Category: Stock Market

Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are having a bit of an off day.

In afternoon trade, the banking giant’s shares are down 0.7% to $28.00.

What’s going on?

This afternoon the banking giant announced the offer of a new Additional Tier 1 Capital security, ANZ Capital Notes 7. This notes offering is aiming to raise $1 billion, but also has the option to raise more or less.

In conjunction with the offering, the bank intends to redeem its ANZ Capital Notes 2 on 24 March 2022. The proceeds from the new offer will go towards that redemption and also for general corporate purposes.

ANZ Capital Notes 7

The ANZ Capital Notes 7 are fully paid, convertible, perpetual, unsecured, subordinated notes. Distributions on these notes are payable quarterly in arrears and in cash based on a floating rate and are non-cumulative.

This is subject to a payment condition not existing and is at ANZ’s absolute discretion. Payment conditions include the distribution not resulting in ANZ’s CET1 ratio falling below required levels or APRA objecting to the payment.

These distributions are expected to be franked at the same rate as its dividends. However, if a distribution is not fully franked, ANZ will pay an additional amount in cash to compensate holders for the unfranked component.

After which, ANZ Capital Notes 7 will ultimately convert into shares on 20 September 2031, unless they are converted, redeemed or resold earlier.

What about ANZ shares? Are they a buy?

If you’re more interested in ANZ’s shares than its capital notes, then the good news is that one leading broker sees value in them at the current level.

According to a recent note out of Goldman Sachs, its analysts have retained their buy rating and with a $30.84 price target.

Based on the current ANZ share price of $28.00, this implies potential upside of 10% for investors. And if you include the $1.46 per share fully franked dividend Goldman expects in FY 2022, this total return increases to 15.5%.

The post ANZ (ASX:ANZ) shares drop amid $1bn raising: Time to buy? appeared first on The Motley Fool Australia.

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• Travel soars, ANZ falters, Magellan sinks. Scott Phillips on Nine’s Late News

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

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It’s shaping up to be another big week of earnings reports this week on the S&P/ASX 200 Index (ASX: XJO). We’ve already heard from the ASX big four banks. This week, we have Wesfarmers Ltd (ASX: WES). And, of course, Telstra Corporation Ltd (ASX: TLS) shares.

Yes, Telstra, the ASX 200 telco giant, is scheduled to give its half-year earnings for FY 2022 on Thursday, 17 February, the same day as Wesfarmers, coincidentally. So what might investors be looking forward to when we hear from Telstra?

Well, it’s worth mentioning that we’ve already heard quite a lot out of this telco over 2022 so far. Just last week, the company announced it had entered into a $100 million deal with the internet of things (IoT) company Intellihub Group. As my Fool colleague Monica covered at the time, this will result in “Telstra providing more than 4 million IoT SIMS to the company within the next decade”.

Earlier this month, we also got the news that Telstra would be spending up to $1.6 billion on two “nation-building” projects – the ViaSat satellite program and a new, faster dual fibre network.

So investors will probably be keen for some updates on either or both of these recent announcements. Or perhaps any new plans to further monetise Telstra’s existing stack of infrastructure assets.

Investors were impressed with last year’s sale of 50% of the InfraCo Towers business, so it’s possible we might hear of some additional plans involving other Telstra infrastructure.

What about the Telstra dividend?

Apart from that, it’s likely investors will have their eye on any dividend announcements Telstra might make.

Telstra has been paying out an annual dividend of 16 cents per share for a few years now. That’s a payout level the company has been able to hold steady after a few years of dividend cuts last decade. But investors might be hoping for that long-awaited pay raise from Telstra. Telstra hasn’t raised its dividend since 2015.

Well, according to broker Morgans, investors shouldn’t hold their breath. Morgans recently forecast another 16 cents per share annual dividend for Telstra for FY 2022, as well as the same for FY 2023. That might disappoint some investors if that turns out to be accurate. But even so, that would mean Telstra’s arguably-solid current trailing yield of 3.95% (5.64% grossed-up) is here to stay.

At the current Telstra share price of $4.06, this ASX 200 telco has a market capitalisation of $47.58 billion.

The post Own Telstra (ASX:TLS) shares? Here’s what to watch when the ASX 200 telco reports this week appeared first on The Motley Fool Australia.

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• Here are the 3 most heavily traded ASX 200 shares this Wednesday

Motley Fool contributor Sebastian Bowen owns Telstra Corporation 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 owns and has recommended Telstra Corporation Limited and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is fighting back from a poor start and is now only down marginally. At the time of writing, the benchmark index is down 0.1% to 7,235.1 points.

Four ASX shares that are not letting that hold them back today are listed below. Here’s why they are climbing:

Dexus Property Group (ASX: DXS)

The Dexus share price is up 2.5% to $10.40. This follows the release of the property company’s half year results this morning. For the six months, Dexus posted an 82% increase in net profit after tax to $803.2 million. Strong demand and rent collections drove the result. Rent collections came in at 97.9%, whereas occupancy was 95.1% for the Dexus office portfolio and 98.6% for the Dexus industrial portfolio.

JB Hi-Fi Limited (ASX: JBH)

The JB Hi-Fi share price is up 3.5% to $53.48. This appears to have been driven by a positive reaction to its half year results from brokers. One of those is Credit Suisse, which has retained its outperform rating and lifted its price target on the retail giant’s shares to $60.27. It was pleased with its result and buyback and expects the company to benefit from the work from home trend.

Seek Limited (ASX: SEK)

The Seek share price is up 7% to $29.72. Investors have been buying this job listings company’s shares after it reported a 59% increase in first half revenue to $517.2 million and a 147% lift in reported net profit after tax (before significant items) to $124.2 million. A note out of Goldman Sachs reveals that Seek’s revenue and net profit were 4% and 20% ahead of consensus estimates. It also highlights that its FY 2022 guidance upgrade is well-ahead of current estimates.

Sims Ltd (ASX: SGM)

The Sims share price has jumped 18% to $17.66 following the release of a very strong half year result. The scrap metals company reported a 73.9% increase in revenue to $4,265.0 million and a 541.3% jump in underlying EBIT to $361.7 million. This was driven by “higher sales volumes and higher material prices, combined with disciplined margin management.”

The post Why Dexus, JB Hi-Fi, Seek, and Sims shares are climbing today appeared first on The Motley Fool Australia.

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• Seek (ASX:SEK) dividend rebounds to a 3-year high, what it means for shareholders
• Seek (ASX:SEK) share price leaps 8% as revenue soars
• ASX 200 (ASX:XJO) midday update: BHP and SEEK impress, Beach sinks
• ‘Excellent performance’: Sims (ASX:SGM) share price rockets 16% on stellar earnings
• Profit up 82%: Dexus (ASX:DXS) share price steady on active half year results

Motley Fool contributor James Mickleboro owns SEEK 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 SEEK Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Tassal Group Limited (ASX: TGR) share price is in positive territory on Tuesday. This comes after the company released its half-year results for the FY22 period during afternoon trade.

At the time of writing, the seafood company’s shares are fetching for $3.76 apiece, up 2.73%.

Let’s take a closer look to see how Tassal performed for the period.

Tassal shares pushes higher on achieving strong growth across key metrics

The Tassal share price is moving forward following the company’s robust result for the 6 months ending 31 December 2021. Here are some of the key highlights:

• Revenue of $419.14 million, up 43.3% on the prior corresponding period (H1 FY21 $292.48 million);
• Operating cash flow of $86.99 million, up 110.2% (H1 FY21 $41.39 million)
• Underlying earnings before interest and tax (EBIT) of $50.01 million, up 6.9% (H1 FY21 $46.78 million);
• Underlying net profit after tax (NPAT) of $31.18 million, up 10.3% (H1 FY21 $28.26 million); and
• Interim dividend of 8 cents per share, up 14.3% (H1 FY21 7 cents per share)

What happened in the first-half FY22 for Tassal?

Investors are buying up Tassal shares as the company announced strong growth in cash flow and earnings.

During the first-half, the company made investments in its salmon and prawn infrastructure which resulted in cash flow generation.

The salmon division recorded a sustainable annual harvest of 40,000 hog tonnes from existing marine leases. The sales mix leapt by 37.1% to $349.92 million with a recovery in both export pricing and volume, and domestic out-of-home.

Across the Prawn segment, the domestic market experienced an increase of 480% to $30.19 million. Sales volume growth of 365.3% to 1,670 tonnes included continued growth in harvested tonnes and in the frozen prawn inventory.

What did management say?

Tassal managing director and CEO, Mark Ryan touched on the result, saying:

Tassal has successfully completed its investment in salmon biomass growth and is now experiencing the benefits of scale. Together with the investments in and growth of our prawn business, where we achieve more attractive capital and working capital cycles, Tassal is focused on growing cashflow and optimising returns.

We have delivered a step- change in cash generation and believe Tassal is well positioned to deliver further improvements in cash flow and cash conversion going forward.

What’s the outlook for Tassal for the remainder of FY22?

Pleasingly, Tassal advised the global salmon market has recovered and the pricing is restored to pre-COVID levels.

Looking ahead, South-East Asia demand remains strong and global pricing is expected to remain stable for the remainder of FY22.

Management stated that it’s focusing on optimising pricing, particularly as supply chain costs have materially increased due to COVID.

Energy, feed commodities, labour and domestic freight costs have increased in the first-half, with no relief in sight for FY22.

No earnings guidance was given by the company for the second-half.

Tassal share price snapshot

Over the past twelve months, the Tassal share price has gained 10% following a long bumpy ride for investors.

When looking at year to date, the company’s shares are up 5% off the back of positive sentiment since late January.

Based on today’s price, Tassal commands a market capitalisation of around $781.81 million.

The post ‘Salmon biomass growth’ paying off: Tassal (ASX:TGR) share price lifts following H1 FY22 results appeared first on The Motley Fool Australia.

More reading

• Top broker picks 6 ASX 200 shares with earnings surprise potential

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 Bruce Jackson.

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The Beach Energy Ltd (ASX: BPT) share price is plummeting today, falling 10% into the red at the time of writing to $1.46.

Following the release of the oil and gas company’s half-year results yesterday, investors and analysts have had time to digest the more salient points from the update — and it appears Beach might have missed expectations.

Why’s Beach Energy share price tracing lower today?

Whilst the oil and gas player came in with a fairly robust set of results, it missed the mark on others. For instance, EBITDA growth of 26% led to an EBITDA margin of 65%.

As a result, net profit after tax (NPAT) grew 66% over the same time last year, enabling the board to declare a 1 cent per share dividend.

However, the company missed on earnings per share (EPS) estimates – a fact that generally plagues a company’s share price in the weeks following.

Analysts were banking on Beach attaining an adjusted EPS of 10.62 cents per share, up from a realised 10.28 cents a share in H1 FY22.

However, the company posted an adjusted EPS of 9.34 cents, 12% below the consensus number.

Earnings results are incredibly important in determining the direction of a company’s future share price. Research corroborates that over the long term, the growth in global stock indices is primarily driven by company earnings growth.

Moreover, as legendary Fidelity fund manager Peter Lynch alludes to in his book One up on Wall St, the market prices stock on a combination of past earnings history and future earnings expectations.

Research also shows that companies who report EPS figures that miss the consensus estimate will see a decline in their share price in the weeks following. It’s a pattern known as ‘post-earnings announcement drift’, or PEAD.

Hence, with Beach Energy reporting weaker-than-expected EPS, it appears the market is conforming to this pattern today.

Aside from this, analysts at Macquarie and Canaccord Genuity both downgraded the company from buys today. Macquarie slashed its price target to $1.50 and rated Beach to underperform.

Meanwhile, Canaccord analyst James Bullen assigned a hold rating on the stock and valued the company at $1.66 per share today.

Beach Energy share price snapshot

In the last 12 months, the Beach Energy share price has struggled, having lost 12% in value across that time.

This year to date, things are turning around with the company’s shares climbing more than 17% since January 4. Even with today’s hammering, they’ve gained more than 5% during the last month alone.

The post Not so sunny: why the Beach Energy (ASX:BPT) share price is sinking 10% today appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: BHP and SEEK impress, Beach sinks
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• Beach (ASX:BPT) share price charges higher after delivering rapid profit growth

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 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 Bruce Jackson.

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The Bitcoin (CRYPTO: BTC) price is well known for its volatility.

The token is currently trading for US$43,476. That’s up 4% over the past 24 hours, though it’s still down 38% from its 10 November record high.

To give you some idea of the big potential Bitcoin price moves, CoinMarketCap tells us over the past 90 days it hit a high of US$60,949 and a low of US$33,184.

The Ethereum (CRPYPTO: ETH) price doesn’t offer crypto investors any smoother of a ride.

Quite the opposite.

Ethereum is up 6% since this time yesterday, currently trading for US$3,020.

Over the last 90 days the Ethereum price notched a low of US$2,172 and a high of US$4,780. Quite a ride.

But the Ethereum and Bitcoin price volatility doesn’t appear to be dissuading BlackRock, the world’s biggest asset manager, from eyeing an entry into the crypto sphere.

Cryptocurrency trading service in the cards

As reported by CoinDesk, 3 people with knowledge of BlackRock’s plans say the company, with US$10 trillion in assets under management, “is preparing to offer a cryptocurrency trading service to its investor clients”.

According to CoinDesk:

One of the people said BlackRock will allow its clients … to trade cryptocurrency through Aladdin … the asset manager’s integrated investment management platform. The timetable for unveiling the service is unclear.

BlackRock did not comment on the rumours, though the company was hiring an Aladdin blockchain strategy lead back in June 2021.

Should BlackRock follow through on launching its crypto trading service, analysts will be closely watching the Bitcoin price and Ethereum price to see if its institutional clients might smooth out the notorious volatility.

Bitcoin price volatility holding it back

The big weekly and even daily swings in the Bitcoin price is a drag on its “fair-value”, according to JPMorgan Chase & Co strategists.

As Bloomberg reports, JPMorgan says the Bitcoin price has a fair-value level of some US$38,000, as the token is around 4 times as volatile as gold.

According to the strategists, “The biggest challenge for Bitcoin going forward is its volatility and the boom and bust cycles that hinder further institutional adoption.”

The post Ethereum and Bitcoin price in focus as world’s biggest asset manager eyes cryptos appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends Bitcoin and Ethereum. The Motley Fool Australia owns and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Aurizon Holdings Ltd (ASX: AZJ) share price is slipping today following news a Swiss buyer may be interested in the company’s East Coast rail division.

The rail freight operator’s shares are currently swapping hands at $3.55, a 1.8% fall. For perspective, the S&P/ASX 200 Index (ASX: XJO) is down 0.41 at the time of writing.

Let’s take a look at the latest news involving the company today.

Takeover rumours

Aurizon may have a potential buyer for its East Coast rail division, The Australian reported. The publication reported Swiss multinational Glencore has approached Aurizon about a potential acquisition of this segment of its business.

Glencore is the major customer of East Coast Rail, a coal haulage business that also goes by the name One Rail Coal.

In October, Aurizon announced an agreement with Macquarie Asset Management to acquire One Rail for $2.35 billion. This transaction includes two operations, One Rail Bulk and East Coast Rail.

In its financial half-year results presentation yesterday, Aurizon stated it plans to divest its East Coast Rail business via a demerger or a trade sale. Aurizon said it is yet to make a decision on this, but will choose the option that offers the best shareholder value.

The company confirmed it is in talks with potential buyers of East Coast Rail, but did not name the parties involved. Aurizon stated:

Aurizon’s financial analysis of One Rail acquisition currently assumes divestment of East Coast Rail through a demerger, although no decision has been made. East Coast Rail is a highly cash generative business – well suited to potential demerged entity.

Discussions ongoing with potential trade sale buyers – final decision to be made on trade sale or demerger after completion – demerger will be progressed in the absence of a compelling trade sale offer.

The asking price for the East Coast Rail business could be about $1 billion, The Australian noted.

Aurizon reported a 4% fall in its net profits after tax (NPAT) to $257 million in its financial results yesterday. Its interim dividend also fell by 27% to 10.5 cents a share.

Aurizon transports roughly half the country’s coal exports and carried 202 million tonnes of the commodity in the 2021 financial year.

Aurizon share price snap shot

The Aurizon share price has dived more than 11% in the past 12 months but is up 1.72% year to date.

The company has a market capitalisation of about $6.5 billion based on its current share price.

The post Deal or no deal? Aurizon (ASX:AZJ) share price falls amid sale rumours appeared first on The Motley Fool Australia.

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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 Aurizon Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The SEEK Limited (ASX: SEK) share price is feeling the full force of positive investor sentiment today.

At the time of writing, shares in the employment marketplace provider are trouncing the broader S&P/ASX 200 Index (ASX: XJO). Specifically, SEEK shares are up 8.1% from their previous close to $30.04. In contrast, the benchmark index is heading south to the tune of 0.5%.

No doubt market participants were impressed with the company’s earnings. SEEK reported a 147% uplift in net earnings after tax (NPAT) to A$124 million. Whereas, analyst consensus had anticipated earnings of $101 million.

However, a freshly declared dividend could be the real music to shareholders’ ears today.

SEEKin’ better dividends, look no further

Shareholders of ASX-listed SEEK can rejoice in the fact that the company is busily restoring its dividends to its former glory. Payouts are getting a boost again amid SEEK’s first-half results.

This follows a treacherous time for shareholders chasing dividends from the Australian job listing company in 2019 and 2020. Prior to the pandemic, SEEK made a change in its dividend policy to reduce the amount handed out. In turn, the payout ratio fell from between 50% and 60% of profits to between 30% and 50%.

As we all know, COVID-19 then crushed global economies, resulting in SEEK scrapping a final dividend in FY20. This resulted in a minuscule payment of 13 cents per share in 2020. For comparison, the company dished out 68 cents per share in 2018.

However, the company has since returned to profitability. Likewise, dividends have begun to spring back to life. In 2021, SEEK handed out 40 cents per share, 20 cents of that being in the form of an interim dividend.

Today, the company declared a fully franked dividend of 23 cents per share — representing an increase of 15% from the prior corresponding period. Furthermore, this marks the highest dividend paid to shareholders in three years.

According to the release, this interim dividend comes with a record date of 24 March 2022. If on the register by then, shareholders will receive the dividend payment on 7 April 2022.

Additionally, the company highlighted this payment is within its payout policy of 75% of cash NPAT less capital expenditure.

How about the SEEK share price?

Unfortunately for shareholders, the SEEK share price has been an underperformer over the past 12 months. While the index has managed to push 5% higher, the job listing platform has fallen 5%.

It has been a similar story for the first two months of trading in 2022. SEEK shares have taken a trip 12% lower, while the ASX 200 has only slipped 4.9%.

The post SEEK (ASX:SEK) dividend rebounds to a 3-year high, what it means for shareholders appeared first on The Motley Fool Australia.

More reading

• Seek (ASX:SEK) share price leaps 8% as revenue soars
• ASX 200 (ASX:XJO) midday update: BHP and SEEK impress, Beach sinks
• 5 things to watch on the ASX 200 on Tuesday
• 3 ASX tech shares to pounce on NOW while they’re cheap
• SEEK (ASX:SEK) share price tumbles on broker sell rating. Here’s why it is bearish

Motley Fool contributor Mitchell Lawler 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 SEEK Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Tuesday is proving to be a good day for the embattled Block Inc CDI (ASX: SQ2) share price.

It’s regaining some of its notable losses from its journey on the ASX so far amid news the company – formerly known as Square – will be among the first to test a new blockchain accelerator chip.

At the time of writing, the Block share price is $158.02, 5.24% higher than its previous close.

Let’s take a closer look at what might be boosting the fresh-faced ASX stock today.

Block share price surges 5% on Tuesday

The Block share price is moving upwards this week, following up yesterday’s 1.8% gain with today’s 5% surge.

It’s a much-needed boost for the stock. It tumbled 16.5% between listing on 20 January – after absorbing former market favourite, Afterpay ­– and Friday’s close.

The embattled tech sector is also moving higher today, with the S&P/ASX 200 Info Tech Index (ASX: XIJ) and the S&P/ASX All Technology Index (ASX: XTX) gaining 1.05% and 1.03% respectively.

That makes the tech sector the best-performing industry on the S&P/ASX 200 Index (ASX: XJO), which is slumping 0.5% on Tuesday.

It also places Block as the third best-performing ASX 200 share, behind Sims Ltd (ASX: SGM) and SEEK Limited (ASX: SEK).

Could this be boosting Block’s stock?

While there’s been no news from Block lately, the company’s New York listing, Block Inc (NYSE: SQ), surged 3.49% in Monday’s session amid news released by Intel Corporation (NASDAQ: INTC).

The computing technology company has announced it’s working to create a low-energy blockchain accelerator, and Block will be among 3 companies with first dibs on the technology.  

The blockchain tech will be ready to ship later this year, said Intel. It chose the three initial customers due to their sustainability goals.

Senior vice president and general manager at Intel’s accelerated computing systems and graphics group, Raja M. Koduri, commented:

Intel Labs has dedicated decades of research into reliable cryptography, hashing techniques and ultra-low voltage circuits. We expect that our circuit innovations will deliver a blockchain accelerator that has over 1000x better performance per watt than mainstream GPUs for SHA-256 based mining. 

The post Why is the Block (ASX:SQ2) share price squaring away such healthy gains today? appeared first on The Motley Fool Australia.

More reading

• 3 things the doubters could be missing about Block shares
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• Why are these ASX 200 tech shares tumbling more than 6% on Friday?
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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. owns and has recommended Block, Inc. The Motley Fool Australia has recommended SEEK Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in insurance giant Insurance Australia Group Ltd (ASX: IAG) are rangebound this afternoon and are now flat on the day at $4.72 apiece.

Following the release of IAG’s half year results last week, investors have scaled back their enthusiasm for the stock. Previously, investors were successful in bidding the price up from a bottom of $4.24 on 1 February.

Morgans downgrades IAG from add to hold

IAG came in with a fairly weak set of results for the half, with revenue sliding more than 4% and insurance profit tanking almost 58% to $282 million.

As a result, analysts at Morgans reckon IAG’s juice isn’t worth the squeeze right now, noting the insurance giant’s earnings guidance leaves plenty to be desired.

The broker downgraded its estimates on next year’s net profit after tax (NPAT) for IAG by 2%–4% on weaker insurance forecasts, and on industry-specific headwinds.

As Morgans wound back its earnings forecasts, it also downgraded IAG from add to hold in the note today, slashing its IAG valuation by 4% to $5.12 in the process.

Morgans sees better value elsewhere in the ASX insurance sector and votes a pass on IAG in the meantime.

Meanwhile, analysts at Morgan Stanley also reckon IAG still faces numerous risks to its earnings outlook over the coming years.

Whilst margins improved and the insurer raised gross written premium guidance, Morgan Stanley analysts reckon that “the reported margin was not as strong with catastrophe costs and reserve headwinds”.

Fellow broker Citi reckons that IAG’s results were “a little disappointing”, although at the same time, reckons that one-off expenses should cease in the second half.

Citi rates IAG a buy after its earnings and raised its price target by around 3% to $4.73 per share.

IAG share price snapshot

In the last 12 months, the IAG share price has slipped more than 11% into the red after a difficult year.

This year to date however, shares have climbed 11% and are up over 6% in the past 5 days of trading.

The post We’ll pass thanks: Top broker downgrades IAG (ASX:IAG) share price to hold appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• Here are the 3 most heavily traded ASX 200 shares this Friday
• Why IAG, Rio Tinto, Unibail, and Westpac shares are pushing higher
• Here’s why the IAG (ASX:IAG) share price is charging 4% higher today
• ASX 200 (ASX:XJO) midday update: IAG upgrades guidance, Magellan sinks again

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 owns 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 Bruce Jackson.

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