Category: Stock Market

At lunch on Friday, the S&P/ASX 200 Index (ASX: XJO) is back on form and on course to end the week on a very positive note. The benchmark index is currently up 1.55% to 7,049 points.

Here’s what is happening on the ASX 200 today:

Tech sector rebounds

A key driver of the ASX 200’s gain has been a rebound in the tech sector. Tech shares including Altium Limited (ASX: ALU) and Block Inc (ASX: SQ2) are recording strong gains, leading to the S&P/ASX All Technology index rising 4.3% at lunch. This follows an improved night on the Nasdaq index and futures contracts pointing to a solid night on Friday.

Xero shares boosted by bullish brokers

The Xero Limited (ASX: XRO) share price is racing higher today after the cloud accounting platform provider was the subject of a number of bullish broker notes. One of those was from Goldman Sachs, which has retained its buy rating with a $118.00 price target. Elsewhere, Ord Minnett upgraded the company’s shares to a buy rating with a $97.00 price target.

Gold miners drag on ASX 200

One area of the market that isn’t rising with the ASX 200 is the gold industry. A number of gold miners, such as Gold Road Resources Ltd (ASX: GOR) and Newcrest Mining Ltd (ASX: NCM), are falling today after the gold price tumbled overnight. This has led to the S&P/ASX All Ordinaries Gold index falling 0.9% today.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Friday has been the Block share price with a 12.5% gain. This follows a strong gain by its NYSE-listed shares overnight. The worst performer has been the IGO Ltd (ASX: IGO) share price with a 3% decline. This is despite there being no news out of the battery materials miner.

The post ASX 200 midday update: Block and Xero rebound, gold miners fall appeared first on The Motley Fool Australia.

More reading

• Blast off! Why is the Zip share price zooming 3% on Friday?
• Tech turnaround: ASX 200 tech shares surge higher on Friday
• Xero share price rebounds: Is now the time to invest?
• The Soul Patts dividend is being paid today. Here’s what you need to know
• 5 things to watch on the ASX 200 on Friday

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 Altium, Block, Inc., and Xero. The Motley Fool Australia has positions in and has recommended Block, Inc. and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/6d7muQL

Shares in Megaport Ltd (ASX: MP1) are shifting higher on Friday and now trade 6% in the green at $7.01 apiece.

The Megaport share price has traded 62% in the red since market activity resumed in January.

What’s up with the Megaport share price?

Despite no market-sensitive updates today, investors are bidding up Megaport shares today, despite a heavy selloff that’s ensued since late April.

In that time, the Megaport share price has come off a high of $12.76 with authority, a 45% drop, along with weakness in the broad sector.

For instance, the S&P/ASX All Technology Index (ASX: XTX) has collapsed 16% in the last month of trade after another 11% dip in the past week of trade.

However, there’s no denying that positive sentiment exists for Megaport, and some sophisticated investors are looking at this weak period as an opportunity.

“[W]ith the world moving more and more of computing into the cloud, the thematic tailwinds just cannot be denied for this ASX share,” said Tony Yoo of TMF earlier this week.

Yoo said commentary from Firetrail Investments supports this view:

“We continue to believe the medium-term growth opportunity for Megaport is significant and will be realised within a reasonable timeframe,” Firetrail said.

Meanwhile, analysts at Shaw and Partners noted that there is “definitely some value” in Megaport with its stock price trading around $8 at the time.

Megaport share price snapshot

In the last 12 months, the Megaport share price collapsed more than 46% into the red after extending losses well into the new year.

The post Why is the Megaport share price rallying 6% on Friday? appeared first on The Motley Fool Australia.

More reading

• 3 ASX shares destined for greatness: Firetrail
• 2 ASX shares that could surprise you in a year’s time
• The Appen share price is soaring 5% on Thursday. Could this be why?
• 3 stellar ASX growth shares analysts are tipping as buys this month
• These were the worst performing ASX 200 shares in April

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 positions in and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/So9H2rj

The Insurance Australia Group Ltd (ASX: IAG) share price is outperforming in May but the company still boasts a strong dividend yield.

The last 12 months have seen the company stepping up its dividends once more. However, its stock is still trading significantly lower than it was pre-pandemic.

At the time of writing, the IAG share price is up 1.32% on the day at $4.62. That’s around 2% higher than it ended April but around 40% lower than it was at the start of 2020.

For context, the S&P/ASX 200 Index (ASX: XJO) has slipped 5% so far in May and is up around 4% from where it began 2020.

So, with that in mind, let’s take a look at how the company’s dividends compare with its share price in May.

Is IAG really trading with a 4% dividend yield?

Those who own IAG shares for the dividends will likely be stoked to know the company’s dividend yield is 4.16% as of Thursday’s close.

Over the last 12 months, IAG has paid out two dividends worth a combined 19 cents.

The first was its 13-cent final dividend of financial year 2021. The second was its interim dividend, worth 6 cents.

That represents a better annual payout than shareholders received over financial year 2021.

That year, the company skipped its final dividend before offering a 7-cent interim dividend.

Though, investors received a 20-cent final dividend and a 10-cent interim dividend in financial year 2020.

That makes this financial year’s combined payouts a 171% improvement on financial year 2021’s, but a 36% reduction on those of financial year 2020.

It’s also worth noting that IAG’s three most recent dividends haven’t been franked. That means some shareholders haven’t been able to take advantage of the tax benefits often accompanying ASX dividends.

IAG is expected to announce its next dividend – the final dividend of financial year 2022 – on 12 August.

IAG share price snapshot

The IAG share price is outperforming the broader market in 2022. It has gained 3.5% year to date while the ASX 200 has slumped 7%.

However, the insurer’s stock has dumped 6% over the past 12 months. The ASX 200 has gained 0.6% over that period.

The post What is the dividend yield on IAG shares in May? appeared first on The Motley Fool Australia.

More reading

• The IAG share price has gained 6% in a month. Is this just the beginning?
• 4 ‘defensive growth’ ASX shares to buy in turbulent times: Wilsons
• Does IAG have a dividend reinvestment plan?
• What happened to the IAG share price in April?
• How does the IAG dividend compare to QBE?

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 positions in and has recommended Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/TFfV1U7

The Aristocrat Leisure Limited (ASX: ALL) share price is back on form on Friday.

In morning trade, the gaming technology company’s shares are up 4% to $31.80.

Why is the Aristocrat share price storming higher?

There have been a couple of catalysts for the rise in the Aristocrat share price this morning.

The first is a rebound in the tech sector following an improved night of trade on the Nasdaq index. This has led to the S&P/ASX All Technology Index rising by a sizeable 3.9% on Friday.

Also giving the Aristocrat share price a boost was the release of a broker note out of Macquarie this week which appears to have been lost in the market selloff until now.

According to the note, the broker has retained its outperform rating and $44.00 price target on the company’s shares ahead of its half-year results release later this month.

Based on the current Aristocrat share price, this implies potential upside of 38% for investors over the next 12 months.

What did the broker say?

Macquarie believes the recent market weakness has created an opportunity for investors to pick up shares in a company that is well-placed for growth in the coming years.

This is due to strong performances across its businesses and potential M&A activity. In respect to the latter, the broker highlights that Aristocrat has over $1 billion in cash to play with.

It isn’t just Macquarie that is bullish on the Aristocrat share price. The team at Citi recently slapped a buy rating and $44.00 price target on the company’s shares.

It commented:

Aristocrat represents a compelling long-term growth story, with exposure to ongoing growth in mobile game penetration and potential to grow into new markets.

Despite the Playtech acquisition not proceeding, the immense opportunity in Real Money Gaming remains.

Foolish takeaway

I would have to agree with Citi and Macquarie on Aristocrat. At just 19x FY 2022 earnings based on Citi’s estimates, it appears to be one of the best value tech shares around. Especially given the positive growth outlook for its pokie machine and digital businesses and its sizeable cash balance.

The post Why the Aristocrat share price is storming higher and could keep rising appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy today
• Unprecedented: Does this event mean we’re now in a bear market?
• 2 ASX 200 shares that analysts say are buys
• Aristocrat share price higher on bullish broker note
• Analysts name 2 ASX growth shares to buy with 30%+ upside

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/iBm5I0w

The Zip Co Ltd (ASX: ZIP) share price is ending the week on a high after yesterday’s catastrophic session.

And it’s not alone in its gains. The tech-adjacent stock is leaping alongside many of the S&P/ASX 200 Index (ASX: XJO)’s technology shares.

At the time of writing, the Zip share price is trading at 97 cents, 3.74% higher than its previous close.

For context, the ASX 200 is also in the green, gaining 1.35%.

Let’s take a look at what might be going on with the buy now, pay later (BNPL) provider’s shares.

Zip share price takes off on Friday

Zip shares are back on the horse after tumbling to a multi-year low of 91.5 cents in intraday trade yesterday.

And the BNPL stock was joined in the red by most ASX 200 tech shares. In fact, the S&P/ASX 200 Information Technology Index (ASX: XIJ) fell a whopping 8.7% on Thursday amid news of inflation overseas.

But today’s a new day. The tech sector is up 4.89% on Friday with none of its constituents recording a loss.

The Block Inc (ASX: SQ2) share price is leading the pack. It’s currently up 12.5%, clawing back some of yesterday’s 17.6% tumble.

Despite today’s partial rebound, the Zip share price is 77% lower than it was at the start of 2022. It has also dumped 85% since this time last year.  

The post Blast off! Why is the Zip share price zooming 3% on Friday? appeared first on The Motley Fool Australia.

More reading

• Tech turnaround: ASX 200 tech shares surge higher on Friday
• Why Block, IDP Education, Monash IVF, and Xero shares are dropping
• Blockdown! Why is the Block share price crashing by 16% today?
• Thursday thrashing: ASX tech shares tumble
• ASX 200 midday update: CBA’s Q3 update impresses, Xero and Block crash

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 Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/TV8H4eh

The Australian Strategic Materials Ltd (ASX: ASM) share price won’t be going anywhere on Friday.

This comes as the company requested its shares be placed in a trading halt today.

At such, the emerging critical metals producer’s shares are frozen at $5.26 cents apiece.

What’s happening with Australian Strategic Materials?

Prior to the market opening, management requested the Australian Strategic Materials share price be halted while it prepares an announcement.

According to the release, the company is planning to make an announcement in relation to an equity funding agreement and revisions to a framework agreement.

It’s worth noting that Australian Strategic Materials shares have lost considerable value in the past month. Its shares are now down more than 26% after touching an 11-month low of $5.20 yesterday.

The company has requested the trading halt remains in place until Tuesday 17 May or following the release of the announcement, whichever comes first.

Project ready for construction

Headquartered in Western Australia, the company is focused on supplying high-purity metals, alloys and powders to global manufactures.

These advanced materials are used in the clean energies, electric vehicles, aerospace, electronics, and communications space.

Australian Strategic Materials wholly owns the Dubbo Project which holds rare earths, zirconium, niobium, hafnium, tantalum, and yttrium.

With all major approvals and licences in place, the project is ready for construction, subject to financing.

The company intends to develop the site to meet the high demand of a range of existing and future technologies.

Notably, once established, the project will be one of the few supply options outside China, according to the company.

About the Australian Strategic Materials share price

Over the past 12 months, Australian Strategic Materials shares have risen by 24% following strong investor hype in mid-2021.

Although, when looking since the start of the current year, its shares have receded to post a decline of 50%.

Based on valuation grounds, Australian Strategic Materials has a market capitalisation of roughly $775.65 million.

The post Why is the Australian Strategic Materials share price frozen today? appeared first on The Motley Fool Australia.

More reading

• Tech turnaround: ASX 200 tech shares surge higher on Friday
• Down 8% in a week, is the Cochlear share price in the buy zone?
• Why Tesla stock is falling again today
• Which is the better beaten-up buy, Bubs or A2 Milk shares?
• Infomedia share price halted amid takeover approach

Motley Fool contributor Aaron Teboneras 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.

from The Motley Fool Australia https://ift.tt/GhTjyDq

S&P/ASX 200 Index (ASX: XJO) tech shares are enjoying a much-needed turnaround today.

At the time of writing tech shares are among the strongest performers, as witnessed by the 3.1% gain in the S&P/ASX All Technology Index (ASX: XTX), which includes companies outside of ASX 200 tech shares.

The ASX 200 itself is up 1.3% at this same time.

Why are tech stocks rebounding?

Tech shares look to be getting a lift from a late afternoon rally in the tech heavy Nasdaq yesterday (overnight Aussie time).

With barely an hour to go before the closing bell, the Nasdaq was down 2.2% for the day. Then investors piled in, seeing the index finish up a slender 0.1%.

After a tough year, these ASX 200 tech shares are leaping higher

WiseTech Global Ltd (ASX: WTC), like most every tech stock, has struggled this year amid fast rising inflation and interest rate hike expectations. That’s seen its share price tumble 34.5% year-to-date.

But today, the shareholders of the company which provides cloud-based software solutions for the logistics sector, can breathe easier, with shares up 2.3%.

Xero Limited (ASX: XRO), a business and accounting software provider, is also down 44.5% in 2022. But not today. At the time of writing, the Xero share price stands at $80.48, up 4.7%.

Leading the charge among ASX 200 tech shares is global payment systems giant Block Inc (ASX: SQ2). Block hasn’t been immune to the wider tech market rout, with shares down 37.1% since 4 January.

Today the Block share price is surging higher, up 12.1%.

The post Tech turnaround: ASX 200 tech shares surge higher on Friday appeared first on The Motley Fool Australia.

More reading

• Xero share price rebounds: Is now the time to invest?
• Why Block, IDP Education, Monash IVF, and Xero shares are dropping
• Blockdown! Why is the Block share price crashing by 16% today?
• Thursday thrashing: ASX tech shares tumble
• Why is the WiseTech share price slipping 5% lower today?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc., WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Block, Inc., WiseTech Global, and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/P2GzviX

Shares of Cochlear Ltd (ASX: COH) have struggled this year to date, dipping 8% in the past week of trade alone.

The Cochlear share price pushed another 6% lower in the past month of trade, coming off a high of $236 in late April. Now trading at around $211, this represents an overall drop of almost 3% since January.

In wider market moves, the S&P/ASX 200 Health Care Index (ASX: XHJ) has slipped 10% this year to date but is up 3% in the last month of trade.

Is the Cochlear share price a buy?

Broker sentiment is mixed on which direction the Cochlear share price will travel in the next 12 months. In terms of ratings, calls are split evenly between buys and holds, according to Bloomberg data.

Specifically, 42.1% of coverage has it rated a buy or hold, with the remaining 16% of brokers urging their clients to sell Cochlear shares.

A flurry of broker updates came through in late April for Cochlear. Goldman Sachs pointed out that the company’s acquisition of Oticon Medical could be a net positive to boost industry pricing.

That’s because Oticon was previously a challenger to Cochlear, albeit with a lower pricing point, and the acquisition also folds in additional research and development (R&D) opportunities for the company.

The broker retained its buy rating and values Cochlear at $237 per share, well ahead of Morgan Stanley, which values it at $208 per share with a neutral stance.

Still, those at Morgan Stanley reckon the Oticon transaction shouldn’t face any issues from regulators, and that the company won’t add a material impact to Cochlear’s bottom line.

That view differs from analysts at Macquarie, however. The Macquarie team reckon that the $170 million Oticon transaction could spell earnings dilution in the short term for Cochlear.

Analysts reckon that there will be a range of $30 million–$60 million in integration costs and that Cochlear only acquired Oticon to boost its market share of the implant device market.

Macquarie is neutral on Cochlear as well, albeit values the company at $215 per share.

Opinion differs at Citi however, with analysts there rating the stock a buy with a $235 per share price target – right near Cochlear’s former highs.

The team at Citi made an interesting report noting the Oticon transaction is both an opportunistic and defensive play by Cochlear.

One curious point is the broker reckons Cochlear could even be capitalising on Oticon’s recall of its Neuro Zti implant in 2021, due to malfunction issues.

This made entry into the US difficult for Oticon, Citi says, but the transaction also consolidated Cochlear’s position towards becoming a market leader in the bone-anchored hearing aid segment as well.

The consensus price target for Cochlear according to Bloomberg data is $223.90 per share, implying around 6% upside potential should this come to fruition.

The post Down 8% in a week, is the Cochlear share price in the buy zone? appeared first on The Motley Fool Australia.

More reading

• Analysts say these top ASX growth shares are buys
• Broker says the Cochlear share price is in the buy zone following Oticon acquisition
• Top brokers name 3 ASX shares to buy today
• 2 medical tech ASX shares Morgans loves right now
• Cochlear share price falls on ‘loss making’ Oticon Medical acquisition

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 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.

from The Motley Fool Australia https://ift.tt/3R9cv7i

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.

What happened 

Tesla (NASDAQ: TSLA) investors have been seeing the electric vehicle stock stumble as of late and they aren’t getting any reprieve today. The company’s stock was stumbling once again today, likely as investors processed several bits of news including the Securities and Exchange Commission (SEC) scrutiny of CEO Elon Musk’s Twitter purchase, rising inflation, and an analyst’s price cut for Tesla’s stock. 

The EV maker fell by as much as 7.4% this morning and was down by 1% as of 12:28 p.m. ET. 

So what 

First up is the SEC’s probe into Musk’s purchase of Twitter. Yesterday, The Wall Street Journal reported that the SEC was looking into whether or not Musk broke a rule when he disclosed his stake in Twitter. 

According to the report, Musk reported his stake a week later than he should have and also used a filing that’s usually reserved for passive investors.

Tesla investors aren’t keen to have Musk in the sights of the SEC again and it’s likely that some of them are selling off shares as a result today. 

Additionally, Tesla’s shares may be falling in response to an investor note by Wells Fargo analyst Colin Langan, who maintained an equal-weight rating on Tesla’s stock today but lowered his price target from $960 to $900. 

And if all that wasn’t enough to send Tesla’s share price falling today, general worry from investors about the U.S. economy isn’t helping either. An inflation report came out yesterday showing that inflation is still stubbornly high — at 8.3% in April — and that’s making investors increasingly concerned that aggressive interest rate hikes by the Federal Reserve will be needed. 

With more rate hikes likely on the way this year, investors are fleeing high-growth stocks in search of seemingly more stable investments.

Now what 

Tesla investors have already been on a wild ride lately, with this stock plunging 31% over the past six months.

Musk’s purchase of Twitter isn’t making things easier for himself or Tesla shareholders. And with investors already nervous about rising inflation and a potential economic slowdown, I think Tesla investors should continue to keep a bottle of antacid handy, at least for a little while. 

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

The post Why Tesla stock is falling again today appeared first on The Motley Fool Australia.

More reading

• The US stock market just took a major dive. What’s going on?
• Why Tesla stock dropped this morning
• Why Tesla stock popped on Tuesday
• Why Tesla stock dropped, then popped on Monday
• Elon Musk just sold $5.6 billion of Tesla shares. What’s the deal?

Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Chris Neiger 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 Tesla and Twitter. 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. 

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

from The Motley Fool Australia https://ift.tt/cbfJRYq

The A2 Milk Company Ltd (ASX: A2M) share price and the Bubs Australia Ltd (ASX: BUB) share price have both suffered in recent times.

Over the last six months, the Bubs share price is down around 33%. The A2 Milk share price is down a similar level, around 35%.

From the peak in July 2020, A2 Milk shares are down around 80%. Looking at Bubs, it has declined more than 60% since July 2020.

Both businesses have seen similar falls, but which one is the better buy?

What’s the problem?

China is a key market for infant formula from both of these businesses. The country had a population of around 1.4 billion in 2021, so that’s a very large potential market of families that may want to buy infant nutrition.

A2 Milk blamed the decline on the prolonged impact of COVID-19 and a rapidly changing infant formula market. In FY21, it said that over the year the Chinese market growth reduced significantly from “globally high rates to be flat, and cross-border trade has been disrupted significantly which has had a profound impact on the company’s results”.

A2 Milk shares faltered as sales through the daigou/reseller and e-commerce channels suffered.

In FY21, the company saw revenue fall 30.3% to $1.21 billion and net profit after tax (NPAT) sank 79.1% to $80.7 million. A2 Milk took action to address excess inventory. It said this was reducing channel inventory, improving product freshness, and market pricing.

Bubs also saw a significant drop in daigou sales in FY21, with gross revenue dropping 24% to $46.8 million. It also suffered from an inventory write-down to the tune of $12.6 million.

Growth returning?

While FY21 saw a lot of disruption, things are improving.

A2 Milk is expecting to deliver revenue growth in FY22. The HY22 revenue was slightly down by 2.5% to $660.5 million. The overall Chinese infant formula market declined by 3.3% in value during the first half due to the impact of a lower birth rate.

A2 Milk is expecting the FY22 second-half revenue to be much more than that in the FY21 second half.

The latest update we’ve seen from Bubs is the FY22 third quarter. Gross revenue was up 49% to $17.6 million, the third consecutive quarter of growth on the prior year. Domestic retail infant formula sales rose 108% year on year. Total Chinese sales were up 8%. Excluding China, international gross revenue was up 153%, with international sales of Bubs-branded products growing by 63%.

Profitability

Bubs is not yet profitable, while A2 Milk is. Profitability can be a help for the A2 Milk share price.

A2 Milk made an NPAT of $56.1 million in the first half of FY22, though this was down 53.3%.

Despite the revenue growth expectations, A2 Milk isn’t expecting higher earnings as it “significantly” invests in the market and other activities related to its growth strategy.

Which one is better?

It may be that A2 Milk has a stronger brand, for now at least.

But Bubs is growing quickly. It’s growing strongly internationally, in Asian countries outside of China.

The broker Citi currently rates Bubs as a buy, with a price target of 59 cents. That implies a possible upside of around 57% on its current price of 37.5 cents. It noted the Chinese lockdowns could slow growth in the short term. It also noted Bubs’ new A2 beta-casein protein infant formula range, with the corporate daigou partner Willis Trading putting in an order valued at $32.9 million.

Citi rates A2 Milk shares as a sell, with a price target of $4.80. Citi thinks that A2 Milk could suffer from the lockdowns.

In my opinion, Bubs has managed to turn things around over the last several months. Its growth is now looking stronger than A2 Milk, it’s growing its product range and it’s setting the scene for good growth internationally by expanding its footprint in the US. For those reasons, I’d pick Bubs of the two. But share market volatility could remain elevated for a while.

The post Which is the better beaten-up buy, Bubs or A2 Milk shares? appeared first on The Motley Fool Australia.

More reading

• Bubs share price sinks 29% in a month. Top broker tips 60% upside
• Why A2 Milk, Imugene, Liontown, and Magellan shares are tumbling lower
• A2 Milk share price sinks to multi-year low following broker downgrade
• What’s the outlook for the A2 Milk share price in May?
• The A2 Milk share price plunged 15% in April. What went wrong?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 recommended A2 Milk and BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/4vmBqtw