Category: Stock Market

ResMed share price drops: Is this a buying opportunity?
The ResMed Inc. (ASX: RMD) share price is trading lower on Thursday.

In afternoon trade, the sleep treatment focused medical device company’s shares are down 1.5% to $33.78.

Why is the ResMed share price falling?

The weakness in the ResMed share price could have been driven by the release of an update from one of one of the company’s rivals.

Overnight, health technology giant Philips revealed that its third-quarter financial performance was impacted by continued supply chain challenges that were more significant than anticipated.

It also warned that the remainder of the second half may not be as strong as expected because of these challenges. The company said:

Looking ahead, Philips still expects a better second half of the year, compared to the first half of 2022. However, the company sees prolonged supply chain disruptions and a worsening macro-environment. Consequently, Philips now expects a mid-single-digit comparable sales decline for the fourth quarter of 2022 with a high-single-to-double-digit adjusted EBITA margin range.

Is this a buying opportunity?

According to a note out of Goldman Sachs, its analysts remain bullish on the ResMed share price.

This morning the broker has retained its buy rating and $36.80 price target on the company’s shares.

Based on where its shares are trading today, this implies potential upside of 9% for investors over the next 12 months. It commented:

We are Buy-rated on RMD. Our 12-month target price of A$36.80 is unchanged and remains based 85% on our NTM EV/EBITDA valuation of A$35.00 (multiple of 27.3x based on weighted average of peers, sector and DCF target multiple) and 15% on our M&A valuation of A$46.90 (multiple of 36.7x).

Goldman also remains neutral on fellow medical device company Fisher & Paykel Healthcare Corp Ltd (ASX: FPH), with a price target of $17.90.

The post ResMed share price drops: Is this a buying opportunity? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. 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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13 October 2022
‘Significant opportunity’ Zip share price turns red as CEO packs his bags for the United States
The Zip Co Ltd (ASX: ZIP) co-founder and CEO Larry Diamond has moved to the USA indefinitely.

Zip shares are down 0.78% today and are currently trading at 63.5 cents. For perspective, the S&P/ASX 200 (ASX: XJO) is 0.19% in the green today.

Let’s take a look at what is going on at Zip.

Zip CEO moves

Zip’s CEO and co-founder Larry Diamond moved to the USA “permanently” on Wednesday with his wife and family, the Financial Review reported.

Diamond sees the USA as a “significant opportunity”. Zip’s USA revenue grew more than the company’s Australian revenue in FY22. After COVID-19 restrictions, Diamond had been spending two weeks in every six in the USA, the publication reported. Commenting on his move, reportedly to Manhattan New York, Diamond said:

It is important to be there to demonstrate what we have done in Australia.

It is hard to be there then come home: I have to be on the ground. There is still a significant opportunity for fintech in the US, as US banks are asleep at the wheel.

Zip made the decision to close its Singapore and UK arms in FY22 to “optimise” the global cost base.

The USA’s Federal Reserve has raised interest rates from nearly zero to 3.25% since March. ZIP USA revenue exploded 69% to $282 million in the 2022 financial year. Australian revenue grew 39% to $297.4 million. At the time, Diamond highlighted the role of BNPL companies amid rising inflation. He said:

In times of heightened inflation and cost of living pressures, BNPL has become even more of an important budgeting tool for everyday consumers.

Meanwhile, the team at Macquarie has recently tipped the Zip share price to drop. Analysts placed a 60 cent per share price target on the Zip share price and gave it an underperform rating.

The Block Inc CDI (ASX: SQ2) share price is up 2.62% today, while Sezzle Inc (ASX: SZL) shares are 2% in the red.

Zip share price snapshot

The Zip share price has descended 85% year to date. In the past year, the Zip share price has sunk 90%.

Back on 19 February 2021, the Zip share price hit a high of $12.35.

Zip has a market capitalisation of about $448 million based on the current share price.

The post ‘Significant opportunity’ Zip share price turns red as CEO packs his bags for the United States appeared first on The Motley Fool Australia.

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Motley Fool contributor Monica O’Shea 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 ZIPCOLTD FPO. 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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13 October 2022
Missed the boat on Whitehaven shares? This other ASX coal share ‘screams value’: expert
It’s been an exercise in kicking thyself in 2022 for investors who ignored ASX coal shares or got out of them because they thought the transition to renewable energy was going to kill the coal industry quick.

Case in point: Whitehaven Coal Ltd (ASX: WHC) shares have skyrocketed 225% in the year to date.

Other pure-play ASX coal shares have also had many days in the sun this year.

The New Hope Corporation Limited (ASX: NHC) share price is up 194% year to date. Stanmore Resources Ltd (ASX: SMR) shares are up 173% year to date.

But according to Katana Asset Management, it’s not too late to get in on the ASX coal shares party.

Why are ASX coal shares shooting the lights out?

ASX coal shares have skyrocketed in 2022 due to a supply/demand imbalance caused by the Ukraine war.

As we reported in late September, top broker Macquarie raised its outlook for the thermal coal price by 38% to 114% over CY23 to CY27.

The broker reckons developed economies are showing a “willingness to pay a premium to secure energy supply” given the global challenges.

The broker thinks the thermal coal price will lift by 25% to US$410 per tonne in the second half of CY22 and it will be US$367.50 per tonne in 2023.

As my Fool colleague Bruce Jackson notes, elevated coal prices are delivering huge profits to the miners.

Steve Johnson of Forager Funds says some coal companies “are generating almost their whole market cap every year in cash flow“.

The coal price closed at US$405 per tonne overnight. That’s up 66% year over year. The coal price hit a record of US$460 per tonne in September.

The stock to buy if you missed out on Whitehaven shares

Katana’s Hendrik Bothma writes on Livewire that Yancoal Australia Ltd (ASX: YAL) is a sitting duck for ASX investors looking for good value today.

It could be an opportunity for investors who feel they’ve missed out on Whitehaven shares.

Bothma said:

With soaring coal prices these companies have been generating record revenue and eye-watering cash flow.

All bar one has received their share of air-time, and we think this laggard screams value. That company is Yancoal Australia.

Despite a market cap in excess of $7bn it lacks coverage and remains under-researched.

There are a few possible reasons for this… 62% of the company is owned by Yankuang Energy Group Co Ltd based in China, and until recently the company was facing a very different fate with crippling debt. This presents the opportunity, fuelled by strong coal prices the company has significantly de-risked over the past year, and now sits in a net cash position.

This turnaround has gone largely unnoticed due to the lack of coverage leaving the share price trading at a significant discount to peers.

YAL is a clear laggard from a lack of coverage, and their dramatic turnaround has gone largely unrewarded… it’s only a matter of time until they re-rate.

The Yancoal share price is up 113% in the year to date compared to a 225% bump for Whitehaven shares.

Whitehaven shares versus Yancoal shares

Katana has done a comparative analysis of the two ASX coal shares.

Before we get into the detail, here is the bottom line as Katana sees it:

YAL is currently trading on a FY22e P/E of 1.4x and EV/EBITDA 0.9x. By comparison this represents a 71% and 66% discount to their closest peer. It’s not often that you see a company generate billions in profit while trading on a P/E of <2x.

Consensus also forecasts YAL paying an FY22 full-year dividend yield of ~37% (unfranked), which is ~8x the ASX 200 average and means you get over a third of your investment back in dividends in one year. In contrast, WHC paid an effective yield of 15% in FY22 (5% dividend and 10% buyback).

WHC does however intend to undertake an additional 25% buyback if approved at the AGM this month, which would put them on a similar effective yield.

Katana’s analysis comparing Whitehaven shares and Yancoal shares reveals a few salient points.

As per the Livewire article:
- Yancoal and Whitehaven are predominantly thermal coal producers with a rough 85% thermal and 15% metallurgical coal split
- Yancoal sells more than double the volume of Whitehaven and outsells other ASX pure-play producers
- They have similar operating cash costs but Yancoal generates almost double the free cash flow per share. Yancoal has a free cash flow yield of 85% compared to Whitehaven’s 27%. That means investors today would pay 1.2 times free cash flow per Yancoal share compared to four times free cash flow for Whitehaven shares
- At the end of FY22, Whitehaven had a $970 million net cash balance. Yancoal moved from net debt of $3.4 billion with 40% gearing to a net cash position in July.
What’s the latest news from Yancoal?

As my Fool colleague James reported earlier this month, Yancoal recently made a major debt repayment.

It prepaid US$1 billion of debt from available cash. This is expected to save about US$207 million in total borrowing costs over the loan periods.

The Yancoal share price is down 0.33% at the time of writing to $5.96. Whitehaven shares are down 0.7% to $10.61.

The post Missed the boat on Whitehaven shares? This other ASX coal share ‘screams value’: expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Macquarie Group Limited. 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 recommended Macquarie Group Limited. 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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13 October 2022
Is the Woolworths share price a buy ahead of this month’s AGM?
Shares of Woolworths Group Ltd (ASX: WOW) are rangebound today and are currently trading flat at $33.05 cents apiece.

After a rollercoaster year on the charts, the Woolworths share price has now receded to 52-week lows. This follows a heavy sell-off period from August to date.

Noteworthy is that the company will also hold its annual general meeting (AGM) on 26 October.

As seen below, the share has tracked the benchmark S&P/ASX 200 Index (ASX: XJO) very closely these past 12 months.

Is Woolworths a buy?

Woolworths shares trade on a price-to-earnings (P/E) ratio of 25.6 times and are also priced at a price-to-cashflow (P/CF) ratio of 11.3 times. Each of these is ahead of the industry median of 7.9 times and 3.14 times, respectively.

Although, the company did deliver a return on equity (ROE) of 39.7% last filing. That was ahead of peers Coles and Wesfarmers at 35% and 26.6%, respectively.

However, these are historical numbers, and the company’s AGM and annual report will reveal a lot more detail.

Analysts at Macquarie yesterday released the broker’s ‘event study’ that suggests the AGM ‘season’ can provide a positive catalyst to share prices.

While Woolworths and many other names posted FY22 numbers in late August, the AGM and annual reports provide a unique insight into the performance of the first few trading months of the new financial year.

As a result, investors often reward companies on the back of any earnings surprise that may come as a result of the “mini reporting season”, the broker says.

In its report released Wednesday, the broker posted its top 100 stocks with an outperform rating. These are the names it believes warrant a buy.

Woolworths was named on the list of consumer discretionary retail shares that Macquarie tips to outperform.

Underpinning the investment thesis, the broker notes the strength of the Australian economy. It suggests “consumer spending had not declined as feared”, according to Bloomberg.

Meanwhile, Woolworths is rated as a buy from eight out of 15 analysts covering the share right now, according to Refinitiv Eikon data.

However, the share also has three sell ratings from this list. The consensus price target is $38.23, implying a small amount of upside yet to be realised if correct.

The Woolworths share price is down 13% this year to date.

The post Is the Woolworths share price a buy ahead of this month’s AGM? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow 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 recommended Macquarie Group Limited. 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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13 October 2022
Why Baby Bunting, Mirvac, NIB, and Pilbara Minerals shares are dropping
The S&P/ASX 200 Index (ASX: XJO) is on form on Thursday and on course to record a small gain. At the time of writing, the benchmark index is up 0.25% to 6,663.9 points.

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

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price is down a further 3.5% to $2.92. Investors have been selling this baby products retailer’s shares following a very disappointing update earlier this week. This latest decline means the Baby Bunting share price is now down 25% over the last three sessions. Not even news of some insider buying today has been able to stop the slide.

Mirvac Group (ASX: MGR)

The Mirvac share price is down 3% to $1.87. This property company’s shares have come under pressure this week after it announced the impending retirement of both its CEO and Chair. The company’s CEO, Susan Lloyd-Hurwitz, will retire from Mirvac on 30 June 2023 after a decade in the top job.

NIB Holdings Limited (ASX: NHF)

The NIB share price is down over 11% to $6.66. This morning this private health insurer announced the completion of a $135 million institutional placement. These funds were raised at the floor price of $6.90 per new share, which represents an 8.1% discount to its last close price. The proceeds will be used to support NIB’s expansion into the NDIS market as a Plan Manager.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price is down 4% to $4.97. Investors appear to have been selling Pilbara Minerals and other lithium shares today following a bearish broker note out of Morgan Stanley last night. The broker has raised concerns over lithium demand and prices in China. This sent lithium stocks on Wall Street sinking deep into the red.

The post Why Baby Bunting, Mirvac, NIB, and Pilbara Minerals shares are dropping appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Baby Bunting and NIB Holdings Limited. 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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13 October 2022
2 top US stocks to buy for the long haul
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The software industry is fertile ground for investors today. Demand is on a long-term upswing, supported by a steady shift toward online work and entertainment. Many software businesses have more attractive selling models that are becoming increasingly subscription based, in turn stabilizing cash flows. And valuations have declined sharply with the latest bear market.

With those positive factors in mind, let’s look at two excellent options for investors seeking exposure to the sector. Read on for a few reasons to like Adobe (NASDAQ: ADBE) and Electronic Arts (NASDAQ: EA) stocks right now.

1. Adobe

Adobe stock has become cheaper this year, partly thanks to a growth slowdown and partly due to worries about its $20 billion acquisition of Figma. The growth hangover won’t last forever, and the buyout will likely reward patient investors.

Adobe creates software products for digital creators ranging from students to huge global brands. Its cloud platforms have attracted many more customers this year, even on top of soaring growth in earlier phases of the pandemic. Sales are up to $13.1 billion through the first nine months of the year compared to $11.7 billion a year earlier.

Operating trends might look weaker over the next nine-month period, and Adobe is taking on some extra risk as it incorporates the new Figma business into its cloud platform. But the volatility from these issues should fade, allowing patient shareholders to generate solid returns by simply holding onto this software-as-a-service stock.

2. Electronic Arts

Electronic Arts is a video game developer boasting one of the industry’s most dominant content portfolios. From sports franchises to adventure games, casual titles to battle royale brands, EA covers every industry niche and all of the popular monetization models.

That diversity is paying off. Sales in the most recent quarter were up 22% thanks to popularity across brands like FIFA 22 and Apex Legends. EA is also still boosting its earnings at a time when many other digital entertainment specialists are seeing falling profit margins.

That success is a big reason the stock is outperforming peers like Take-Two Interactive (NASDAQ: TTWO). But EA still looks attractive today at a valuation of less than five times sales, one of the cheapest rates investors have seen in the last seven years.

While demand in the video game industry might slow into 2023 as compared to the past few years, the long-term outlook is bright for this business. It is becoming more profitable and steadier, too, thanks to the shift to a subscription-based content model. As a result, investors are likely to see good returns in this software niche over time, especially if they focus on world-class businesses like EA.

Adding EA and Adobe to your portfolio might add volatility in the short term, given the rocky outlook for many tech specialists right now. In exchange for that bumpiness in returns, though, you’ll get exposure to some world-class businesses that are almost certain to be posting stronger sales and earnings in five years than investors are seeing today.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
The post 2 top US stocks to buy for the long haul appeared first on The Motley Fool Australia.

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Demitri Kalogeropoulos 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 Adobe Inc. and Take-Two Interactive. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Electronic Arts and has recommended the following options: long January 2023 $115 calls on Take-Two Interactive, long January 2024 $420 calls on Adobe Inc., and short January 2024 $430 calls on Adobe Inc. The Motley Fool Australia has recommended Adobe Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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13 October 2022
Why Atlantic Lithium, Elmo, Qantas, and Westpac shares are pushing higher
In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a small gain. At the time of writing, the benchmark index is up 0.3% to 6,665.3 points.

Four ASX shares that have climbed more than most today are listed below. Here’s why they are pushing higher:

Atlantic Lithium Ltd (ASX: A11)

The Atlantic Lithium share price is up 2.5% to 61.5 cents. Investors have been buying this lithium developer’s shares after it announced the submission of the mining licence application for the Ewoyaa Lithium Mine in Ghana. If everything goes to plan, Ewoyaa will be the country’s first lithium mine.

ELMO Software Ltd (ASX: ELO)

The ELMO share price is up 29% to $3.13. This follows confirmation that the human resources and payroll software company is in takeover talks. ELMO notes that it has received approaches expressing interest in acquiring the company from various parties, including Accel-KKR. However, no agreement has been reached in relation to any transaction.

Qantas Airways Limited (ASX: QAN)

The Qantas share price is up 10% to $5.68. The catalyst for this was the release of a market update this morning. That update reveals that Qantas expects to report an underlying profit before tax of $1.2 billion to $1.3 billion for the first half of FY 2023. Qantas also expects its net debt to fall to between $3.2 billion and $3.4 billion at 31 December, which is below the bottom of the target range of $3.9 billion.

Westpac Banking Corp (ASX: WBC)

The Westpac share price is up 3% to $23.08. This morning analysts at Goldman Sachs reiterated their bullish view on this banking giant following the release of a rival’s full year results. It said: “We would particularly highlight our Buy recommendation (on CL) on WBC, whose year-to-date consensus NIM upgrades have significantly lagged peers.”

The post Why Atlantic Lithium, Elmo, Qantas, and Westpac shares are pushing higher appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Elmo Software. The Motley Fool Australia has positions in and has recommended Elmo Software. The Motley Fool Australia has recommended Westpac Banking Corporation. 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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13 October 2022
Two ASX mining shares soaring by 20% today
The S&P/ASX 200 Materials Index (ASX: XMJ) is 0.14% in the red today, but two ASX mining shares are bucking the trend with big gains.

The Carnaby Resources Ltd (ASX: CNB) and Magmatic Resources Ltd (ASX: MAG) share prices are smashing the index today.

Let’s take a look at why these ASX mining shares are having such a great day.

Carnaby Resources

Carnaby shares are currently soaring 23.49% to 92 cents apiece.

As we reported earlier, the ASX mining share advised of “phenomenal results” from the Mount Hope prospect. This is located within the Greater Duchess Copper Gold Project in Queensland. Results included 60 metres at 3.1% copper and 16 metres at 7.6% copper.

Commenting on the news, managing director Rob Watkins said:

The outstanding result of 60m @ 3.1% copper in MHRC029 is the widest and highest grade drill result yet recorded throughout the Greater Duchess Project, even surpassing the original discovery hole at Nil Desperandum.

Magmatic Resources

Magmatic Resources shares are surging 20% to 12 cents at the time of writing.

The ASX mining share is exploring gold and copper at the Wellington North, Parkes, Myall, and Moorefield projects.

The gold price leapt higher to US$1,674 in global markets overnight, while copper fell slightly to US$7,545 a tonne.

Earlier this week, Magmatic reported a 722.5 metre copper intersection. Results included:
- 722.5 metres at 0.25% copper, 0.05 grams per tonne gold, and 14 parts per million (ppm) molybdenum from 134.5m
Commenting on the results, managing director Dr Adam McKinnon said: “I couldn’t be any more impressed with results from first full hole at our Myall program.”

Share price snapshot

The Carnaby Resources share price is up 200% in the past 12 months but is down 43% this year to date. However, it has gained 6% in the past month.

Magmatic Resources shares are up 20% over the past year and 9% year to date, but are down 14% over the past month.

The post Two ASX mining shares soaring by 20% today appeared first on The Motley Fool Australia.

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- Guess which ASX mining share is rocketing 20% on ‘phenomenal’ drill results
- ‘This could rapidly unfold’: Why this ASX mining share is leaping 8% today
Motley Fool contributor Monica O’Shea 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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13 October 2022
What’s been dragging the Rio Tinto share price lower this week?
The Rio Tinto Limited (ASX: RIO) share price has been struggling this week despite no news having been released by the S&P/ASX 200 Index (ASX: XJO) iron ore giant.

The stock is in the green today, posting a 0.43% gain. But that’s not enough to negate the 2.5% fall it recorded over the course of Tuesday and Wednesday.

Indeed, the Rio Tinto share price is currently 1.2% lower than it closed last Friday’s session.

So, what might be dragging on the materials favourite this week? Let’s take a look.

What’s weighing on the Rio Tinto share price?

The Rio Tinto share price has posted a fall for this week so far. Though, it is outperforming its sector.

The S&P/ASX 200 Materials Index (ASX: XMJ) is down 0.17% right now and 2.1% lower than it ended last week.

The iron ore giant’s peers are also in the weekly red. The Fortescue Metals Group Limited (ASX: FMG) share price is trading 0.8% lower than it closed last Friday. At the same time, shares in BHP Group Ltd (ASX: BHP) have fallen 1.25% over the course of this week.

The three iron ore giants have been in focus for much of the last four days due to concerns about the iron ore price.

The commodity’s value generally sees a boom in September and October, but that hasn’t materialised this year, my Fool colleague Tristan reports.

Its gains are normally driven by an increase in Chinese construction. But with many of the nation’s cities pushing through lockdowns and its housing market experiencing a downturn, building hasn’t ramped up.

Thereby, demand for steel – for which iron ore is a critical component – isn’t rising in China. In return, the iron ore price isn’t surging as expected.

That’s an issue for Rio Tinto shares as the company’s bottom line is dependent on the commodity’s price. Any rise or fall adds to or takes from its overall profits.

Thus, the latest concerns about the iron ore price’s future have likely weighed on the stock and that of its peers this week.

The post What’s been dragging the Rio Tinto share price lower this week? 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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13 October 2022
Elmo share price explodes 29% on possible takeover
The Elmo Software Ltd (ASX: ELO) share price is rocketing on Thursday, up 29.7% to $3.125 per share.

Shares in the provider of cloud-based human resources and payroll software were halted for the first hour of trading today, but launched skyward when trading resumed just after 11am AEDT.

This follows on speculations surrounding a potential takeover offer of the ASX tech share.

What’s all this about a potential acquisition?

The Elmo share price was frozen in early trade today at the company’s request.

The company requested the pause due to recent media speculation regarding “possible corporate activity”.

The ASX tech share hit the boards again after it released a statement regarding those speculations.

According to the release, Elmo “confirms that it has received approaches expressing interest in acquiring the company from various parties, including Accel-KKR”.

Elmo said it’s in discussions “with selected parties in the context of maximising shareholder value”. Discussions which look to be driving the Elmo share price sharply higher today.

However, the company noted:

No agreement has been reached in relation to any transaction, and there is no certainty that any proposal received will result in a binding offer or that any such offer would be recommended to shareholders.

UBS and Arnold Bloch Leibler are advising the company regarding any proposals it receives.

Elmo share price snapshot

Despite today’s surge, the Elmo share price has underperformed this year, down 32.7% since the opening bell on 4 January. That compares to a year-to-date loss of 13.6% posted by the All Ordinaries Index (ASX: XAO).

October, however, has presented a markedly different picture.

While the All Ordinaries is up 3% since the first day of trading this month, the Elmo share price has gained a whopping 41%.

In its 2022 financial year results, the company reported a 32% year-on-year increase in revenue. Though it still notched up a steep $79 million net loss for the year.

The post Elmo share price explodes 29% on possible takeover appeared first on The Motley Fool Australia.

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- ‘High quality’: Analyst names 2 ASX tech shares to buy right now
Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Elmo Software. The Motley Fool Australia has positions in and has recommended Elmo Software. 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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13 October 2022