Category: Stock Market

A little-known ASX mining share is setting the bar high today.

While the All Ordinaries Index (ASX: XAO) is down 0.21%, this microcap ASX miner rocketed 30% higher on open.

In later morning trade, the ASX mining share has given back some of those stellar gains but remains up an impressive 19%.

Any guesses on the company?

If you said Ragusa Minerals Ltd (ASX: RAS), give yourself a gold star.

So, what’s going on?

What’s driving investor interest in the ASX mining share?

The Ragusa Minerals share price is rocketing after the company reported promising results from initial assays at its 100% owned Burracoppin Project, located in Western Australia.

The results come from the first round of the ASX mining share’s exploratory drill campaign at the project, consisting of 147 composite samples.

According to the release, the initial assays returned “exceptionally high-grade alumina averaging 33.73% Al2O3 – with a peak grade of 38.3% Al2O3”. That corresponded with an ultra-bright ISO brightness of 88% with half of the samples greater than ISO brightness 80%.

Ragusa Minerals also reported on a promising rare earths find at Burracoppin. The explorer noted that 40% of the samples returned total rare earth oxide levels (TREO) above a 500ppm cut-off. The average came in at 1,493ppm TREO with a peak value of 6,285ppm TREO.

Commenting on the result sending the ASX mining share soaring today, Ragusa chair Jerko Zuvela said:

The company is excited with the initial results from the maiden drilling program and the significant discovery of rare earth elements at our Burracoppin Project. This is a positive result for the potential multi-commodity development of our project – with upcoming laboratory analysis results used to delineate a JORC mineral resource.

We look forward to progressing the strategic critical minerals discovered at Burracoppin.

Ragusa Minerals share price snapshot

With today’s intraday gains factored in, this ASX mining share has trounced the benchmark returns in 2022, gaining 116%. That compares to a 5% year-to-date loss posted by the All Ordinaries.

The post Guess which ASX mining share just rocketed 30% on a new rare earths find appeared first on The Motley Fool Australia.

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More reading

• Why did this ASX lithium share just crash 42%?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Sarytogan Graphite Ltd (ASX: SGA) share price has been an exceptionally strong performer on Tuesday.

In morning trade, the graphite explorer’s shares rose as much as 43% to 43.5 cents.

The ASX graphite share has since dropped back a touch but remains up 25% at 38 cents.

Why is this ASX graphite share surging?

Investors have been buying Sarytogan Graphite’s shares following the release of an update on metallurgical test work for the Sarytogan Graphite Deposit in Central Kazakhstan.

According to the release, a composite sample was blended from samples collected from six diamond drill holes. These comprise three from the Northern Graphite Zone and three from the Central Graphite Zone of the Sarytogan Graphite Deposit.

The composite sample was then subjected to metallurgical test work, which resulted in a graphite purity of 99.70% total graphitic carbon (TGC).

But it gets better! After combining alkaline roasting and chemical purification, the company achieved 99.87% TGC.

Management notes that these results are another step towards the company’s strategy to target the rapidly growing battery anode materials market.

The product to support this strategy will be uncoated spherical graphite (USpG). This type of graphite currently trades at more than US$3,000 per tonne, which is approximately triple the price of traditional flake graphite products.

To achieve the specification of USpG, the Sarytogan concentrates will require milling to make spherical graphite balls of 5-20 micron in size and further purification to 99.95% TGC.

‘Thrilled with this breakthrough’

Sarytogan Graphite’s managing director, Sean Gregory, commented:

Sarytogan is thrilled with this breakthrough metallurgical result by our German laboratory partner Pro-Graphite. The graphite purities achieved are a significant step towards battery anode specification. Sarytogan’s giant highgrade Mineral Resource is now complimented by its’ premium micro-crystalline high-purity product, credentials that now elevate the project to be a potential answer to the world’s projected battery anode material shortage.

The post ‘Thrilled with this breakthrough’: Why this ASX graphite share is exploding 43% appeared first on The Motley Fool Australia.

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More reading

• 3 ASX mining shares leaping higher on new discoveries today

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

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The Sayona Mining Ltd (ASX: SYA) share price delivered an unimpressive performance in November.

Shares in the ASX lithium company opened at 23.5 cents each on 1 November and closed lower at 23 cents a share at the end of the month for a 2.13% loss.

By comparison, the S&P/ASX 200 Materials Index (ASX: XMJ) had a spectacular month in November. The index climbed 16.23% for the month.

And more broadly, the S&P/ASX 200 Index (ASX: XJO) also made a 6.13% gain over the same period.

Currently, Sayona shares are going for 22.7 cents apiece, a 1.3% drop on yesterday’s closing price.

Let’s take a look at what the last month held for Sayona and where it might be headed.

What happened to Sayona in November?

Recently, the Motley Fool reported that lithium shares, like Sayona, could be suffering from reduced demand for battery materials in China. This comes amid COVID lockdowns and protests in the country causing operational disruptions in the manufacturing of electric vehicles (EVs).

As noted by my colleague Monica O’Shea, there could potentially be an oversupply of batteries for EVs in China by 2025. Both of these headwinds could have weighed on Sayona’s share price near the end of the month.

Another development was Sayona issuing 185 million new shares to the market on 18 November. The company said it would use the funds to acquire an additional 1,824 exploration claims near its 60%-owned Moblan lithium project in Canada.

As well as acquiring an extra 985 kilometres of land for exploration, Sayona announced it would also be buying a 9.26% stake in the seller, the Canadian-listed Troilus Gold Corp.

What’s next?

In other news for the month, Sayona announced that it has made progress in the restart of its North American Lithium (NAL) operations in Quebec, Canada. The company expects to start producing lithium from the site in the first quarter of next year.

Yet it seems experts are split on the broader outlook for lithium producers such as Sayona.

Global Lithium LLC founder and president Joe Lowry recently predicted that the price of lithium hydroxide could reach USD $100,000 per tonne. That’s well up from the US $85,000 per tonne it’s fetching at the time of writing. The strong demand for electric vehicles was said to be a tailwind that could further lift the price of lithium hydroxide.

However, Schroders head of Australian equities Martin Conlon believes that even the current lithium prices are “vastly higher than needed to incentivise new supply and are therefore difficult to rationalise on any fundamental basis”.

It appears Conlon believes lithium is presently overvalued and could be due for a downside correction.

The post The Sayona Mining share price went backwards in November. What now? appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 directors buying and selling their company shares in the past week
• Up 30% in a month, is it time to cash in some chips on Fortescue shares?
• ‘Highest quality companies’: Expert names 2 ASX shares to buy now
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Can an ASX lithium share that’s already gained 320% over the past 12 months offer investors more profits in the year ahead?

While there are no guarantees in life, and certainly none in equity markets, Harrison Massey, stockbroker at Argonaut, believes that lithium explorer Global Lithium Resources Ltd (ASX: GL1) could do just that.

The ASX lithium share has a market cap of $500 million. And as Massey notes (courtesy of The Bull), Global Lithium “has an impressive register with Mineral Resources Limited (ASX: MIN) owning 9.9% of the company”.

Why this ASX lithium share is rated as a buy

“GL1 recently raised $120 million to acquire the remaining 20% of the Manna Lithium project from Breaker Resources NL (ASX: BRB),” Massey said.

That capital raising was announced on 26 October, after the ASX lithium share emerged from a trading halt.

Investors sold off the stock on the day, as Global Lithium announced it was raising the funds at $2.25 per share. That was 13.8% below the share price before the miner entered its trading halt.

But Global Lithium’s chair Warrick Hazeldine was upbeat about the prospects with the new funding secured. According to Hazeldine:

The outstanding on-the-ground exploration work completed by the Global Lithium team over the past six months has delivered impressive results at Manna, affording us the opportunity to now present an offer to Breaker which we believe is a win-win for both companies.

The acquisition of the underlying tenements provides Global Lithium with a clearer development pathway as we look to conclude these development focused studies in late 2023.

Argonaut’s Massey is also bullish on the potential for the ASX lithium share’s Manna project.

“GL1 has an existing resource of 20.4 million tonnes of lithium oxide across its two assets,” he said. “We’re anticipating a substantial mineral resource upgrade at the Manna Lithium project in December 2022.”

Global Lithium share price snapshot

Global Lithium is a relative newcomer to the ASX, having listed on 6 May 2021. Since then, the ASX lithium share has rocketed an eye-popping 610%.

For some context, the All Ordinaries Index (ASX: XAO) is up 2% over that same period.

The post This ASX lithium share is 10% owned by Mineral Resources. Is it a buy? appeared first on The Motley Fool Australia.

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More reading

• Can ASX 200 lithium shares come charging back in December?
• 2 ASX lithium shares smashing all-time highs on Monday
• ASX index beaters: 5 shares that have supercharged portfolios in 2022
• Why is the Mineral Resources share price rocking an all-time high today?
• Thank you Mr Powell! 7 ASX 200 shares cracking new 52-week highs on Thursday

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Magellan Financial Group Ltd (ASX: MFG) share price has come under pressure on Tuesday.

In morning trade, the struggling fund manager’s shares are down 3.5% to $9.16.

This means the Magellan share price has now lost two thirds of its value over the last 12 months.

Why is the Magellan share price falling again?

Investors have been hitting the sell button again on Tuesday for a couple of reasons.

The first is a very poor night of trade on Wall Street, which saw the Dow Jones fall 1.4% and the Nasdaq tumble 1.9%. This was driven by concerns that the US Federal Reserve may continue its tightening until it tips the economy into a recession.

In response to this poor session, the S&P/ASX 200 Index (ASX: XJO) has dropped 0.4% today.

What else?

Also weighing on the Magellan share price today is news that the company continues to bleed funds under management (FUM).

For the month ended 30 November, Magellan finished the period with FUM of $50.2 billion, comprising retail FUM of $20.6 billion and institutional FUM of $29.6 billion.

This represents a month on month decline of 1.57% from $51 billion at the end of October despite the ASX 200 index racing 6.1% higher last month.

What happened?

Unfortunately for Magellan, not even global markets having one of their best months in recent times was able to offset yet another large monthly outflow from investors.

The release notes that in November, Magellan experienced net outflows of $2.5 billion, which comprised net retail outflows of $0.6 billion and net institutional outflows of $1.9 billion.

This means that Magellan’s FUM has now fallen by approximately 57% from $116.4 billion a year ago despite the market trading higher and the Australian dollar weakening against the US dollar.

The post Magellan share price tumbles on $2.5b fund haemorrhage in November appeared first on The Motley Fool Australia.

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More reading

• 10 ASX dividend shares paying more than 10% yield right now
• Three comforting lessons for investors whose portfolio has been smashed versus the surprisingly good return of the ASX 200
• Should I buy this ASX 200 share for its whopping 18% dividend yield?
• Hamish Douglass has been selling down his Magellan shares. Should you?
• The Magellan share price has caved 50% so far this year. Are directors seriously asking for a pay rise?

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

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The Wesfarmers Ltd (ASX: WES) share price has gone up by 14% since the end of September. It has been a solid run for the company, so can it keep the run going to Christmas and New Year’s Eve?

It has been a volatile year for the company, but the last few months have been helpful for shareholders nursing financial bruises.

December is one of the most important months of the year for Wesfarmers. It has a large portfolio of retail businesses including Bunnings, Kmart, Target, Officeworks, Catch, and Priceline. So, capturing Christmas demand is important for the company.

What’s the outlook for Wesfarmers shares?

After a couple of years of booming sales, the business is now facing the task of managing cost pressures resulting from higher inflation.

The company said at its recent annual general meeting that it’s seeing elevated supply chain costs, rising wages, and higher utility costs. Together with a lower Australian dollar, this is impacting the company in FY23.

However, the company’s businesses are “well placed relative to their competitors to manage costs and will continue to leverage the benefits of scale, sourcing capabilities and employment brand”.

Wesfarmers informed investors that retail trading conditions have remained “robust”, which could be seen as supportive for the Wesfarmers share price.

The company noted that “Australian consumer demand continues to be supported by low unemployment and high levels of accumulated savings, but rising interest rates and the impact of inflation are starting to affect consumer behaviour”.

That sounds somewhat promising for the Christmas trading period for the business.

Wesfarmers also said that “shopping patterns and customer feedback indicate some customers are becoming more price sensitive, as they try to manage household budgets”.

Management sees this as an opportunity for its businesses, which are “well known for their everyday low prices, to outperform relative to others in their markets”.

Bunnings is seeing “strong demand from commercial customers”. Kmart’s low price points “position it to meet customer needs and profitably grow its market share in an environment where shoppers are more focused on value”.

Target “continues to benefit from good progress in delivering on quality and style at affordable prices”.

It noted that Officeworks sales had been broadly in line, year to date, while lower online demand had hurt Catch sales.

The business also noted that the high-performing chemicals, energy and fertilisers division (WesCEF) is still benefiting from strong customer demand and elevated commodity prices.

In summary, Wesfarmers is entering December in a strong position with pleasing recent trading.

Broker ratings

UBS thinks Wesfarmers is a buy, with a price target of $56. That implies a possible rise of around 15% on the current price of $48.59 over the next year. The broker thinks Bunnings and Kmart can perform well in tougher retail conditions.

However, Ord Minnett has a lighten rating, with a Wesfarmers share price target of $43.20, implying a drop of more than 10% over the next year. The pessimism relates to a possible decline in the gross profit margin.

For what it’s worth, I’m not sure if Wesfarmers shares can climb much more in the next few weeks to Christmas – who knows what’s going to happen? – but I do think Wesfarmers is an excellent ASX blue-chip share to own for the long term, thanks to its quality portfolio and ability to renew it by selling or buying businesses.

In terms of valuation, UBS’ numbers put the Wesfarmers share price at 22x FY23’s estimated earnings.

The post Should Wesfarmers shares be under your Christmas tree in December? appeared first on The Motley Fool Australia.

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More reading

• Is this a red flag for Wesfarmers shares?
• The Wesfarmers share price had a strong run in November
• Top brokers name 3 ASX shares to buy today
• Why I’m buying ASX shares in this once-in-a-lifetime market to try and retire early
• The 10 ASX 200 shares responsible for 60% of all Aussie dividends last quarter

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

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It’s been a good week for the S&P/ASX 200 Index (ASX: XJO). It’s lifted 1.3% since this time last week to trade at around 7,300 points at the time of writing.

And that’s not the only excitement going down on the Aussie bourse. Two ASX 200 directors have been buying and selling their companies’ shares recently.

Let’s take a closer look at the insiders shaking up their holdings over the past week.

2 ASX 200 directors trading in their company’s shares

The share price of ASX 200 fast-food restaurant manager Collins Food Ltd (ASX: CKF) has taken a tumble in recent weeks, and insiders have seemingly taken advantage.

The Collins Food share price dumped 20% last week after the company revealed its half-year profits had tumbled 58% amid inflationary challenges.

While the news was likely disappointing, it might have presented a buying opportunity judging by the slew of insider buying that went down following the tumble.

Most recently, non-executive director Kevin Perkins bolstered his stake by 20,000 shares bought on-market for a total of $160,141. That equates to around $8 apiece.

That’s just 40 cents off the two-year low of $7.60 posted by the stock last Wednesday.

On the other hand, insider selling has also been going down at ASX 200 tech favourite TechnologyOne Ltd (ASX: TNE) following a share price rally.

Stock in the software company has risen nearly 50% from its May low. The company’s share price is also boasting a 19.5% gain over the last 30 days. Of course, there is a multitude of reasons an insider, like Rick Anstey, might choose to sell down their holding.

The director indirectly offloaded 14,000 TechnologyOne shares late last week, pocketing $196,320 for the sale. That equals around $14.02 apiece.

The ASX 200 share hit a record high of $14.43 in yesterday’s session.  

The post 2 ASX 200 directors buying and selling their company shares in the past week appeared first on The Motley Fool Australia.

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More reading

• Up 30% in a month, is it time to cash in some chips on Fortescue shares?
• ‘Highest quality companies’: Expert names 2 ASX shares to buy now
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Monday

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Collins Foods. The Motley Fool Australia has recommended Collins Foods and Technology One. 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 Telstra Group Ltd (ASX: TLS) share price has risen by around 30% over the last two years. The telco’s plans could see it rise even further in the coming years if all goes well.

2022 has been a volatile year for the telecommunications company, and most of the ASX share market. But, the Telstra share price is virtually where it was 12 months ago.

The business has been working on its T22 strategy for a few years. Now the business is working on a T25 strategy that will form a big part of the next five years, so let’s look at that plan.

T25 strategy

There are several initiatives within the plan which will help Telstra’s long-term performance. It includes:

• Network coverage – Telstra wants to cover 95% of Australia’s population with 5G access. The business has already invested a lot to ensure it has a leading mobile network, but it will increase its 4G and 5G network footprint by 100,000 square kilometres. By the end of FY24, 4G coverage will reach 100% of its network. At the end of FY25, 80% of all mobile traffic is expected to be on 5G. The business will achieve “greater access to towers assets with 250 new towers and 700 additional tenancies”, and it has signed a regional sharing agreement with TPG Telecom Ltd (ASX: TPG).
• Revenue growth – Adding more subscribers has always been an important part of the telco’s growth strategy, and it continues to add users. But, it’s also planning to increase prices in line with inflation, which could be a very handy natural boost for revenue. Plus, the business is working on growing additional businesses including Telstra Health and Telstra Energy.
• Profit margin improvement – The biggest thing that could benefit the Telstra share price is profit growth. Telstra is planning to cut another $500 million of net fixed costs out of the business by FY25. In the next few years to FY25, the business is aiming to grow underlying earnings before interest, tax, depreciation and amortisation (EBITDA) at a compound annual growth rate (CAGR) of “mid-single” digits and grow underlying earnings per share (EPS) at a CAGR in the “high-teens”.
• Grow dividends – Shareholders have enjoyed a lot of dividend income from Telstra over the years. If it can grow its earnings and cash flow, then it can fund higher payouts to investors. In the FY22 result, it grew its final dividend from 8 cents per share to 8.5 cents per share.

My thoughts on the Telstra share price potential

I think Telstra has done a good job of turning things around. The reduction of the cost base is making it more profitable, revenue growth is looking positive and earnings diversification seems like a good move.

If it can grow underlying EPS at a good rate, then this could be a useful boost for investor sentiment, and enable Telstra to invest further in the business for more growth.

As Telstra rolls out its 5G coverage, this unlocks the potential for the company to provide fixed wireless internet for households – 5G-based broadband. This could enable the business to capture more of the profit margin for broadband customers, which has been lost to the NBN.

I think the Telstra share price and dividend look promising for the next five years, so I’d happily own it in my portfolio for the next five years and beyond.

According to CMC Markets, Telstra is valued at 21 times FY24’s estimated earnings with a projected grossed-up dividend yield of 6.4%.

The post Where will Telstra shares be in 5 years? appeared first on The Motley Fool Australia.

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More reading

• Leading brokers name 3 ASX shares to buy today
• Buy Telstra and this ASX dividend share: experts
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. 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 Fortescue Metals Group Limited (ASX: FMG) share price has rocketed over the last 30 days. Its gains have likely left some investors wondering if now is a good time to lock in some profits.

This time last month, the Fortescue share price was trading at $15.87. As of Monday’s close, it’s sitting at $21.03. That marks a notable 32.5% gain in that time.

So, where might the S&P/ASX 200 Index (ASX: XJO) iron ore stock go from here, and should shareholders cash in some chips following its rally? Here’s what experts think.

Should investors bail on Fortescue shares after recent gains?

The Fortescue share price has taken off over the last few weeks. Could its upwards trajectory continue? Well, that depends on who you ask.

Argonaut’s Harrison Massey thinks not. He said, courtesy of The Bull:

China’s zero COVID-19 policy can impact demand for iron ore and slow its economy. We don’t expect China’s pandemic policy to be removed in the short term.

Investors may want to consider taking a profit at these levels.

The expert’s warning follows a record-breaking month for the iron ore price. It lifted from around US$80 per tonne to approximately US$100 per tonne in November.

The commodity’s rally was arguably sparked by the hope China could relax some of its strict COVID-19 restrictions. While further outbreaks might have dashed some hope of a Chinese reopening, it hasn’t seemingly dampened the spirits of Red Leaf Securities’ John Athanasiou.

Athanasiou labelled the stock a hold last week, commenting, as per The Bull:

We believe the [Fortescue] share price has also been benefiting from speculation that China will ease COVID-19 restrictions. Consequently, this may push up the iron ore price.

In addition to a favourable outlook on iron ore prices, Athanasiou was also impressed by Fortescue’s latest quarterly report.

It posted a 4% increase in iron ore shipments, lifting to 47.5 million tonnes, and an average revenue of US$87 per dry metric tonne.

The post Up 30% in a month, is it time to cash in some chips on Fortescue shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price has had an odd year. The ASX bank share is down 11% in 2022 to date, but it’s up 17% since mid-June.

With a rising interest rate environment, some investors may be confused about why the ANZ share price isn’t trading higher across the year.

As we know, the Reserve Bank of Australia (RBA) has been increasing interest rates for many months in a row. ASX bank shares like ANZ have passed the higher rates onto borrowers quicker than savers. This has meant that ANZ’s lending prospective profitability has increased, which is measured by the net interest margin (NIM).

What’s happening in December and beyond?

The RBA is expected to increase the interest rate again by 0.25% this week, though how much further it goes is a big question. Will this be the last rate rise? Or will it need to go further to bring inflation under control? What commentary will the RBA provide about future rises?

ANZ says that the environment will “continue to be supportive for margins in the first half”, although any change from the exit NIM margin of 1.8% in September 2022 is likely to be “more modest”.

Currently, there are competing thoughts about what a higher NIM means. When ANZ released its FY22 result, it outlined that it was expecting the RBA cash rate to reach 3.60% by June 2023 and stay there for at least 12 months.

This could boost net interest income by $1.5 billion in FY23 and $3.2 billion in FY25. In margin terms, it could boost the NIM by 17 basis points (0.17%) in FY23 and 34 basis points (0.34%) in FY25. This could be why investors have sent the ANZ share price higher in recent months.

ANZ has already seen a major boost to its NIM, and it’s saying that more rate increases won’t be as much of a boost. But, higher rates would likely hurt its loan book. Borrowers can only absorb a certain amount into their budget before their mortgage repayments are too expensive. That tipping point is when bank bad debts would likely start escalating.

But, ANZ CEO Shayne Elliott pointed out that RBA data showed “aggregate household balance sheets, net of liquid assets, are the best they have been for 15 years”. Management believes the business is “in good shape to withstand volatility”.

Broker ratings on the ANZ share price

UBS rates ANZ as a buy, with a price target of $30. A price target is where the broker thinks the share price will be in 12 months. The broker will watch the quality of ANZ’s loan book and how much it can benefit from deposit pricing.

However, broker Morgan Stanley doesn’t think ANZ can rise much further after its run since the middle of the year. Morgan Stanley’s price target is $25.50, implying a small rise in the year ahead.

The post Can ANZ shares finish the year with a strong performance in December? appeared first on The Motley Fool Australia.

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More reading

• Why did the ANZ share price tumble in November while the ASX 200 gained 6%?
• The 3 best-performing ASX 200 bank shares in November revealed
• The 10 ASX 200 shares responsible for 60% of all Aussie dividends last quarter
• Bought $1,000 of ANZ shares 10 years ago? Here’s how much dividend income you’ve received
• Which ASX 200 bank share stands to benefit the most from ‘good borrowers’?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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