Avita Medical Limited, Electro Optic Systems Holdings Limited, and Nanosonics 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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The market stumbled out of the opening block this morning but there are two ASX stocks in particular that are crashing after being hit by broker downgrades.

The S&P/ASX 200 Index (Index:^AXJO) fell 0.3% in early trade as ongoing fears of a second COVID-19 wave of infections weigh on investor sentiment.

It will be hard to shake the sinking feeling in the near-term with coronavirus dominating headlines, but the two downgrade candidates will have other things to worry about as well.

Big cracks emerging

The first is the Adbri Ltd (ASX: ABC) share price, which crashed 7.2% to $2.18 at the time of writing after UBS downgraded the stock by two full notches to “sell” from “buy”.

This makes the stock the worst performer on the ASX 200 and significantly behind the Bega Cheese Ltd (ASX: BGA) share price, which is the second worst with its 3% plus fall.

The broker’s bearish change of heart comes on news that Adbri lost a major contract with Alcoa to supply lime.

Lime lost its flavour

“Key to our ABC Buy call was the expectation that the Lime division was a stable but high margin contributor to the business, which would insulate ABC from any weakness in its concrete/cement division,” said UBS.

“However, the loss of a major Lime contract has now shaken this view. Despite having a high margin, ABC’s inability to renegotiate the contract is concerning given the significance of it (40% of Lime production).”

The broker cut its price target on the stock to $2 from $2.82 a share.

Metal fatigue

Another major underperformer is the Sims Ltd (ASX: SGM) share price. Shares in the scrap metal group tumbled 2.9% to $7.39 this morning to become the third worst performing ASX 200 stock.

This time it’s Jarden that delivered the blow to the stock as it downgraded its recommendation to “neutral” from “outperform”.

The broker warns that Sims will miss consensus earnings forecasts by a mile as it cut its earnings expectations on the group.

Cum-profit downgrade?

“Our 2H20 forecasts are shaped by the evident weakness in scrap pricing, volumes, and soft US scrap peer trading results for the period through MayQ20,” said Jarden.

“We note that 1H21 trading has commenced from a position of scrap pricing and volumes weakness, and with heightened uncertainty, and risk of potential demand destruction, under COVID19.”

The broker is now forecasting Sims to post an earnings before interest and tax (EBIT) loss of $52 million for FY20, which is around 50% below the median consensus estimate.

Jarden dropped its 12-month price target on the stock to $7.95 from $9.10 a share.

More reading

• Why Adbri, Domino’s, Event, & Viva Energy shares are dropping lower
• Analysis: Is the Polynovo share price good value?
• ASX 200 edges higher: Afterpay and Qantas join forces, big four banks push higher
• These were the 5 best performing ASX shares last week
• These were the 5 worst performing ASX shares last week

Motley Fool contributor Brendon Lau 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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