Category: Stock Market

The Mineral Resources Ltd (ASX: MIN) share price is down more than 3% in early trading as the resources player released its half-yearly results prior to the open on Wednesday.

At the time of writing, the Mineral Resources share price is trading 3.06% lower at $56.11. It marks a significant recovery after the company’s shares hit a low of $50.36 earlier this morning.

Let’s take a closer look at the company’s financial results for the half-year ended 31 December 2021.

Mineral Resources net loss after tax down 108%

The company outlined several progress points relevant to investors, including:

• Revenue of $1.4 billion, down 12% on the previous year
• Underlying earnings before interest, tax, depreciation, amortisation and impairment (EBITDA) of $156 million, down 80% year on year (YoY)
• Underlying net loss after tax was $36 million, down 108% YoY
• Statutory net profit after tax (NPAT) was also down 96% from the year prior, at $20 million
• A return on invested capital (ROIC) of 23.9% “even in difficult conditions”
• Increased Mining Services production volumes by 18% on the previous year
• No interim dividend declared

What else happened this half for Mineral Resources?

The company’s financials were earmarked by a 80% decrease in EBITDA to $156 million and a corresponding net loss after tax of $36 million – down a further 108% from the previous year.

This meant the company’s statutory NPAT – income that includes ‘exceptional items’ – came in at $36 million, a whopping $500 million, or 96% decrease, on the prior corresponding period, as reported by the company.

This amount includes a “net post-tax fair value gain of $75million on listed investments mainly arising on the divestment…in Pilbara Minerals Ltd (ASX: PLS)” as well as a “net post-tax $19 million unrealised foreign exchange loss on the Group’s USD denominated notes and cash holdings”.

Aside from that, Mineral Resources exported 9.9 million wet metric tonnes (wmt) of iron ore and 207,000 dry metric tonnes (dmt) of spodumene for the period.

This enabled the company to deliver a ROIC of 24%, in what were otherwise “difficult conditions”, according to the company. That figure is also up a few basis points from 23.4%.

Operating cash flow also ran a loss this half and was down 123% on the same time last year, whereas capital expenditures increased 15% to $403 million this half.

In other metrics, Mineral Resources maintained a “low 12-month rolling Lost Time Injury Frequency Rate (LTIFR) of 0.10 and [reduced its] Total Reportable Injury Frequency Rate (TRIFR) to 2.25”.

Finally, given Mineral Resources’ “capital investment programme”, the net loss after tax in 1H22, and “volatile conditions in the iron ore market”, the Board has refrained from declaring an interim dividend.

Management commentary

Speaking on the announcement, Mineral Resources managing director Chris Ellison said:

This has been a challenging half, as we continued to navigate the uncertainty of a COVID-19 world and maintained our focus on protecting the jobs of all our people. I am proud of the efforts of the more than 4,800 men and women in our business for their united and disciplined approach, which so far has enabled us to keep COVID-19 out of our operations. It hasn’t been easy and the challenges during 1H22 were amplified by the collapse in iron ore prices. This has delivered our worst first half financial result in three years. These results do not reflect the substantial progress in our iron ore, lithium and gas businesses during the last six months which will create significant value for decades to come and which underpins our long-term growth for our Mining Services division.

What’s next for Mineral Resources?

According to the company, it remains on target to meet its FY22 volume guidance. This constitutes a 15-20% increase for mining services, alongside spodumene export guidance of 450-475 ktpa.

Finally, the company reaffirmed “the revised full-year iron ore export guidance of 18.5-19.5 mtpa” in its announcement today.

Mineral Resources share price snapshot

In the last 12 months, before today’s results were announced, the Mineral Resources share price had climbed 56%, rallying another 3% this year to date.

Those growth figures are being pulled back today, given this morning’s earnings announcement.

At the time of writing, Mineral Resources has a market capitalisation of around $10 billion.

The post Mineral Resources (ASX:MIN) share price slides as lower iron ore prices bite appeared first on The Motley Fool Australia.

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• Own Mineral Resources (ASX:MIN) shares? Here’s what to watch when the miner reports tomorrow
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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 Tritium DCFC Ltd (NASDAQ: DCFC) share price has exploded today on the back of news that has sparked interest from the highest office in the United States.

Tritium is an Australian electric vehicle (EV) fast-charging company now listed on the NASDAQ.

The company’s share price rocketed 39.47% on the NASDAQ today to finish the session at US$9.54. In after-hours trading, it has soared a further 11.01% to US$10.59 at the time of writing.

Let’s take a look at what has buoyed the Tritium share price today.

Tritium CEO meets with US President Joe Biden

Today, the Tritium CEO Jane Hunter met with President Joe Biden for an important announcement.

Tritium will establish a new DC fast charger manufacturing facility for EVs in Tennessee, US. This will include up to 6 production lines. The facility will employ more than 500 people in the next 5 years.

The facility will also produce more than 10,000 fast charger units per year. This could expand to up to 30,000 at peak capacity.

In remarks at the White House, US President Joe Biden said:

The new manufacturing facility Tritium is — that it’s announced today is more than just great news for Tennessee.

This is great news for workers across the country, for an economy, and, frankly, for the planet. When we wrote the — and passed the Bipartisan Infrastructure Law, we included $7.5 billion for electric vehicle chargers, like the one Jane brought along today. 

And later this week, we’re going to announce a state-by-state allocation for $5 billion of the funding for these chargers. So states can start making plans to build out what will become a national network of electric vehicle chargers.

Tritium’s new facility is going to produce up to 30,000 of these chargers every year.

Amazing month for Aussie company

The meeting with the President follows an incredible month for Tritium. On Australia Day, Hunter rang the closing bell at the NASDAQ MarketSite in New York’s Times Square. Tritium was listed on the NASDAQ on 14 January.

Tritium said its US expansion is part of a global trend to provide fast EV charging solutions to the “masses”.

In a media release put out by Tritium, CEO Jane Hunter said:

Tritium’s investment in a U.S.-based, cutting-edge facility for manufacturing is part of our strong push toward global growth in support of the e-mobility industry.

We are thrilled to work with the U.S. Federal government and the State of Tennessee on this initiative. With the help of the hard-working residents of Tennessee, we expect to double or even triple our charger production capacity to further our product distribution throughout the United States.

Tritium share price snapshot

The Tritium share price has climbed 3.47% since the company was listed on the NASDAQ on 14 January. For perspective, the benchmark Nasdaq Composite Index (NASDAQ: IXIC) has lost 4.7% since this date.

Tritium has a market capitalisation of about US$926 million based on the current share price.

The post Tritium (NASDAQ:DCFC) share price rockets 39% on what Biden describes as ‘great news for the planet’ appeared first on The Motley Fool Australia.

More reading

• Why did the Tritium (NASDAQ:DCFC) share price just leap 7%?
• Here’s how Tritium (NASDAQ:DCFC) has been performing since listing in the US

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 Commonwealth Bank of Australia (ASX: CBA) share price is storming higher on Wednesday morning.

At the time of writing, the banking giant’s shares are up 5% to $99.28.

Why is the CBA share price storming higher?

Investors have been bidding the CBA share price higher today after it delivered a half year profit well-ahead of the market’s expectations.

For the six months ended 31 December, Australia’s largest bank reported a cash net profit after tax of $4,746 million, which is an increase of 23% over the prior corresponding period.

As a comparison, the market was expecting cash earnings of approximately $4,500 million and the team at Goldman Sachs was forecasting cash earnings of $4,295 million. The latter means CBA outperformed the broker’s estimates by over 10%.

Its analysts note that the outperformance was driven largely by its non-interest income, which rose 4.1% over the prior corresponding period. This reflects improved volume related lending and deposit fee income, the non-recurrence of prior period aircraft impairments, and higher net profits from minority interests.

Goldman commented: “CBA’s 1H22 cash earnings (company basis) from continued operations of A$4,746 mn were 10.5% ahead of our expectations, and up 22.7% on pcp. The beat was driven by outperformance on non-interest income (albeit components of this appear somewhat one-off in nature), expenses and BDDs, and expenses, partially offset by lower NIMs. Net net, this drove a +5.5% beat at the PPOP [pre-provisioning operating profit] line.”

Goldman Sachs, like many brokers, has been tipping CBA’s shares as a sell and to sink notably lower. But today’s outperformance could force many brokers into amending their price targets and even their recommendations.

CBA to return more capital to shareholders

Also giving the CBA share price a boost today was news that it will follow up its $6 billion off-market buyback with a new $2 billion on-market buyback.

Management advised that it is undertaking this buyback due to its strong capital position. This strength has put the bank in a position to support customers and manage ongoing uncertainties, while continuing to return surplus capital to shareholders.

This buyback is expected to reduce CBA’s CET1 capital ratio by approximately 42 basis points to 11.4%, which is still well-ahead of APRA’s unquestionably strong benchmark of 10.5%. It will also remain well-placed to accommodate changes under APRA’s new capital framework effective in 2023.

As well as the buyback, CBA will be returning capital to shareholders via its fully franked interim dividend. The CBA board has increased its interim dividend by 17% to $1.75 per share. This will be paid to eligible shareholders on 30 March.

Following today’s gain, the CBA share price is now up almost 14% over the last 12 months.

The post Analysts forced to eat humble pie as CBA (ASX:CBA) share price soars 5% appeared first on The Motley Fool Australia.

More reading

• The ASX 200 just hit 3-week highs. What’s next?
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• Leading brokers name 3 ASX shares to sell today
• CBA (ASX:CBA) share price is ‘very expensive’: expert

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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The Australian Foundation Investment Co. Ltd (ASX: AFI) share price is treading lower on Wednesday morning. This comes despite the Melbourne-based listed investment company (LIC) not releasing any market-sensitive news today.

At the time of writing, AFIC shares are down 1.17% to $8.43 apiece. In comparison, the S&P/ASX 200 Index (ASX: XJO) is also down 0.1% to 7,183 points.

Why are AFIC shares falling today? 

With the company’s half-year results released late last month, investors are eyeing AFIC shares as they go ex-dividend today.

Typically, one day before the record date, the ex-dividend date, is when investors must have purchased shares. If the investor does not buy AFIC shares before this date, the dividend will go to the seller.

Historically, when a company reaches its ex-dividend day, its shares tend to fall in proportion to the dividend paid out. This is because investors tend to sell off the company’s shares after securing the dividend.

What does this mean for AFIC shareholders?

For those eligible for AFIC interim dividend, shareholders will receive a payment of 10 cents per share on 25 February. The dividend is fully franked which means investors will collect tax credits from this.

The interim dividend remains unchanged when compared against the prior corresponding period (H1 FY21).

Furthermore, the final dividend for the 2021 financial year was 14 cents per share, also fully franked.

A Dividend Reinvestment Plan (DRP) and Dividend Substitution Share Plan (DSSP) is available at a 5% discount. This will be based on the volume weighted average price of the company’s shares traded on the ASX and Chi-X over the five trading days from today.

The last date for the receipt of an election notice for participation in the DRP & DSSP is on 11 February.

AFIC share price summary

Since the beginning of 2022, AFIC shares have gained 15% on the back of positive investor sentiment. The S&P/ASX 200 Financials Index (ASX: XFJ) is up around 10% over the same timeframe.

Based on today’s price, AFIC commands a market capitalisation of roughly $10.46 billion and has approximately 1.23 billion shares outstanding.

The post Why is the AFIC (ASX:AFI) share price sliding lower today? appeared first on The Motley Fool Australia.

More reading

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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 Nanosonics Ltd (ASX: NAN) share price has come under significant pressure this week.

With another decline this morning, the infection prevention specialist’s shares are now down 11% since Friday’s close.

Why is the Nanosonics share price under pressure?

Investors have been selling down the Nanosonics share price this week after the release of a very surprising announcement relating to its key North American operations.

That announcement revealed that, effective immediately, its current sales agreement with GE Healthcare will be revised to only a pass-through model until it expires in June. While it is unclear who or what drove the change, the loss of GE Healthcare is being seen as a major blow.

Goldman Sachs notes that “GE has played a critical role in driving adoption of NAN’s trophon system over 10+ years and, in FY21, GE constituted 60% of NAN’s Group sales.”

And while the broker acknowledges that the transition of existing trophon customers from GE to Nanosonics is likely to boost its gross margin, it also carries a lot of risk.

Goldman commented: “All existing trophon customers will transition over to NAN from today, likely improving the gross margin profile on recurrent consumables sales, but also materially increasing the logistical complexity of NAN’s business, not to mention the risk that some customers are slow to transition (or do not at all).”

“We are surprised by the abruptness of this announcement, particularly given the importance of this relationship to NAN. The new agreement is effective from today and seemingly has not afforded the company much/any time to invest for such a material change in sales/distribution strategy. Whilst NAN is still hoping to renegotiate a new agreement to take effect from July 2022, management commentary implied that any material change from these new arrangements could be unlikely,” the broker added.

In light of this and its softer than expected first half, Goldman has downgraded its estimates and is now predicting a full year loss in FY 2022.

Is this a buying opportunity?

Despite the recent weakness in the Nanosonics share price, Goldman believes it is too soon to invest and suspects that further declines are on the way.

According to the note, the broker has retained its sell rating and slashed its price target by 14% to $3.80.

Based on the current Nanosonics share price of $4.49, this implies potential downside of 15%.

The post Uh oh! Nanosonics (ASX:NAN) share price tipped to sink after shock announcement 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. owns and has recommended Nanosonics Limited. The Motley Fool Australia owns and has recommended Nanosonics 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 Computershare Limited (ASX: CPU) share price is on the move on Wednesday morning following the release of its half year results.

At the time of writing, the stock transfer company’s shares are up 12% to $22.31.

Computershare share price rises following solid first half growth

• Management revenue up 4.6% to US$1.2 billion
• Revenue excluding margin income up 4.5% to US$1.1 billion
• Management EBIT excluding margin income up 16.7% to US$157.8 million
• Margin income up 8.3% to US$60.1 million
• Management earnings per share up 4.5% to 22.76 US cents
• Interim dividend per share up 4.3% to 24 Australian cents
• Full year earnings per share guidance lifted from 2% to 9%

What happened during the half?

For the six months ended 31 December, Computershare reported a 4.6% increase in management revenue to US$1.2 billion and a 4.5% lift in management earnings per share to 22.76 US cents.

This was driven by positive performances across the company. Management notes that its Issuer Services and Employee Share Plans continue to perform well and are winning market share. This is being underpinned by its proprietary technology platforms, improved customer experience, and the benefits of strong equity markets.

Computershare’s largest business, Register Maintenance, was on form and delivered higher revenues and profits. It was a similar story for the Governance Services business, which reported an improved result. Management believes this demonstrates its growing traction in this complementary market.

The company’s Employee Share Plans delivered the fastest rate of profit growth across the group. Recurring client paid fees and higher transaction volumes assisted with its performance. And while temporary delays to the rollout of the Equate+ platform due to cross border travel restrictions deferred cost synergies, management remains positive on its outlook.

The Computershare Corporate Trust (CCT) business, which was acquired from Wells Fargo in November, exceeded management’s expectations, with growing fee revenue and significant leverage to rising interest rates. Another positive is that management has made a good start with integrating the new business and is working towards delivering the expected synergy benefits and 15%+ target return on capital.

And while US Mortgage Services remains subdued, industry fundamentals are beginning to improve. Management expects rising interest rates to increase the value of the MSRs it owns and reduce portfolio run-off rates. Furthermore, with the lifting of regulatory restrictions, it expects an increase in loan servicing activity in the second half of the year with further recovery in FY 2023.

Management commentary

Computershare’s CEO, Stuart Irving, commented: “I am pleased to report that the momentum we enjoyed in the second half of last year has continued, with Computershare delivering a positive set of results for the first six months of FY22. Management Earnings Per Share (EPS) has increased by 4.5% compared to the prior corresponding period. Growth was led by an increase in management revenue, careful cost controls driving margin expansion and outperformance in our recently acquired Computershare Corporate Trust (CCT) business in the US.”

Mr Irving is positive on the second half. So much so, he revealed that the company has upgraded its earnings guidance for the full year.

He said: “With 1H results ahead of expectations, and a positive outlook for the second half of the year, we are upgrading full year earnings guidance. We now expect Management EPS to increase by around 9% this year compared to the original 2% guidance we gave in August. The investments we have been making to strengthen and scale our global growth businesses are delivering the anticipated returns, underpinning the strong operating performance in the first half.”

The post Computershare (ASX:CPU) share price jumps 12% after strong half and guidance upgrade appeared first on The Motley Fool Australia.

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• The Computershare (ASX:CPU) share price is leaping 5%. Top broker says buy now
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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Among ASX shares, there’s been no sector devastated more than technology.

The S&P/ASX All Technology Index (ASX: XTX) has plummeted a hair-raising 19% this year so far. This compares to a 5.5% drop for the broader S&P/ASX 200 Index (ASX: XJO).

But rather than being a scary time, many experts espouse that there’s never been a better time to buy than right now.

Among this group is Tribeca portfolio manager Jun Bei Liu, who feels the market has overdone the punishment of growth stocks.

“I actually think, in general, tech has been sold off a lot,” she told Switzer TV Investing. 

“All these businesses are trading at probably the cheapest they’ve ever been.”

Liu reckons the current rotation away from growth and tech ASX shares will not last long.

“Very soon… investors will realise the world is still going to lack growth after the economy reopens,” she said.

“Cyclical companies will continue to struggle to find growth… Growth companies will still have a premium to the rest of the market.”

A rebound could come as soon as the current reporting season, as the market digests any positive earnings numbers. 

Liu thus nominated 3 ASX shares in the technology field that she thinks are excellent value for money right now:

This ASX tech trio will bounce back

Accounting software provider Xero Limited (ASX: XRO) has seen its shares tumble 21% this year and 28% since the start of November.

“It’s not going to report this reporting season because it’s out of cycle,” said Liu.

“But it’s global and the share price has come off a lot.”

The Xero share price finished Tuesday at $111.40. 

Liu is expecting a “good result” during the current reporting season out of jobseeker website Seek Limited (ASX: SEK).

“This employment market is incredibly strong.”

The Seek share price is indeed in bargain territory. It has fallen 16% this year, and more than 20% since mid-December.

Seek shares closed Tuesday at $27.66. 

Liu will also be keenly monitoring the earnings result this month for logistics software maker WiseTech Global Ltd (ASX: WTC).

Its shares have taken a painful 24% dive this year so far. The stock closed Tuesday at $44.53.

“The last result was just incredibly strong and we think they still have a bright future,” she said.

“They have de-rated and it’s a great buying opportunity.” 

Only 10 days ago, Burman Invest chief investment officer Julia Lee agreed with this assessment of WiseTech’s potential.

“I think that growth story is very much still intact,” she said.

“In the medium term, I think the outlook is good.”

While Wisetech would “struggle a little bit in the short term” because of low cargo volumes triggered by the COVID-19 Omicron variant, Lee likes that it consistently turns a profit.

“I much prefer the profitable ones at the moment.”

The post 3 ASX tech shares to pounce on NOW while they’re cheap appeared first on The Motley Fool Australia.

More reading

• The ASX 200 just hit 3-week highs. What’s next?
• Why 2 specific ASX share sectors are taking such a beating in 2022
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX shares today
• Why are Sydney Airport (ASX:SYD) shares such hot property today?

Motley Fool contributor Tony Yoo owns Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended WiseTech Global and Xero. The Motley Fool Australia owns and has recommended WiseTech Global and Xero. 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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It was a solid session for the S&P/ASX 200 Index (ASX: XJO) yesterday.

The positive session saw several ASX 200 shares push to multi-week highs, with no one catalyst standing out more than the others. While it can be difficult to say exactly what drove these companies upwards, there are a number of potential explanations.

Here are some of the events that helped a handful of ASX 200 shares to bullish performances yesterday.

Positive response to earnings of ASX 200 companies

Another day of the February reporting season served up more numbers for investors to chew on. The big names included Macquarie Group Ltd (ASX: MQG) and Suncorp Group Ltd (ASX: SUN).

It appears both ASX 200 shares managed to exceed the market’s expectations, with their share prices rising 4.3% and 5.9% respectively.

The third quarter was a record-setter for Macquarie, although no specific figures were included with the update.

On the other hand, Suncorp reported steep declines across numerous financial and operational metrics. However, investors were forgiving.

Iron ore prices take the elevator over the stairs

ASX 200 mining companies with exposure to iron ore also performed well during Tuesday’s session. These included strong share price appreciations across the titans of the industry such as BHP Group Ltd (ASX: BHP), Fortescue Metals Group Limited (ASX: FMG), and Rio Tinto Limited (ASX: RIO).

The strength in these blue chip mining names comes amid a continued resurgence in iron ore prices. The rally placed iron ore futures above US$150 per tonne. A mere week ago, this figure was hovering around US$138. Meanwhile, if we backtrack to November last year, the price was approximately US$92 per tonne.

According to reports, strong fundamentals and a potential for a supply shock are providing upside pressure to the steelmaking commodity’s price.

ASX 200 travel shares take flight

Lastly, another standout sector that performed across the ASX 200 index on Tuesday was travel shares. Following Monday’s announcement of an international border reopening, travel companies have been gaining traction once more.

For example, Webjet Limited (ASX: WEB) and Flight Centre Travel Group Ltd (ASX: FLT) flew 7.4% and 6.7% higher respectively. The jump in share prices means both companies now have performance returns since the beginning of the year — erasing the damage of the January correction.

What’s next?

Heading into Wednesday, futures are indicating the ASX 200 is likely to open higher. This follows a positive performance on Wall Street overnight. For instance, the S&P500 gained 0.84% as many of the big tech companies moved to the upside.

It will be a busy day for investors, with a number of popular shares unleashing their financial reports today. ASX heavyweights such as Commonwealth Bank of Australia (ASX: CBA) and Mineral Resources Limited (ASX: MIN) are among them.

The post The ASX 200 just hit 3-week highs. What’s next? appeared first on The Motley Fool Australia.

More reading

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• Why 2 specific ASX share sectors are taking such a beating in 2022
• 5 things to watch on the ASX 200 on Wednesday
• On a roll. Why is ASX 200 travel share Webjet (ASX:WEB) skyrocketing?
• Here are the top 10 ASX shares today

Motley Fool contributor Mitchell Lawler owns Commonwealth Bank of Australia and Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited, Macquarie Group Limited, and Webjet Ltd. 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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After the first COVID-19 cases were identified in Australia back in January 2020, the total confirmed number of cases (active and recovered) has crept up to nearly 2.4 million. The rate of infection currently stands at 3.9%, according to data compiled in yesterday’s Department of Health, States & Territories Report.

In the last week, more than 700,000 COVID-19 tests were conducted in Australia, bringing the total to almost 62 million since accurate testing began.

Now the testing regime is shifting, moving to a more ‘rapid’ testing agenda that will see patients get their results in a matter of minutes.

But how is this change set to impact the big COVID-19 diagnostics providers in 2022? Let’s take a look at what the experts think.

RATs! Have these shares missed the boat?

We might all be familiar by now that there are two methods of obtaining a COVID-19 test result – the polymerase chain reaction, or PCR test, and the rapid antigen self-tests, better known as RATs.

Those receiving a COVID-19 test within the last week would have received one of the two offerings, depending on a number of variables. Although, the availability of RATs appears to have picked up substantially in the last few weeks.

Specific data on RATs is sparse right now, given the form of testing has only just recently been accepted as a diagnostic tool for COVID-19.

However, several ASX healthcare shares profited immensely on the back of PCR COVID-19 testing over the course of 2020–21. But the rise of rapid testing may be a risk to sector earnings, according to the team at Credit Suisse.

The broker downgraded its outlook on ASX healthcare giants currently involved in COVID-19 diagnostics, noting that Sonic Healthcare Ltd (ASX: SHL) and Healius Ltd (ASX: HLS) are particularly exposed right now.

Sonic closed Tuesday’s session down less than 1% at $37.89, whereas Healius finished 1% in the green at $4.52.

Most analysts are constructive on Sonic and Healius given the pair are beneficiaries of the PCR testing regime.

However, as the team at Credit Suisse points out, there has been a significant shift towards rapid testing in recent months, reducing PCR test demand.

This is a risk to both Sonic and Healius’ earnings outlooks, the broker says – particularly in FY22 when the shift is taking place.

Shift to RATs an earnings risk to Sonic, Healius, broker says

Credit Suisse believes this change in test trends poses a risk to both Sonic and Healius’ sales growth in 2022. Both companies benefitted greatly over the 2 years from PCR test demand.

“We see risk to 2H consensus earnings with the recent fast shift to rapid antigen tests,” the broker said in a note to clients.

As such, it downgraded forecasts on Healius’ earnings per share (EPS) in FY22, reflecting the slowing COVID-19 tailwinds and lowering its valuation in the process.

“We lower our earnings on Healius by 11% in FY22, due to sharper fall in COVID earnings, and our price target decreases [by 10 cents] to $5.50,” the broker said.

With respect to Sonic, the broker reckons it’s all about the company’s financial health and how it intends to put the balance sheet to work in 2022. The broker said its “focus for Sonic will be on its strong balance sheet and potential for acquisitions”.

Goldman Sachs agrees on this point, noting that Sonic’s balance sheet has strengthened substantially over the pandemic.

As such, it reckons the healthcare giant “has more than $1.2 billion of firepower to deploy”, as quoted from a recent note to investors.

Healius just completed the acquisition of bioanalytical laboratory Agilex earlier this month. The company completed the transaction on a $301 million valuation.

In the last 12 months, the Healius share price has gained more than 9% but is down over 14% this year to date, whereas Sonic has lost more than 19% since January 1.

The post Why this top broker just downgraded these 2 ASX healthcare shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare 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 Metals X Limited (ASX: MLX) share price has been on fire since Monday morning, recording a 15% gain.

At yesterday’s market close, the mining outfit’s shares finished 10.71% higher at 62 cents. Despite not making any market-sensitive announcements to the ASX this week, the company’s share price reached a multi-year high of 65.5 cents.

Let’s take a look at what could be driving investors to snap up Metal X shares lately.

Metals X shares resume their upwards trajectory

The Australian base metals company has continued to power ahead this week on the back of positive investor sentiment.

Late last month, Metals X released its quarterly activities report for the period ending 31 December 2021.

According to the update, the company reported 2,359 tonnes of tin concentrate production from the Renison tin operation. While less than the 2,471 tonnes achieved in the prior quarter, this was due to a planned major shutdown of the processing plant.

Regardless of the setback, Metals X said that it continued high tin production as a result of high mined and mill feed grades. For the December quarter, this was the third highest on record, with ore mined at 186,298 tonnes at a grade of 1.58%.

Tin sold in the three months amounted to 2,175 tonnes at an all-in sustaining cost (AISC) of $21,869 per tonne. In comparison, the quarter ending September recorded 2,381 tonnes of tin sold with an AISC of $21,088 per tonne.

Imputed earnings before interest, tax, depreciation and amortisation (EBITDA) came to $77.6 million, a 10.3% lift against the previous quarter.

In addition, imputed net cash flow stood at $60.9 million, a 12.7% increase over Q3 2021.

Metals X owns a 50% interest in Renison through its 50% stake in the Bluestone Mines Tasmania Joint Venture. It’s worth noting that all the above figures are related to the total output of Renison.

Looking ahead, the company noted that the market outlook for tin remains strong and is expected to continue for 2022.

Metals X declared a closing cash balance of $46.2 million, up from $21.6 million in the prior comparable period. This predominately derives from the sale and spin out of its nickel assets portfolio including the Wingellina Nickel-Cobalt project, and Claude Hills project.

Metals X share price snapshot

Over the past 12 months, the Metals X share price has rocketed by more than 260% for investors.

In 2022, its shares experienced a minor hiccup from a broader market sell-off before rebounding, up almost 8% to date.

Based on valuation grounds, Metals X commands a market capitalisation of roughly $562.5 million, with approximately 907.27 million shares on issue.

The post Why is the Metals X (ASX:MLX) share price going gangbusters this week? appeared first on The Motley Fool Australia.

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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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