Category: Stock Market

On Thursday, the S&P/ASX 200 Index (ASX: XJO) fought hard and was able to record a small gain. The benchmark index rose 0.15% to 7,342.4 points.

Will the market be able to build on this on Friday and end the week on a high? Here are five things to watch:

ASX 200 expected to jump

The Australian share market looks set to end the week in a very positive fashion. According to the latest SPI futures, the ASX 200 is expected to open the day 106 points or 1.6% higher this morning. This is despite further weakness on Wall Street, which late on sees the Dow Jones down 0.2%, the S&P 500 down 0.6%, and the Nasdaq dropping 1.1%. It is worth noting, however, that the US market and the SPI futures have been swinging wildly and all this could change come opening time.

ResMed Q2 update

The ResMed Inc. (ASX: RMD) share price will be on watch today when it releases its second quarter update. The sleep treatment focused medical device company is expected to deliver a strong result thanks partly to rival Philips dealing with a major 5 million + CPAP device recall. The big question will be how much supply chain constraints limited its growth.

Oil prices fall

Energy producers including Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) will be on watch today following a poor night for oil prices. According to Bloomberg, the WTI crude oil price is down 0.45% to US$86.97 a barrel and the Brent crude oil price is down 0.4% to US$89.63 a barrel. Oil prices softened as traders took profit after prices hit seven-year highs.

Gold price tumbles

Gold miners Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) could have a subdued finish to the week after the gold price dropped. According to CNBC, the spot gold price is down 1.9% to US$1,794.40 an ounce. The precious metal came under pressure after the US Federal Reserve’s hawkish comments spooked traders and boosted the US dollar.

Premier Investments a sell

The Premier Investments Limited (ASX: PMV) share price is overvalued according to analysts at Goldman Sachs. Although the retailer delivered a half year trading update ahead of the market’s expectations, it isn’t enough for a change of rating. Goldman said the update did not ease its longer term concerns. As a result, it has retained its sell rating with a $23.60 price target.

The post 5 things to watch on the ASX 200 on Friday appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• Why broker thinks falling ResMed (ASX:RMD) share price is a buying opportunity
• 3 reasons not to panic in this ASX 200 correction
• ASX gold shares fall hard. Is now the time to buy?
• Top brokers name 3 ASX shares to sell today

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Looking for a blue chip ASX 200 share or two for your portfolio following the market selloff? Listed below are three that have been given buy ratings recently.

Here’s what you need to know about them:

CSL Limited (ASX: CSL)

The first blue chip ASX 200 share to consider is CSL. It is a leading biotechnology company which is home to the CSL Behring business and the Seqirus business. Combined, these two businesses have a portfolio of life-saving and lucrative therapies and vaccines which are generating billions of dollars in sales each year. In addition, the company invests in the region of 10% to 11% of its sales back into research and development activities every year. This means it is on course to invest around US$1 billion into these activities this year. This ensures that CSL has a pipeline of potentially lucrative products to drive its future growth.

Citi remains positive on CSL. This week the broker put a buy rating and $340.00 price target on its shares.

Goodman Group (ASX: GMG)

Another blue chip ASX 200 share to look at is Goodman Group. It is a leading integrated commercial and industrial property company with a portfolio of warehouses, large scale logistics facilities, and business and office parks. Management notes that it continues to experience strong demand for its properties, which is being driven by increased intensification of use, long-term supply chain requirements, tight supply in urban infill locations and the quality of its assets. In addition, the company has $12.7 billion of development work in progress, which is expected to underpin further solid growth over the coming years.

Citi is also a fan of Goodman. It currently has a buy rating and $28.00 price target on the company’s shares.

SEEK Limited (ASX: SEK)

A final blue chip ASX 200 share to look at is SEEK. It is the dominant force in job listings in the ANZ market and has a number of international operations. While FY 2021 was a difficult year because of the pandemic, SEEK has been bouncing back strongly now the worst is over and hiring is ramping up.

This morning Macquarie retained its outperform rating and $37.00 price target on the company’s shares. It expects SEEK to upgrade its guidance with its half year results.

The post 3 blue chip ASX 200 shares to buy after the selloff appeared first on The Motley Fool Australia.

More reading

• Own CSL (ASX:CSL) shares? Here’s why the company is moving on from COVID research
• Top brokers name 3 ASX shares to buy today
• Analysts name 2 beaten down ASX shares with 30% upside
• Can the CSL (ASX:CSL) share price reach pre-COVID highs?
• 2 excellent blue chip ASX 200 shares to buy this month

Motley Fool contributor James Mickleboro owns SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. 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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Key points

• The Zip share price sank 9.66% today
• The news came amid mixed views on a potential acquisition of Sezzle by Zip Co
• Zip confirmed earlier this week it is in talks to acquire Sezzle

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The Zip Co Ltd (ASX: Z1P) share price slumped today amid reports Citi analysts have concerns over the company’s Sezzle Inc (ASX: SZL) takeover aspirations.

The ASX buy now, pay later company’s shares finished the day trading at $2.90 apiece, down 9.66%.

Let’s take a look at the latest chatter surrounding Zip.

Zip takeover talks get mixed reviews

The Zip share price fell nearly 10% today and is now down nearly 21% since market close on 19 January.

News that research analysts at Citi had mixed views on the possibility of Zip acquiring Sezzle may have weighed on investors’ minds today. Of course, this was also against the backdrop of tumbling ASX tech shares, with the S&P/ASX All Technology Index (ASX: XTX) ending the day more than 5% lower.

A report in today’s The Australian said Citi analysts have raised questions over whether a takeover of Sezzle is the correct strategy — despite the fact the acquisition could help Zip gain scale in the US buy now, pay later sector.

However, the analysts do seem to be in favour of some industry consolidation, reportedly saying, “From a sector perspective, we see the increasing consolidation activity as positive for industry profitability”.

But the analysts also expressed some concern, adding, “…we do not expect the acquisition to meaningfully change Zip’s enterprise retailer penetration immediately”.

Earlier this week, Zip confirmed media speculation it is in talks with rival Sezzle over a possible acquisition.

In a statement to the ASX, Zip’s board said:

Zip confirms it is in discussions with Sezzle in relation to a potential acquisition.

Zip is always interested in pursuing options that are in the best interests of shareholders; however the discussions with Sezzle are preliminary in nature and there is no certainty that the discussions will result in a transaction of any kind.

Zip is not the only ASX buy now, pay later stock that slipped in a horror day for the tech sector. Block Inc CDI (ASX: SQ2) dropped 5.35%, Openpay Ltd (ASX: OPY) dived 8.33%, and Sezzle sank 8.09%.

Humm Group Ltd (ASX: HUM) also descended 1.86%.

Zip share price snapshot

The Zip share price has crashed by 33% since the end of 2021. Over the past 12 months, Zip shares have lost almost 63%.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has returned just under 1% over the past year.

Zip has a market capitalisation of roughly $1.7 billion based on its current share price.

The post Zip (ASX:Z1P) share price tumbles 10% as top broker questions possible Sezzle play appeared first on The Motley Fool Australia.

More reading

• What happened to ASX buy now, pay later shares today?
• Why A2 Milk, Baby Bunting, Codan, and Sezzle shares are surging higher
• ASX 200 (ASX:XJO) midday update: Zip confirms Sezzle talks, Fortescue’s Q2 update
• Why is the Sezzle (ASX:SZL) share price rocketing 20% higher?
• Zip (ASX:Z1P) share price higher amid Sezzle acquisition talks

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has recommended Humm 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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Key points

• Buy now, pay later shares took a beating on the ASX today
• The Zip share price fell 9.66%, while Block sunk 5.35%
• The All Technology Index also descended overall

Buy now, pay later (BNPL) shares had a shocking day on the market today but they are not alone.

Leading the pack is the Zip Co Ltd (ASX: Z1P) share price, diving 9.66%. For perspective, the S&P/ASX 200 Index (ASX: XJO) also fell 1.77% today, while the S&P/ASX All Technology Index (ASX: XTX) slumped 5.05%

Let’s take a look at what happened to BNPL shares today.

Tech sector weakness hurts BNPL shares

The Block Inc CDI (ASX: SQ2) share price gravitated 5.35% while Openpay Group Ltd (ASX: OPY) shares cascaded 8.33%.

Meanwhile, Sezzle (ASX: SZL) shares tumbled 8.09% and Humm Group Ltd (ASX: HUM) shares plunged 2.48%.

Today’s fall came amid an overall weakness in the technology sector in Australia.

Among the ASX tech share fallers was Xero Limited (ASX: XRO), down 6.69%.

Meanwhile, Wisetech Global Ltd (ASX: WTC) plunged 9.85% and NextDC Ltd (ASX: NXT) sunk 1.85%. Additionally, Megaport Ltd (ASX: MP1) dropped a mammoth 9.46%.

Block’s ASX shares dropped slightly more than the company’s US listing. The Block Inc (NYSE: SQ) share price fell 3.71% overnight in the United States.

Paypal Holdings (NASDAQ: PYPL) fell 0.77%. However, the Nasdaq-100 Index (NASDAQ: NDX) gained 0.17%.

The broader ASX index moved closer towards ‘a correction’ on Thursday, as my Foolish colleague Bernd noted.

Correction broadly refers to any pullback of more than 10% and the index is down more than 8% since the market close on 31 December.

The post What happened to ASX buy now, pay later shares today? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• What happened to ASX tech shares today?
• Why is the Openpay (ASX: OPY) share price up 7% today?
• There’s a new kid on the Block (ASX:SQ2), but how does it make money?
• ASX 200 (ASX:XJO) midday update: Zip confirms Sezzle talks, Fortescue’s Q2 update

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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With the market under significant pressure this month, a good number of shares are trading at 52-week lows.

While this is disappointing, analysts appear to believe it could be a buying opportunity for some of them. Here are three beaten down shares that brokers rate as buys:

Cochlear Limited (ASX: COH)

The Cochlear share price was out of form and sank to a 52-week low of $178.55 today before recovering slightly to end the session at $182.06.

The team at Credit Suisse are likely to see this recent share price weakness as a buying opportunity for investors. Earlier this week, the broker upgraded the hearing solutions company’s shares to an outperform rating with a $235.00 price target. Based on the current Cochlear share price, this implies potential upside of 29% over the next 12 months.

Harvey Norman Holdings Limited (ASX: HVN)

The Harvey Norman share price got caught up in the market selloff and tumbled to a 52-week low of $4.57 on Thursday before ending the day at $4.67.

Goldman Sachs believes there’s material upside for the retail giant’s shares from this level. The broker currently has a buy rating and $6.00 price target on its shares. This implies a potential return of 28% before dividends. Speaking of which, the broker is forecasting fully franked dividends yields of 7.7% over the next three financial years.

NEXTC Ltd (ASX: NXT)

The NEXTDC share price dropped to a 52-week low of $9.74 on Thursday before recovering slightly to $9.82.

This share price weakness could also be a buying opportunity for investors according to Goldman Sachs. Its analysts currently have a conviction buy rating and $14.40 price target on the data centre operator’s shares. This implies potential upside of 48% for investors over the next 12 months.

The post 3 buy-rated ASX shares that just hit 52-week lows appeared first on The Motley Fool Australia.

More reading

• Why is the Cochlear (ASX:COH) share price tumbling 5% on Thursday?
• Top brokers name 3 ASX shares to buy today
• $20,000 invested in these ASX shares 10 years ago is worth how much today?
• 2 ASX dividend shares with fully franked 7% yields
• What happened to ASX tech shares today?

Motley Fool contributor James Mickleboro owns NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Cochlear Ltd. The Motley Fool Australia owns and has recommended Harvey Norman Holdings 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 Bruce Jackson.

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As the market closes on its fourth consecutive day of steep losses, investors are coming to terms with the S&P/ASX 200 Index (ASX: XJO) now being in a correction. To say there has been plenty of red across ASX shares lately is perhaps an understatement.

It can be difficult to stay the course when portfolios are relentlessly ticking lower. Each day can feel like a one-way ticket to more losses. It is in these times that the fortitude of an investor is truly put to the test.

Now, it is a different story if the intention is to sell. However, more often than not, the pressure to sell during a downturn comes from a place of fear.

With that being said, now seems like an appropriate time to brush up on some fundamental investing principles that have stood the test of time.

These lessons have served many investors over the years during countless rough patches. Considering the start to 2022, they might need to be deployed once again.

Follow the business, not the share price

The first investing principle to remember during a sell-off is that the market can be erratic, but the underlying company often remains unchanged. One of the greats, Peter Lynch, once said:

Behind every stock is a business, find out what it’s doing.

In the long run, the price of an ASX share will be determined by the success of the business itself. Whereas, in the short-term, the share price bounces violently around changes in emotions and sentiment from investors.

A lot of pain can be avoided sometimes if investors focus less on what the share price is doing, and more on how the company is performing. Whether that be an assessment of revenue/earnings growth, board quality, or customer satisfaction. These are the factors that many investing greats have paid attention to during difficult times in the market.

Why do you own that ASX share in the first place?

Another principle that can help with weathering the storms is rooted in a bit of self-awareness.

Warren Buffett has said in the past:

Risk comes from not knowing what you are doing.

It could be reasonable to tack onto the end of that: why are you doing it?

Understanding what you are invested in and why you are investing provides some degree of self-certainty during an otherwise uncertain time.

As an investor, if you can feel confident in the ASX shares you hold — both knowing what the company does, and why you are invested in it — conviction is pre-built and at the ready when the volatility hits.

In addition, this is often the difference between selling out of a company you may like at a lower price; compared to buying more shares in it at a discount.

Foolish takeaway

In essence, difficult times in the share market sort the investors from the traders. Those with conviction and those without it. Ultimately, there are no right or wrong decisions in absence of hindsight. However, sometimes as investors, we can lose sight during rough waters — only to realise we detoured from our previously chartered course after the fact.

Many investing greats know this. They have lived it through the experience of many treacherous times in the market before. Fortunately, each time the market has come out the other side — proceeding to reach new all-time highs.

While the past performance of ASX shares is not an indicator of future performance, the abovementioned principles offer us a glimpse of how successful investors have navigated these seas before.

The post Here’s a quick way to ride out the sell-off in ASX shares appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• Is the Wisetech (ASX:WTC) share price a bargain after plunging 26% so far this year?
• Here’s why the Rhythm Biosciences (ASX:RHY) share price soared 8% today
• Why broker thinks falling ResMed (ASX:RMD) share price is a buying opportunity
• 3 reasons not to panic in this ASX 200 correction

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 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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Today, the S&P/ASX 200 Index (ASX: XJO) fell further in its fourth consecutive red session. At the end of trade, the benchmark index was 1.77% lower at 6,838.3 points.

It was an ugly day for tech investors, as the sector fell nearly 5% amid increased expectations for higher interest rates sooner rather than later. In contrast, energy shares offered a change in scenery as share prices pushed higher. This followed an increase in oil prices overnight, rising to US$90 per barrel.

However, the question is: which shares delivered the biggest returns to investors on the ASX today? Here are the top ten stocks that came through for investors:

Top 10 ASX shares countdown today

Looking at the top 200 listed companies, Beach Energy Ltd (ASX: BPT) was the biggest gainer today. Shares in the oil and gas company surged 8.81% higher amid a strengthening in oil prices. Find out more about Beach Energy here.

The next biggest gaining ASX share today was Ausnet Services Ltd (ASX: AST). The Australian energy company rallied 4.45% despite there being no new announcements out today. Uncover the latest Ausnet Services details here.

Today’s top 10 biggest gains were made in these ASX shares:

ASX-listed company	Share price	Price change
Beach Energy Ltd (ASX: BPT)	$1.42	8.81%
Ausnet Services Ltd (ASX: AST)	$2.58	4.45%
Santos Ltd (ASX: STO)	$6.96	3.57%
Meridian Energy Ltd (ASX: MEZ)	$4.33	3.10%
Virgin Money UK PLC (ASX: VUK)	$3.49	2.95%
Infratil Ltd (ASX: IFT)	$7.18	2.57%
Woodside Petroleum Ltd (ASX: WPL)	$24.73	2.49%
Champion Iron Ltd (ASX: CIA)	$5.83	2.46%
Ebos Group Ltd (ASX: EBO)	$36.20	2.38%
South32 Ltd (ASX: S32)	$3.82	2.14%

Our top 10 ASX shares today countdown is a recurring end-of-day summary to ensure you know which companies were making big moves on the day. Check-in at Fool.com.au after the market has closed during weekdays to see which stocks make the countdown.

The post Here are the top 10 ASX shares today appeared first on The Motley Fool Australia.

More reading

• 3 reasons not to panic in this ASX 200 correction
• Why Beach, Jumbo, Premier Investments, and Western Areas are pushing higher
• These 3 ASX 200 shares are topping the volume charts on Thursday
• Bargain bonanza? Scott Phillips’ advice for a glass-half-full approach to falling ASX share prices
• It’s official – ASX 200 sinks into correction territory

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 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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Key points

• The Wisetech Global share price is under more selling pressure today
• Shares in the software solutions provider have plunged 26% this YTD
• Wistech is now trading below its consensus price target of $50.17 per share, but above historical and forward earnings multiples

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The WiseTech Global Ltd (ASX: WTC) share price is under more selling weight today amid the violent selloff in ASX tech shares that started in December.

Even though it was an impressive year in 2021 for the software-as-a-service (SaaS) player, the momentum hasn’t been so rosy in 2022 so far.

Since we rolled into the new year, shares in the software solutions provider have plunged 26% after sliding more than 27% in the past month. They finished the session down another 10% on Thursday and closed at $43.31.

With the recent pullback, it begs the question – is Wistech now trading at a bargain? Let’s see what the experts are saying.

What’s up with the Wisetech share price lately?

On a wider front, ASX tech shares have been rocked in 2022, amid a sector-wide correction brought on by rising yields on the long end of the US Treasury yield curve.

And when the bond market speaks, the stock market listens – these rising yields disproportionately hurt the valuations of ASX tech shares, resulting in an unwind of investors’ exposure to tech and growth in general.

As such, the S&P/ASX All Technology Index (XTX) is down 20% this year to date after falling a further 5% in today’s session alone.

Wisetech is front-running the index with its 26% loss since January 1, as shown on the chart below, despite no market-sensitive information from the company in that time.

Why is Wisetech more sensitive to the market moves than some of its peers? One answer lies in what is known as the stock’s ‘beta’, a measurement of the degree an asset moves in relation to movements to the overall market (usually the benchmark S&P/ASX 200 Index (ASX: XJO)).

In essence, high-beta stocks are highly correlated to the market – even more volatile compared to changes in the overall market – whereas low-beta stocks will remain largely muted to market changes.

A beta of zero means the asset’s price changes have no correlation to changes in the market, whereas a beta of 1 means the stock moves in lock-step with the market; a perfect correlation. A negative beta shows an inverse relationship in price movements.

Another example is in resources – ASX gold shares have a high beta/correlation to the underlying or spot price of gold, for instance. It is well known that tech shares have a high beta relative to benchmark indices in general.

It is not a measure of risk or volatility itself, but how the stock moves in relation to changes in the market based on historical data.

Bloomberg Intelligence shows Wistech has a calculated beta of 1.134, meaning that for every 1% change (up or down) in the S&P/ASX 200 index over the last 3 years, the company has responded with a 1.134% change in share price in the same direction.

Is the Wisetech share price a bargain right now?

With the recent pullback in share price, Wistech is now trading below its consensus price target of $50.17 per share.

However, sentiment remains mixed, with more than 50% of analysts covering the company advocating it as a hold right now.

Meanwhile, just 30% have it as a buy according to a list provided by Bloomberg Intelligence. Morgan Stanley is one broker constructive on the shares but values the company at $35 per share.

Jarden is also bullish, however sees more upside potential at a $50 per share valuation, in line with the consensus view.

Meanwhile, Macquarie has Wisetech as a hold but values the company at $54 per share in a note from this month, alongside Evans and Partners who see it fairly valued at $45 per share.

Hence, based on a money-weighted basis, the Wistech share price is trading below the consensus estimate of fair value and offers around 16% upside potential at the time of writing.

However, it’s important to assess value via additional methods, as the inputs to price targets are notoriously sensitive. That’s where earnings multiples come in handy.

Given the consensus of earnings estimates, Wisetech is also trading on a lofty 12 month forward price to earnings (P/E) of 91.5x and expects to report earnings in late February. On last check, it is currently trading at around 144x P/E.

This figure is expected to fall to 69x and 54x P/E based on FY23 and FY24 earnings estimates respectively. Over the last 4 years, Wisetech has also averaged a daily P/E of 107.47x.

Hence, it is currently trading above its historical and forward valuation estimates when factoring in these earnings multiples and thus is not a bargain in that regard.

Alas, judging by the consensus view of Wisetech’s fair value, it is is trading at a discount, however compared to its self-statistics on earnings multiples, it is trading at a premium.

Wisetech share price summary

In the last 12 months, the Wisetech share price has climbed more than 27%. However, the selling pressure has crept in and now shareholders are swimming in a sea of red.

Across the past month, shares have tanked 27% and are down more than 17% in the past week of trading as well. Wistech therefore leads the benchmark index’s losses for the year.

The post Is the Wisetech (ASX:WTC) share price a bargain after plunging 26% so far this year? appeared first on The Motley Fool Australia.

More reading

• What happened to ASX tech shares today?
• These 2 ASX 200 tech shares have withstood the selloff to surge higher over the last 6 months
• Sticky revenue winners. Here are the 5 best ASX SaaS shares of 2021
• Why Afterpay, BrainChip, Medibank, and WiseTech shares are racing higher
• 5 best ASX 200 tech shares of 2021

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. owns and has recommended WiseTech Global. The Motley Fool Australia owns and has recommended WiseTech Global. 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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Key points

• The Rhythm Biosciences share price finished the day up by more than 8% after earlier jumping by 19%
• The diagnostics company released its latest quarterly results today
• Its colorectal cancer detection product, ColoSTAT, is set to gain EU and UK commercial exposure

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The Rhythm Biosciences Ltd (ASX: RHY) share price surged today following the company’s latest quarterly activity update.

Among the business results, the diagnostic technology company released an update on its core product, ColoSTAT — a low-cost blood test used for the detection of colorectal cancer.

At the close of trading, the Rhythm Biosciences share price was up 8.43% at $1.35. During intra-day trade, it hit a high of $1.49, a gain of 19.2% on its previous closing price.

Let’s dive in and dissect this update…

What did Rhythm Biosciences report?

The Rhythm Biosciences share price jumped into the green after the company reported a total of $5.5 million cash in the bank for the period ending 31 December 2021. (This excluded a placement of $6.5 million before costs which was completed this month).

Secondly, it received a rebate of $2.4 million from its R&D Tax Incentive claim, in which the Australian government “encourages companies to engage in R&D programs by providing a refundable tax offset of up to 43.5% on eligible activities”.

Thirdly, it made three executive and non-executive enrolments to its board, including CEO Glenn Gilbert additionally taking on the role of managing director.

But probably most notable for the healthcare company was the progressing commercialisation of its product — the ColoSTAT.

ColoSTAT EU exposure

Rhythm Biosciences’ ColoSTAT product was recently granted a “CE Mark”. This means it has met all provisions of EU legislation required to be sold within the European Economic Area (EEA).

According to Listcorp, colorectal cancer — which the ColoSTAT aims to detect — is the third most common form of cancer for men, and second for women.

This certification exposes the company to 231 million people and a market valued at US$12 billion.

And since the quarter, its CE Mark certification now encapsulates England, Wales, Scotland, and Northern Ireland.

While the company is continuing to test its product to ensure “highly accurate, consistent and reproducible results” — at 84% sensitivity and 95% specificity — it has confirmed the product “significantly outperforms the current market testing regime, by as much as 33%”.

The company is therefore confident it will perform well in the market.

Looking forward, Rhythm Biosciences has employed a “platform expansion program”, using similar technology of ColoSTAT to diagnose other types of cancers.

Breast, cervical, lung, gastric, and pancreatic cancers are to be targeted for similar commercial pathways.

Rhythm Biosciences share price snapshot

The Rhythm Biosciences share price has jumped by 48% in the last six months. However, it is down around 12% this year to date.

The company has a market capitalisation of $265.99 million and over 213 million shares outstanding.

The post Here’s why the Rhythm Biosciences (ASX:RHY) share price soared 8% today appeared first on The Motley Fool Australia.

More reading

• Here’s why the Rhythm (ASX:RHY) share price is up 11% today

Motley Fool contributor Alice de Bruin 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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Key points:

• ResMed share price is swept up in the market sell-off but JP Morgan believes 2022 will be a strong year for the company
• The product recall by rival Philips gives ResMed time and opportunity to build and hold market share
• JP Morgan upgraded ResMed to “overweight” from “neutral” on the back of this more bullish outlook

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The ResMed CDI (ASX: RMD) share price isn’t spared from the market de-rating, but JP Morgan believes 2022 will be a strong year for the company.

The broker’s conviction was strong enough for it to upgrade the ResMed share price to “overweight” from “neutral”.

This news could bring relief to shareholders that have seen the sleep disorder treatment devices company tumble 13% since the start of the year, including a 3.86% fall today.

Why the ResMed share price is copping a de-rating

Market sentiment towards the ResMed share price has recently soured due to interest rate expectations and  COVID-19 supply chain disruptions.

The threat of higher interest rates is knocking the wind out of high price-to-earnings (P/E) shares. This is because the valuations of ASX shares trading at a market premium tend to suffer more when rates increase.

COVID chaos hurting sales

Meanwhile, ResMed’s supply chain problems are hardly unique as well. The difficulty in securing components and delays in shipping are driving up costs for the company.

“Our channel checks indicate ResMed’s deliveries fell short of customer expectations late in the December quarter,” JP Morgan said.

“This reflects both supply chain challenges (a shortage of key components) and the increased freight times as the Christmas rush exacerbated the pandemic-induced challenges.”

Brightening outlook for ResMed

But there are reasons to feel bullish on the ResMed share price despite these headwinds. The broker believes production should ramp up over the coming months as the chip and component shortage eases.

This will allow the company to increase sales of its devices into the end of the financial year and quite possibly into FY23.

Perhaps more significant for ResMed’s fortunes is the product recall by its key competitor, Philips. It seems that the time it will take Philips to rectify this issue will be longer than for ResMed to overcome the supply chain bottleneck. This gives the ASX-listed entity an opportunity to take and hold market share.

What is the ResMed share price worth?

“While Philips has stuck to its 12-month guidance to deal with the recall we expect this will prove optimistic given the supply chain challenges reported by ResMed and others,” said JP Morgan.

“We also note the recall is the largest in medical device history and seems to have attracted a significant level of regulatory scrutiny.”

Also worth noting is that ResMed has started charging a $12 surcharge for all its devices in 2022 to help offset rising costs. The broker estimates that approximately half of the gross margin decline caused by the component and freight cost challenges will be offset by the surcharge.

JP Morgan lifted its 12-month price target on the ResMed share price to $37.90 from $36 a share. That suggests a potential 20% upside on the current share price of $31.40.

The post Why broker thinks falling ResMed (ASX:RMD) share price is a buying opportunity appeared first on The Motley Fool Australia.

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Motley Fool contributor Brendon Lau 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 ResMed Inc. 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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