Category: Stock Market

WiseTech Global Ltd (ASX: WTC) shares will be closely monitored on Wednesday morning after the logistics software maker released its full-year results and future outlook.

What did the company report?

• Revenue was up 25% to hit $632.2 million
• Earnings before interest, taxation, depreciation and amortisation (EBITDA) was up 54% to hit $319 million
• Statutory net profit after tax was up 80% to hit $194.6 million
• Free cash flow was up 71% to hit $237.3 million
• Final ordinary dividend was raised from 3.85 cents per share to 6.4 cents.

What else happened in FY22?

WiseTech has acquired a remarkable 41 companies since listing on the ASX in 2016.

During the last financial year, it completed two takeovers — Inobiz and Hazmatica.

“We are actively looking at further tuck-in acquisition opportunities which are typically smaller in size but can quickly bring their team, technology and knowledge, without major rewrites, and rapidly add value to the CargoWise ecosystem,” said WiseTech founder and chief executive Richard White.

“We also continue to look at larger, strategically significant, acquisition opportunities supported by our strong balance sheet, cash flow and funding options.”

What did management say?

White said of the full-year result:

This standout performance demonstrates the increasing resilience of our business model. In an environment of persistent supply chain constraints, inflationary pressures and COVID-related business disruption, to have delivered these outcomes is a real testament to the strength of our business, the dedication of our people, and the effectiveness of our 3P strategy.

COVID-related capacity constraints, port congestion and labour shortages experienced during the year resulted in an overloaded supply chain which could take some time to unwind. Demand for goods continues to outpace pre-COVID-19 levels, 4.9% above pre-COVID trendlines.

What’s next?

Assuming market conditions stay reasonably similar, WiseTech is predicting revenue growth of 20% to 23% for the 2023 financial year and EBITDA growth of 21% to 30%.

“We are well placed to benefit from the continuing M&A consolidation activity amongst global logistics operators, and their increasing investment in replacing legacy systems with digital solutions, as well as pursuing our own M&A opportunities,” said White.

“Looking ahead, we also remain focused on R&D and accelerating our investments to deliver breakthrough products that enable and empower those that own and operate the supply chains of the world.”

WiseTech share price snapshot

In a remarkable rally, the WiseTech stock price has rocketed more than 51% since 22 June.

That means that it’s only down 11.5% for the year so far, despite getting caught up in the general sell-off of tech and growth shares.

The price-to-earnings ratio is still arguably quite high, sitting at 122.

The post WiseTech share price on watch as net profit rockets 80% appeared first on The Motley Fool Australia.

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More reading

• Earnings preview: Here’s which ASX shares are reporting today
• 5 things to watch on the ASX 200 on Wednesday
• Why are ASX 200 tech shares flying higher on Thursday?
• Why are ASX 200 tech shares having such a stellar run today?
• Brokers name 2 top ASX shares to buy now

Motley Fool contributor Tony Yoo 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 WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. 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 Zip Co Ltd (ASX: ZIP) share price will be in the spotlight this week as the company gears up to release its FY22 results.

The ASX buy now, pay later (BNPL) provider is slated to unveil its full-year report tomorrow.

While once all the rage, Zip shares have experienced an almighty fall from grace.

As the BNPL hype hit a fever pitch across the ASX, the Zip share price reached the lofty heights of $13. At these levels, the company boasted a market capitalisation of nearly $7 billion.

Fast forward 18 months and the market has well and truly fallen out of love with ASX BNPL shares. 

The Zip share price has crumbled almost 80% this year to 92 cents, giving the company a market cap of $630 million.

Shareholders will be hoping to see their fortunes turn tomorrow when Zip releases its FY22 results. 

Here’s what we know so far

Based on Zip’s unaudited quarterly reports, the ASX BNPL share’s FY22 results could look something like this.

• Total transaction volume (TTV): $8.6 billion – up 51% from $5.7 billion in FY21
• Transactions: 75 million – up 81% from 41.3 million in FY21
• Revenue: $606 million – up 55% from $392 million in FY21
• Customers: 12 million – up 64% from 7.3 million in FY21
• Merchants: 90,700 – up 77% from 51,300 in FY21

It’s worth noting that Zip completed its acquisition of QuadPay on 31 August 2020. So, the company’s FY22 results will benefit from an extra two months’ contribution from QuadPay compared to FY22.

What I’m watching in Zip’s FY22 results

When Zip hands in its full-year results tomorrow, I think the following things will be worthy of a closer look.

Unit economics

The key to a company’s sustainability, and ultimate profitability, lies in its unit economics.

For ASX BNPL players like Zip, this is all about how well they can convert the transaction value that flows through their platform into revenue. And from there, how much of this revenue they can collect from customers.

For Zip, the key metrics to watch here are the company’s revenue margin, cash cost of sales (which includes bad debts), and cash transaction margin.

In the first half of FY22, Zip’s revenue margin retreated to 6.7%, down from 6.9% in HY21.

Its cash cost of sales performance also deteriorated on the back of rising bad debt expenses. As a percentage of TTV, cash cost of sales jumped from 3.2% to 4.6%.

Ultimately, this didn’t bode well for Zip’s cash transaction margin, which subtracts cost of sales from the revenue margin. This figure stood at 2.1% in HY22, down from 3.5% in FY21, and 3.7% in HY21.

In February, management noted it was taking direct action to improve bad debt performance. Investors will be keen to see if these initiatives have been bearing fruit.

Zip has a medium-term target of achieving cash transaction margins between 2.5% and 3%.

Balance sheet health

Zip’s business model is heavily reliant on debt funding. 

And due to the nature of its services, a lot of its revenue sits in customer receivables, waiting for customers to repay their instalments. 

As a result, it’s important to pay close attention to Zip’s balance sheet.

The key line items to focus on include cash, customer receivables, and borrowings.

Investors will also be able to glean further insights from the relevant accounting notes for these line items.

Operating expenses

Zip is undeniably in a growth phase, overlooking earnings in order to chase long-term gains.

But as the company continues to burn through cash while its unit economics deteriorate, Zip has recognised something has to give.

In response, management is undertaking what has internally been dubbed Operation Blue Sky. It’s all about cutting costs in order to make the company’s operations more economically viable.

This will see the company rein in its employee expenses by $30 million, put new financial services products on the back burner, tighten new lending, and step back global expansion. 

So, Zip’s operating expenses are sure to be in the spotlight tomorrow. 

The first of these cost management initiatives kicked off in April this year, so the benefits are unlikely to meaningfully show up until FY23.

Nonetheless, investors will be hoping to see a deceleration in expenses growth tomorrow, particularly compared to the first half of FY22.

The big expenses to watch will be employee costs and marketing costs.

The post Looking to buy Zip shares? Here’s what to look for in tomorrow’s results appeared first on The Motley Fool Australia.

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More reading

• Why is the Zip share price sinking 5% on Monday?
• Why is the Block share price tumbling 6% today?
• These are the 10 most shorted ASX shares
• How does Zip’s ‘Operation Blue Sky’ stack up against Block’s battening down of the hatches?
• Why is the Zip share price behaving so strangely on the ASX today?

Motley Fool contributor Cathryn Goh 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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The team at Morgans has been working hard this month analysing the seemingly endless stream of results that have been released.

Two companies that caught the broker’s eyes recently are listed below. Here’s why it thinks investors should be buying these ASX shares post-results:

Accent Group Ltd (ASX: AX1)

The first ASX share that Morgans is tipping as a buy is footwear retailer Accent.

While FY 2022 was a difficult year for the company, the broker was pleased to see that FY 2023 has started positively. And with management aiming to stop discounting and sell at full price, its analysts see scope for margin improvements.

All in all, it feels this makes the Accent share price undervalued at current levels. Morgans has upgraded its shares to an add rating with a $2.00 price target. It commented:

We upgrade from Hold to Add with an increased target price of $2.00. With customer activity showing no signs of a pullback so far in FY23 and with demand for new (and often higher priced) products running strong over the past 8-12 weeks, we have become more positive on the immediate prospects for sales growth.

AX1’s renewed focus on selling at full price will, in our view, support a recovery in the gross profit margin in FY23 back towards historical averages. We welcome AX1’s moderation of the pace of its store rollout in favour of a more selective expansion strategy focused on return on investment. We see AX1 as undervalued at the current share price.

New Hope Corporation Limited (ASX: NHC)

Another ASX share that Morgans is bullish on is coal miner New Hope. The broker was pleased with its recent update and notes that coal prices continue to surprise to the upside.

In light of this and the strong free cash flow the company is generating, it suspects that a re-rating could be in order in the near future. Particularly given its favourable dividend outlook.

Morgans has retained its add rating with an improved price target of $5.50. It commented

4Q Production/Sales were more resilient to disruption than we had feared. Coal prices continue to surprise, driving further EPS/ valuation upgrades. Valuation/target adjusts to (login to view). We think NHC can re-rate as the market awakens to the sheer scope of current cash flows and ongoing dividend upside potential. ADD.

The post Morgans names 2 ASX shares to buy post-results appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 200 shares breaking multi-year highs on Tuesday
• Leading brokers name 3 ASX shares to buy today
• New Hope share price slides despite quarterly coal production boost
• Why ASX 200 energy shares could still have decades of prosperity ahead: broker
• Here are the top 10 ASX 200 shares 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 recommended Accent 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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Investors that are looking to bolster their portfolio with some blue chip ASX 200 shares might want to check out the two listed below.

Both of these ASX 200 shares have recently been rated as buys. Here’s why analysts are bullish on them:

Cochlear Limited (ASX: COH)

Analysts at Morgans are positive on this hearing solutions company following the release of its full year results. The broker notes that its “FY22 results tracked our estimates and guidance.”

Looking ahead, its analysts appear confident that Cochlear’s growth can continue. It explained:

We see continued momentum, with N8 launch underpinning continued gains across Services, and ongoing recovery and backlog supporting CI growth, despite likely slower uptake, clinical capacity shifts and cloud-computing costs.

Despite juggling a lot of moving parts (eg new IT system; N8 launch; Oticon acquisition; China factory commissioning), management has a strong record of executing, coupled with improving demand, portends a solid earnings profile.

In light of this, the broker has retained its add rating with a $236.70 price target on the company’s shares. This compares favourably to the current Cochlear share price of $215.01.

Rio Tinto Limited (ASX: RIO)

Another ASX 200 blue chip share that has been given the tick of approval by analysts is mining giant Rio Tinto.

The team at Goldman Sachs remains very positive on the miner. This is due to its “compelling valuation,” with its shares trading at a sizeable discount to net asset value.

In addition, the broker believes that Rio Tinto will generate significant free cash flow and is on the cusp of returning to production growth. It commented:

Rio is a FCF story in our view, but despite challenges in 1H22, we see RIO returning to production growth in 2H22 with +6% in Cu Eq prod growth in 2023E driven by the Gudai-Darri iron ore mine and a rebound in mined copper volumes.

Goldman has a buy rating and $121.50 price target on the miner’s shares. Based on the current Rio Tinto share price of $97.66, this implies potential upside of 24% for investors.

The post Here’s why analysts say these blue chip ASX 200 shares are buys appeared first on The Motley Fool Australia.

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More reading

• How have ASX dividend shares been performing this earnings season?
• Here’s the Rio Tinto dividend forecast through to 2026
• Could this be set to boost ASX 200 iron ore shares?
• Could ASX battery minerals shares be in for a boost next month?
• 3 buy-rated ASX 200 shares that analysts love

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 Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. 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 hump day, and we are right in the thick of it now with earnings season. Strap yourself in, because the torrential downpour of results from ASX shares is about to sweep through.

Here’s a quick summary of what to expect today so you have a jump on the market.

ASX shares set to report today (smallest to largest)

Rural Funds Group (ASX: RRF), $992.1 million

Netwealth Group Ltd (ASX: NWL), $3.19 billion

Iluka Resources Limited (ASX: ILU), $4.01 billion

Domino’s Pizza Enterprises Ltd (ASX: DMP), $5.81 billion

Seven Group Holdings Ltd (ASX: SVW), $6.43 billion

Lottery Corporation Ltd (ASX: TLC), $9.88 billion

APA Group (ASX: APA), $13.62 billion

Sonic Healthcare Limited (ASX: SHL), $15.93 billion

WiseTech Global Ltd (ASX: WTC), $17.30 billion

Coles Group Ltd (ASX: COL), $24.99 billion

Woolworths Group Ltd (ASX: WOW), $46.02 billion

(Market capitalisations as of 22 August 2022)

To see the complete list of ASX shares, visit our reporting season calendar here.

What to expect

Starting at the big end of town, Woolworths is expected to release its full-year results for FY22 today. Onlookers will likely be keeping a watchful eye on this ASX share to see if it has been able to pass on inflationary costs to the customer.

Analysts over at Citi are expecting $1,502 million in net profit after tax (NPAT) from Woolworths today. Furthermore, both Bell Potter and Citi currently have a buy rating on the supermarket giant.

Moving along, one ASX tech share that has managed to avoid the worst of the tech wreck is set to full-year accounts on Wednesday. According to analysts’ consensus, cloud-based logistics software provider WiseTech is expected to report $175.7 million on the bottom line.

On 15 July, WiseTech dazzled the market with its upgraded FY22 guidance. By the company’s own estimates, revenue will be between $600 million and $635 million.

Lastly, the Lottery Corporation will give the market its first taste of full-year results as a standalone ASX share.

The post Earnings preview: Here’s which ASX shares are reporting today appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Looking to buy Woolworths shares? Here’s what to watch in this week’s earnings results
• Earnings preview: Here are 3 ASX 200 shares reporting this week
• Considering Woolworths shares? Here’s why this key exec just jumped ship for Amazon
• Brokers name 2 blue chip ASX 200 shares to buy

Motley Fool contributor Mitchell Lawler has positions in Sonic Healthcare Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Netwealth and WiseTech Global. The Motley Fool Australia has positions in and has recommended APA Group, COLESGROUP DEF SET, Netwealth, RURALFUNDS STAPLED, and WiseTech Global. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited and Sonic Healthcare 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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If you’re looking for income, then the ASX 200 could be a great place to start. The benchmark index is filled with a range of quality companies that share their profits with shareholders.

Two ASX 200 dividend shares that do this and have been tipped as buys are listed below. Here’s what you need to know about them:

Telstra Corporation Ltd (ASX: TLS)

The first ASX 200 dividend share to consider is Telstra.

It recently released its full year results for FY 2022 and impressed the market thanks to the success of its T22 strategy.

For the 12 months ended 30 June, Telstra posted a 4.7% decline in revenue but an 8.4% increase in underlying EBITDA to $7.3 billion. A key driver of Telstra’s earnings growth was its mobile business, which reported EBITDA growth of 21.2% or $700 million over the prior corresponding period.

The good news is that the company is now embarking on its T25 strategy, which is targeting high-teens underlying earnings per share (EPS) compound annual growth rates from FY 2021 to FY 2025.

One broker that is positive on the company is Morgans. In response to its results, the broker put an add rating and a $4.60 price target on the company’s shares.

As for dividends, its analysts are forecasting fully franked dividends per share of 17 cents in FY 2023 and FY 2024. Based on the latest Telstra share price of $4.13, this will mean 4.1% yields for investors.

Westpac Banking Corp (ASX: WBC)

Another ASX 200 dividend share that could be in the buy zone is Westpac.

It is of course one of Australia’s big four banks, operating under the Westpac brand and a number of regional banking brands such as St George and Bank of Melbourne.

It could be a quality option for investors thanks to its exposure to rising rates and its bold cost reduction plans. Combined, these should be supportive of earnings and dividend growth in the coming years.

The team at Goldman Sachs certainly expect that to be the case. The broker recently upgraded Australia’s oldest bank’s shares to a conviction buy rating with a $26.12 price target.

Its analysts believe “WBC provides strong leverage to rising rates” and “will also see the benefit of higher rates play through its NIM quicker than peers.” And while the broker doesn’t expect Westpac to achieve its full cost base reduction target of $8 billion, it believes $8.9 billion is achievable, which will still be an 18% reduction.

In light of the above, the broker is forecasting fully franked dividends per share of 123 cents in FY 2022 and 135 in FY 2023. Based on the current Westpac share price of $21.36, this represents yields of 5.75% and 6.3% respectively.

The post 2 excellent ASX 200 dividend shares that brokers love appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• 3 ASX All Ordinaries shares trading ex-dividend tomorrow
• Is the Westpac share price a buy for the bank’s ‘surplus capital’?
• Hoping to ring in the latest Telstra dividend? Here’s what you need to do
• How have ASX dividend shares been performing this earnings season?

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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 Corporation Limited. 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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With ASX reporting season in full swing, S&P/ASX 200 Index (ASX: XJO) shares are declaring dividends left, right, and centre.

Once dividends are declared, there’s a cut-off date to determine which shareholders are entitled to the upcoming payment. This is known as the ex-dividend date.

As I covered yesterday, three S&P/ASX All Ordinaries Index (ASX: XAO) shares went ex-dividend on Tuesday, putting downwards pressure on their companies’ respective share prices.

Notably, the Australian Clinical Labs Ltd (ASX: ACL) share price suffered a steep 11% fall as the company’s shares no longer traded with a handsome final dividend.

When a company’s shares go ex-dividend, the share price typically falls. The extent of this drop is linked to the size of the dividend. But it varies based on sentiment and how the broader market is faring that day.

With this in mind, here are three ASX 200 shares going ex-dividend tomorrow. 

REA Group Limited (ASX: REA)

Shares in ASX 200 market darling REA are set to trade without the company’s final dividend on Thursday.

The online property business recently released its FY22 results, declaring a fully franked final dividend of 89 cents per share. This was a 24% increase on the final dividend declared in FY21.

Investors who own REA shares before the market closes tomorrow should see this final dividend land in their accounts in mid-September.

Adding in the company’s interim dividend earlier in the year, REA shares currently trade on a dividend yield of 1.3%. With the benefit of franking credits, this bumps up to 1.8%.

JB Hi-Fi Limited (ASX: JBH)

ASX retailer JB Hi-Fi is another ASX 200 share going ex-dividend tomorrow.

The company recently declared a final fully franked dividend of $1.53, up 43% on the prior corresponding period.

If you own JB Hi-Fi shares before the closing bell tomorrow, you should see this dividend payment land in your account on 9 September.

This final dividend alone spins up a dividend yield of 3.5%. But throwing the company’s interim dividend into the mix puts JB Hi-Fi shares on a sizeable trailing dividend yield of 7.3%. This grosses up to 10.4% including franking credits.

Deterra Royalties Ltd (ASX: DRR)

Last but not least, shares in mining royalties business Deterra will also be going ex-dividend on Thursday.

The ASX 200 share recently announced a final fully franked dividend of 22.08 cents per share, almost double the final dividend declared in FY21.

Shareholders on the company’s registry by the time the market closes tomorrow will see this dividend payment come through on 21 September. 

Combined with its interim dividend, Deterra’s total FY22 dividend payments add up to 33.76 cents per share, fully franked.

This puts Deterra shares on a trailing dividend yield of 7.5%, or 10.7% grossed up.

The post 3 ASX 200 shares going ex-dividend tomorrow appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• The Imugene share price has tumbled 18% since the company’s last update. What’s happening?
• Why did the EML share price tumble 12% on Tuesday?
• Here are the top 10 ASX 200 shares today
• Looking to buy Woolworths shares? Here’s what to watch in this week’s earnings results

Motley Fool contributor Cathryn Goh 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 REA 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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On Tuesday, the S&P/ASX 200 Index (ASX: XJO) was out of form again and sank into the red. The benchmark index fell 1.2% to 6,961.8 points.

Will the market be able to bounce back from this on Wednesday? Here are five things to watch:

ASX 200 expected to rise

The Australian share market could snap its losing streak on Wednesday despite a relatively poor night of trade in the United States. According to the latest SPI futures, the ASX 200 is expected to open the day 7 points or 0.1% higher this morning. In late trade on Wall Street, the Dow Jones is down 0.3%, the S&P 500 has dropped 0.1%, and the Nasdaq is trading marginally higher.

Oil prices rebound strongly

Energy producers including Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a great day after oil prices rebounded strongly overnight. According to Bloomberg, the WTI crude oil price is up 3.8% to US$93.81 a barrel and the Brent crude oil price is up 3.8% to US$100.22 a barrel. This was driven by speculation that Saudi Arabia could cut its output if demand softens.

Coles FY 2022 results

The Coles Group Ltd (ASX: COL) share price will be in focus this morning when the supermarket giant releases its full year results. According to a note out of Citi, its analysts are forecasting a net profit after tax of $1,019 million. This is slightly ahead of the market consensus estimate of $1,008.5 million.

Gold price higher

Gold miners such as Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a decent day after the gold price traded higher overnight. According to CNBC, the spot gold price is up 0.7% to US$1,760.50 an ounce. A pullback in the US dollar following weak US retail sales data boosted the precious metal.

WiseTech results day

The WiseTech Global Ltd (ASX: WTC) share price could be on the move today when the logistics solutions company releases its full year results for FY 2022. WiseTech has a habit of outperforming expectations, so investors may be hoping for the same today. The market consensus estimate is for a net profit after tax of $175.7 million.

The post 5 things to watch on the ASX 200 on Wednesday 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 WiseTech Global. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET and WiseTech Global. 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 PointsBet Holdings Ltd (ASX: PBH) share price has taken a hit in 2022.

Since the start of the year, the sports betting company’s shares have lost 53% of their value.

This has been driven by the market’s aversion to loss-making tech stocks as interest rates rise.

Is the PointsBet share price weakness a buying opportunity?

The team at Bell Potter believes that investors should take advantage of the weakness in the PointsBet share price to pick up shares.

According to a recent note, the broker has retained its speculative buy rating with a $5.25 price target.

Based on the current PointsBet share price of $3.22, this implies potential upside of 63% for investors over the next 12 months.

What did the broker say?

Bell Potter was pleased with PointsBet’s fourth quarter update and highlights that the company is making “positive steps.” It was also pleased that management has confidence that its cash balance will be sufficient to see it through the near term.

Bell Potter commented:

PointsBet released its Appendix 4C for the June quarter and most of the key metrics were slightly better than our forecasts: net win in Australia up 28% to A$55.2m in Q4 and up 30% to $215.4m in FY22 (vs BPe A$212.9m); net win in the US (including iGaming) up 70% to A$30.4m in Q4 and up >100% to A$93.9m in FY22 (vs BPe $84.4m); operating cash outflow of A$60.8m in Q4 and A$197.5m in FY22 (vs BPe A$201.8m); and corporate cash of A$472.7m at 30 June (vs BPe c.A$450m).

The company also provided the first result for the recently launched Canadian operation and the net win (including iGaming) was A$0.2m in Q4. The blended online handle market share was 3.5% in Q4 which was consistent with the 3.6% in Q3. PointsBet confirmed it had generated a positive EBITDA result in the Australian operation in FY22 and said that post the placement of stock to SIG Sports it had sufficient funding for the “near term”.

The post Broker tips PointsBet share price to jump 60% appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why CSL, Downer, Magellan, and PointsBet shares are falling today
• Here are the top 10 ASX 200 shares today
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• Why Baby Bunting, PointsBet, ResMed, and Suncorp shares are dropping 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 positions in and has recommended Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. 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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If you’re searching for growth shares to buy, then two ASX shares listed below could be worth considering.

Both have been named as buys by brokers and tipped to have major upside potential. Here’s what they are saying about them:

Readytech Holdings Ltd (ASX: RDY)

The first ASX growth share to look at is enterprise software provider Readytech.

Earlier this month, Readytech released its full year results and revealed a 16.8% year over year increase in revenue to $78.3 million and a 45.5% jump in underlying EBITDA to $27.5 million.

Goldman Sachs was pleased with this in-line result and notes that its “strong organic growth execution builds confidence in medium-term earnings outlook.”

In response to the result, the broker reiterated its buy rating with a trimmed price target of $4.30. Goldman commented:

We are constructive on RDY’s growth outlook given its defensive end-market exposures (government and education represent ~3/4 of FY23E revenue) and see scope for margins to grow from FY23 onwards, aided by transitioning IT Vision’s on-premise customer base to cloud in coming years (generating a 2-3x ARPU uplift).

RDY remains materially undervalued relative to profitable SaaS peers (we estimate >50% discount on growth-adjusted FY24E EV/EBITDA) and is building an impressive track record of organic growth execution which in our view will drive a re-rating over time.

Treasury Wine Estates Ltd (ASX: TWE)

Another ASX growth share that could be a top option for investors is Treasury Wine. It is one of the world’s leading wine companies with a portfolio of popular brands including Penfolds, 19 Crimes, and Wolf Blass.

It also recently released its full year results and revealed solid growth across the business. This went down well with analysts at Morgans, which are expecting this strong form to continue in the future.

In response to its result, the broker retained its add rating and lifted its price target to $15.71. The broker commented:

Despite all the external headwinds, TWE’s FY22 result was solid and in line with our forecast and its guidance. Importantly, the 2H demonstrated strong EBITS and NPAT growth (+14.1% and +18.8% on pcp). Despite cost pressures, the foundations are now in place for TWE to deliver strong double digit growth from FY23.

Pleasingly, the benefits of its new divisional model are clearly evident and the Penfolds reallocation strategy has been a success. Trading at a material discount to our valuation and its pre-COVID multiples, we maintain an Add rating with a new price target of $15.71 on this high quality company.

The post Brokers name 2 ASX growth shares to buy now appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy next week
• Treasury Wine share price celebrates Friday with a more than two-year high
• 2 exciting small cap ASX shares that analysts rate as buys
• Here are the top 10 ASX 200 shares today
• Why CSL, IPH, Renascor, and Treasury Wine shares are pushing higher

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 Readytech Holdings Ltd. The Motley Fool Australia has recommended Readytech Holdings Ltd and Treasury Wine Estates 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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