Category: Stock Market

The Fortescue Metals Group Limited (ASX: FMG) share price had a disappointing run in the first few days of December.

Since the beginning of the month, the iron ore producer’s shares have tumbled by almost 5% in value. This puts the company as one of the weaker performers on the S&P/ASX 200 Index (ASX: XJO).

At Friday’s market close, Fortescue shares finished the day down a further 0.87% to $17.10.

What’s happened to Fortescue?

There are a number of reasons Fortescue shares have sunk in recent times.

The price of iron ore dropped after a mini bull run, reaching US$103.17 a tonne at the end of November. At current, the steel-making ingredient is trading at US$101.82, a fall of 1.63% for the first 5 days of this month.

Chinese lawmakers introduced new rules for its steel producers in an effort to curb reliance on Australian iron ore. Steel mills were instructed to limit 2021 output to no more than 2020 levels, or face harsh consequences.

As such, China wants its steel industry to halt iron ore production at around 1 billion tonne for 2021. This has led the price of iron ore to shrink from its lofty highs above the US$200 mark earlier this year.

Furthermore, Fortescue could suffer particularly more than its peers as it produces a lower grade of iron ore. Steel producers prefer higher quality iron ore, which miners Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP) supply. Consequently, this puts a squeeze on Fortescue’s margins.

A number of brokers have weighed in on the Fortescue shares following the company’s September quarterly production report.

Goldman Sachs cut its price target by 3.5% to $11, while analysts at Credit Suisse reduced their rating by 33% to $14.

Based on the current Fortescue share price, this implies a downside of 35% and 18%, respectively.

About the Fortescue share price

Over the past 12 months, Fortescue shares have declined around 15% in value. However, when looking at year to date, its losses have declined by 30% for the period.

Fortescue commands a market capitalisation of roughly $53.11 million and has over 3 billion shares on its registry.

The post Why has the Fortescue (ASX:FMG) share price had such a lousy start to December? appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to sell next week
• 5 best ASX 200 resource shares to hold in November
• The Fortescue (ASX:FMG) share price hit by broker downgrade
• The Fortescue (ASX:FMG) share price jumped 22% in November
• These were the 5 best performing ASX 200 shares in November

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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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that investors might want to hear about are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

AMP Ltd (ASX: AMP)

According to a note out of UBS, its analysts have retained their sell rating and trimmed their price target on this financial services company’s shares to 90 cents. UBS made the move to reflect AMP’s demerger plans. The broker isn’t positive on PrivateMarketsCo’s outlook, nor that of the core AMP business, and doesn’t believe the demerger will unlock near-term value for shareholders. The AMP share price ended the week at 94.5 cents.

Fortescue Metals Group Limited (ASX: FMG)

A note out of Morgan Stanley reveals that its analysts have retained their underweight rating and $11.95 price target on this iron ore miner’s shares. Although the broker acknowledges that Vale’s softer production outlook is a positive for the iron ore market and particularly the low grade side, it isn’t enough for a change of rating just yet. The Fortescue share price was fetching $17.10 at the end of the week.

Woolworths Group Ltd (ASX: WOW)

Analysts at Credit Suisse have retained their underperform rating and $31.84 price target on this retail conglomerate’s shares. The follows news that the company is aiming to acquire pharmacy chain operator Australian Pharmaceutical Industries (ASX: API). Credit Suisse has a few concerns over the plan and highlights that Woolworths hasn’t the strongest past when it comes to portfolio expansion. The Woolworths share price was trading at $39.59 on Friday.

The post Top brokers name 3 ASX shares to sell next week appeared first on The Motley Fool Australia.

More reading

• Could this be a fly in the ointment for Woolworths’ (ASX:WOW) push into healthcare?
• Can Wesfarmers (ASX:WES) win the battle to take over API?
• 5 best ASX 200 resource shares to hold in November
• Are AMP (ASX:AMP) shares priced as though ‘the situation is worse than it is’?
• Top brokers name 3 ASX shares to sell today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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November brought gains for many ASX 200 mining and resources shares, but not all stocks can top the charts.

Over the course of last month, the S&P/ASX 200 Resources Index (ASX XJR) gained 4.03% while the S&P/ASX 200 Materials Index (ASX: XMJ) soared 6.16%.

Unfortunately, where there are winners there must also be losers. Here are the 5 worst performing ASX 200 resources and mining shares of November 2021.

November’s worst performing ASX 200 mining and resources shares

Perenti Global Ltd (ASX: PRN) – down 19.61%

Interestingly, November was quiet for the worst ASX 200 mining or resource share of the month.

The only time the market heard price-sensitive news from this mining services company was on 5 November, when it asserted that media speculation it was involved in merger and acquisition activities was false.

While the Perenti share price surged 2.6% that day, the rest of the month wasn’t nearly as fruitful.

Perenti’s stock finished the month trading at 82 cents, 20 cents lower than where it ended the month prior.

Resolute Mining Limited (ASX: RSG) – down 14.29%

Gold miner Resolute Mining also had a poor month’s performance.

While the company remained silent during November, the market bided its share price from 42 cents down to 36 cents.

Last month was rocky for the price of gold too. According to data from CNBC, the yellow metal’s value increased 4.8% between the end of October and 17 November, before falling 4.9% to end November at US$1,776.50 an ounce.

Regis Resources Limited (ASX: RRL) – down 10%

It’s a similar story for fellow gold producer Regis Resources, though, the company did release news to the market in November.

Its share price slid when it provided investors with a seemingly positive biannual exploration update, wherein it detailed works at its Duketon and Tropicana projects.

The Regis Resources share price fell from $2 to $1.80 last month.

Alumina Limited (ASX: AWC) – down 9.55%

The Alumina share price also suffered, though the company didn’t release any news.

However, according to analysis by Capital.com, the price of aluminium slumped over much of November, potentially taking the aluminium producer’s shares with it.

At the end of October, the company’s shares were going for $1.99 a piece. Come the end of November, they were trading at $1.80.

Iluka Resources Limited (ASX: ILU) – down 8.3%

A last-minute gain wasn’t enough to save the Iluka Resources share price from getting on this list. It’s scrapped in as the fifth worst performing ASX mining or resource share.

The company’s stock gained 2.8% on 30 November when it announced inaugural mineral resource estimates for two of its Wimmera heavy mineral deposits.

Still, it ended the month trading at $8.62, 78 cents lower than it ended the month prior.

The post These were the 5 worst performing ASX 200 mining and resource shares of November appeared first on The Motley Fool Australia.

More reading

• These were the worst performing ASX 200 shares last week
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• 5 things to watch on the ASX 200 on Thursday
• Regis Resources (ASX:RRL) share price falls despite upbeat exploration update

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 Xero Limited (ASX: XRO) share price could be a top contender to consider for growth investment portfolios right now.

Xero has a claim to be one of the leading cloud accounting software businesses in the world. It already has strong market positions in New Zealand, Australia and the UK as it wins more subscribers in those areas. The business also has rapidly growing numbers in countries like South Africa and Singapore.

The business has a number of different compelling reasons to consider it. Here are three factors to like the business:

Cheaper price

If investors are considering a particular business, then a cheaper price is more attractive than an expensive one.

Since 1 November 2021, the Xero share price has dropped more than 8%. That’s materially cheaper for the business for people to get a slice of. The lower price may not be there forever if Xero continues to increase in size.

At the moment, Xero shares are rated as a buy by Citi, with a price target of $160. A price target is where the broker thinks the share price will be trading in a year from now. That implies the broker thinks that the Xero share price could go up more than 10% over the next year.

Software as a service (SaaS) economics

SaaS is simply where a tech business is providing a service, usually with a recurring monthly or annual model. That can be useful for customer retention, predictable cashflow and higher profit margins.

Xero has a very high gross profit margin of 87.1%. It was 85.7% in the first half of FY21 and 82.8% in the first half of FY19. Customer churn is very low and is going lower – in the first half of FY22 it was 0.88%.

The increasing average revenue per user (ARPU) and lowering churn is helping increase the lifetime value (LTV) of its total subscriber base. In HY22, Xero said it added $3.8 billion to its LTV to $9.9 billion.

Xero’s annualised monthly recurring revenue climbed another 29% to NZ$1.13 billion during HY22, which may give a rough guide of what the next 12 months of revenue may be if it didn’t gain any more subscribers.

Global platform ecosystem

One of the main features of Xero is that it enables small and medium businesses to access a range of additional applications and services. This makes the overall Xero offering more useful and valuable to those subscribers. This could be helpful for the Xero share price in the long run.

Platform revenue is becoming an increasingly important part of the picture. In HY22, platform revenue made up 11% of the total NZ$506 million revenue – this was after 104% year or year growth, or 37% growth excluding acquired businesses. Accounting software revenue increased 18% year on year in the same time period.

The Xero App Store is the next focus as it moves towards a more commercial model.

The post 3 reasons why the Xero (ASX:XRO) share price could be a high-quality buy appeared first on The Motley Fool Australia.

More reading

• Why Afterpay, Liontown, Northern Star, and Xero shares are falling
• Are Xero shares worth their $21bn valuation? Motley Fool analyst Chris Copley weighs in
• Are these 2 strong ASX 200 shares buy rated?
• Top brokers name 3 ASX shares to sell next week
• Brokers name 3 ASX shares to buy today

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Xero. The Motley Fool Australia owns shares of and has recommended Xero. 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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There’s been no shortage of hype over cryptos this year. And no shortage of opinions on where the market may be headed next year.

We’ll leave those forecasts to analysts with more clear crystal balls than our own.

But we do note that 4 of the most heavily traded cryptos each reached new all-time highs in 2021.

Breaking into new record territory

Bitcoin (CRYPTO: BTC), the world’s first and still dominant crypto, traded for a record US$68,790 (AU$97,140) on 10 November, according to data from CoinMarketCap.

Ethereum (CRYPTO: ETH), the second biggest, also hit its record high on 10 November, trading for US$4,856.

Two other heavily traded cryptos, the so-called meme coins, hit their own record highs earlier this year.

Shiba Inu (CRYPTO: SHIB) traded for an all-time high of 0.0088 US cents on 28 October.

The original ‘dog coin,’ Dogecoin (CRYPTO: DOGE), hit its own record high of 74 US cents a bit earlier in the year, on 8 May.

How did they perform in November?

Of the 4 most heavily traded, only Ethereum finished November in the green.

Ethereum commenced November trading for US$4,314. The token finished the month worth US$4,604, up 6.7%.

Ether has been outperforming Bitcoin and most altcoins this year. Analysts are pointing to its real-world use cases in decentralised finance (think smart contracts) for its outperformance.

According to Stephane Ouellette, CEO of crypto platform FRNT Financial Inc (quoted by Bloomberg):

The current BTC trading window seems to associate the asset more with global currency trends, inflation hedges, etc… While ETH has, at least from a current market perception standpoint, higher correlations with the growth of crypto sub-sectors.

Unlike Ether, Bitcoin finished the month in the red. One Bitcoin was worth US$60,269 on 1 November, falling to US$58,120 by 30 November, a loss of 3.5% for the month.

Turning to our meme coins, Shiba Inu kicked off November trading for 0.0063 US cents. The dog-themed crypto ended November worth 0.0052 cents, down 17% for the month.

As for Dogecoin, it started November worth 26 US cents and at 30 November was trading for 22 US cents, a loss of 15% for the month.

While all 4 cryptos are well up for the year, it’s worth noting that each of them fell heavily when news of the Omicron COVID variant hit the wires on 26 November. Rather than acting as any sort of haven asset, they responded similarly to other risk assets.

The post Here’s how these 4 top traded cryptos performed in November appeared first on The Motley Fool Australia.

More reading

• Here’s why Charlie Munger says crypto should have ‘never been invented’
• Why Bitcoin, Ethereum, and Dogecoin are slumping today
• Is Australia on the precipice of mass crypto adoption?
• Here’s what happened with Ethereum’s (CRYPTO:ETH) record breaking November
• Bitcoin just sailed past this important milestone

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum. 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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If you’re looking for some investment options then you may want to look at the two listed below.

Here’s why analysts think these highly rated ASX 200 shares could be in the buy zone:

Goodman Group (ASX: GMG)

The first ASX 200 share to look at is Goodman Group. This integrated commercial and industrial property company owns a portfolio of in-demand properties with exposure to key growth markets such as ecommerce and logistics

The good news is that demand remains very strong and its development pipeline is filled to the brim with properties that look set to support its growth over the next decade.

In the meantime, Goodman recently upgraded its FY 2022 earnings guidance. Instead of 10% growth, the company now expects to deliver operating earnings per share growth of at least 15%.

The team at Citi still believe management is being conservative and could outperform this guidance. As a result, the broker recently retained its buy rating and lifted its price target to $27.50.

NEXTDC Ltd (ASX: NXT)

Another ASX 200 share for investors to look at is NEXTDC.

It provides scalable on-demand services to support outsourced data centre infrastructure and cloud connectivity from a collection of world class Tier III and Tier IV data centre facilities in key locations across Australia.

Thanks to the ongoing structural shift to the cloud, which is driving increasing demand for capacity in its data centres, NEXTDC appears well-placed to continue growing its earnings at a solid rate long into the future.

The team at Goldman Sachs expects this to be the case and is forecasting strong earnings growth over the coming years. The broker has pencilled in operating earnings growth of ~20% per annum through to at least FY 2024.

Goldman has a buy rating and $14.40 price target on the company’s shares

The post Analysts rate these ASX 200 shares as buys appeared first on The Motley Fool Australia.

More reading

• 10 ASX shares to buy in 2022
• Here’s why the Goodman Group (ASX: GMG) share price just hit an all-time high
• ASX shares to buy for the Omicron COVID outbreak
• 2 high-growth ASX shares profiting from the e-commerce boom
• Why these ASX 200 shares could be strong buys

Motley Fool contributor James Mickleboro owns shares of NEXTDC 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 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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If you’re interested in adding some small caps to your portfolio, then you may want to check out the ones listed below.

These small cap shares are rated highly by analysts and have been given buy ratings recently. Here’s what you need to know about them:

Australian Clinical Labs Ltd (ASX: ACL)

Australian Clinical Labs could be a small cap share to buy. It is a leading Australian private provider of pathology services through 86 NATA accredited laboratories.

From these sites, the company performs a diverse range of pathology tests each year for a range of clients. These include doctors, specialists, patients, hospitals and corporate clients.

Outside the current increased demand for its services from COVID-19 testing, Goldman Sachs believes Australian Clinical Labs is well-placed for growth over the long term. This is due to demographic volume drivers, the prevalence of chronic diseases, and the growing trend for doctors to use pathology services to recognise, prevent or treat diseases earlier.

Goldman Sachs currently has a buy rating and $5.90 price target on the company’s shares. This compares to the most recent Australian Clinical Labs share price of $4.34.

Booktopia Group Ltd (ASX: BKG)

Booktopia could be another small cap ASX share to buy. It is an online book retailer which has been growing at a very strong rate in recent years. For example, in FY 2021, Booktopia reported a 26% increase in shipments to 8.2 million units and a 19% lift in active customers to 1.8 million. This underpinned very strong revenue growth again.

The good news is that with the shift to online shopping continuing and its new distribution centre able to ship more books that ever before, the future looks bright for Booktopia.

Analysts at Morgans are very positive on the company’s outlook. They believe Booktopia is well-placed to win market share and continue its growth.

Morgans currently has an add rating and $3.72 price target on its shares. This compares to the most recent Booktopia share price of $1.99.

The post Analysts are tipping huge gains for these small cap ASX shares appeared first on The Motley Fool Australia.

More reading

• 2 exciting small cap ASX shares named as buys
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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 recommended Booktopia Group Limited. The Motley Fool Australia has recommended Australian Clinical Labs 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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ASX growth shares increasing in size quickly could be contenders for an investor’s portfolio.

There is growing volatility in the ASX share market. This may open up some better value opportunities for people to find.

Share prices regularly change, but lower prices give the chance getting exposure to quality companies at the best prices.

Here are two of them:

Doctor Care Anywhere Group PLC (ASX: DOC)

Doctor Care Anywhere is a UK-based telehealth company that is committed to delivering the best possible patient experience and clinical care through digitally enabled, joined up, evidence-based pathways on its platform. It has relationships with health insurers, healthcare providers and corporate customers to connect with a range of telehealth services.

It also recently completed the acquisition of Australian telehealth and tele-mental provider GP2U Telehealth. This gives the business another avenue for growth and geographical diversification. The ASX growth share has also entered the self-pay market in the Republic of Ireland through its channel partner Boots.

It’s expecting to report 2021 revenue growth of at least 100% compared to FY20, excluding the acquisition.

The three months to 30 September 2021 saw growth with a number of metrics. Quarter on quarter revenue growth was 21.6% to AU$10.7 million. Consultations grew by 30.6% to 116,800 with over 65% of consultations delivered to returning patients.

Activated lives reached 603,200 during the quarter – up 8% quarter on quarter. An activated life is the total number of people who have signed up for Doctor Care Anywhere’s service and entered their personal details.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara describes itself as a health technology software company with an integrated platform which assists in the delivery of personalised breast care.

The ASX growth share grew its subscription revenue by 35% to NZ$11.8 million in the first half of FY22. Its revenue comes with a very high gross profit margin of 91.4%.

Its market share of women who have at least one Volpara product used on their image is around 34%.

Volpara says that its strategic commercial partnerships will help it achieve greater reach in not only genetic testing for breast cancer but expansion into the US lung cancer market where AI and software offer the prospect of saving many more lives.

It has partnered with a number of different organisations, including in lung, with RevealDx, Riverain Technologies, Natera and Invitae.

The company has a number of areas of focus for growth such as expanding the electronic health record (EHR) sales channel. It’s also working on building its data platform in a key effort to change from screening for detection to prevention.

It’s expecting to reach revenue of between NZ$25 million to NZ$26 million in this financial year.

Volpara management said the next few months is going to be “incredibly busy and exciting” as it heads to Chicago for the large radiology conference RSNA. The third and fourth quarters of the year are traditionally the biggest quarters for the business.

The post 2 fast growth ASX shares that could be buys in December 2021 appeared first on The Motley Fool Australia.

More reading

• Best-ever result: Volpara Health (ASX:VHT) share price jumps on half-year update
• Have money to invest? Here are 2 ASX shares that could be potential buys
• 3 exciting small cap ASX shares to watch
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• 2 ASX healthcare shares rated as buys

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Doctor Care Anywhere Group PLC and VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool Australia has recommended Doctor Care Anywhere Group PLC. 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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If you’re wanting to add some ASX dividend shares to your portfolio, then it could be worth considering Telstra Corporation Ltd (ASX: TLS) shares.

Why could Telstra be a dividend share to buy?

Telstra could be a dividend share to buy due to its outlook being the best it has been in over a decade. This is being underpinned by the successful execution of its transformative T22 strategy and the growth targets included in its new T25 strategy.

In respect to the latter, Telstra is aiming for sustained growth and value by targeting mid-single digit underlying EBITDA and high-teens underlying earnings per share compound annual growth rates (CAGR) from FY 2021 to FY 2025.

Telstra’s CEO, Andrew Penn, commented: “T22 has been one of the largest, fastest and most ambitious transformations of a telco globally and today we are a vastly different company.”

“This means we are poised for growth as our society and economy increasingly digitises and we all work, study, transact and get our entertainment online. These fundamental shifts, together with T25, will underpin our future growth and shareholder value,” he added.

The response

These plans went down well with analysts, and particularly the team at Goldman Sachs. The broker believes Telstra is well-placed to grow its dividend in the coming years and is forecasting its first increase in almost a decade.

Goldman has pencilled in fully franked dividends per share of 16 cents for FY 2022 and FY 2023, before an increase to 18 cents in FY 2024 and then 19 cents in FY 2025.

Based on the current Telstra share price of $4.02, this implies yields of 4%, 4.5%, and then 4.7%, respectively.

Goldman also sees upside potential for the company’s shares. The broker has a price target of $4.40, which suggests the Telstra share price could rise almost 10% from current levels.

The post Hold the phone! Why Telstra (ASX:TLS) could be a dividend share to buy appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares are topping the volume charts this Friday
• The Telstra (ASX:TLS) share price keeps rising. What happened in November?
• These 3 ASX 200 shares are topping the volume charts on Thursday
• These 3 ASX 200 shares are topping the volume charts this Wednesday
• Will its energy expansion drive the Telstra (ASX:TLS) share price to new heights?

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 owns shares of and has recommended Telstra Corporation 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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Woolworths Group Ltd (ASX: WOW) wants to buy the Australian Pharmaceutical Industries Ltd (ASX: API) business. But there could be some roadblocks for that deal.

Woolworths has come in with a bid of $1.75 per API share, which is a 12.9% premium compared to the price that was agreed with Wesfarmers Ltd (ASX: WES).

The supermarket business said it was willing to explore potential alternative control transaction structure options, such as a takeover bid with a minimum acceptance condition of 50.1%. Woolworths noted that the board of API has determined the proposal is, or is reasonably likely to be, a superior proposal.

The CEO of Woolworths, Brad Banducci, said:

There is a compelling strategic rationale to support Woolworths Group’s acquisition of API. Health and wellness is a large, fast-growing category and API would be a fantastic addition to our food and everyday needs ecosystem.

If successful, we will continue to support API’s community pharmacy partners to deliver better experiences for both customers and pharmacists. We will also work to strengthen API’s wholesale and distribution business to ensure that all Australians continue to have timely, cost-effective access to a full range of PBS and other medicine, via their community pharmacy, regardless of where they live.

Woolworths also said it expects to achieve material shared benefits and synergies from the combination if it went ahead.

What’s the problem with the takeover?

As reported by my colleague Brooke Cooper, the Pharmacy Guild of Australia is not enthusiastic about the deal. The Pharmacy Guild said:

Why is a company with interests in the alcohol, tobacco, gambling, and nightclub industries wanting to move into healthcare?

How does it hope to convince Australians that it is serious about their health and welfare?

How will it ensure the successful community pharmacy model, which is custodian of the PBS (Pharmaceutical Benefits Scheme), is protected and maintained?

Analysts agree that it could be harder for Woolworths to get its offer across the line compared to Wesfarmers.

The Australian Financial Review reported that UBS analyst Shaun Cousins could face a lot of scrutiny because of the overlap between pharmacy sales and the and the health and beauty products that are sold by Woolworths. Whilst Mr Cousins thinks the deal could be approved by the ACCC, it could take time. He said that the Pharmacy Guild concerns looks greater for Woolworths than Wesfarmers.

Craig Woolford, a MST Marquee analyst, was also quoted by the newspaper, who said that a Woolworths deal is “likely to make the influential Pharmacy Guild nervous.”

Jefferies analyst Michael Simotas said that Wesfarmers could come back with a higher bid and that the ACCC could also have concerns as well. The AFR reported he said synergies should be bigger for Woolworths, but Wesfarmers had a better track record of executing in non-food retail categories.

Time will tell whether Wesfarmers comes back with an improved bid and which retail giant is ultimately successful at expanding into the pharmacy space.

The post Could this be a fly in the appointment for Woolworths’ (ASX:WOW) push into healthcare? appeared first on The Motley Fool Australia.

More reading

• Can Wesfarmers (ASX:WES) win the battle to take over API?
• Why API, Chalice Mining, GUD, and Worley shares are charging higher
• ASX 200 (ASX:XJO) midday update: Afterpay sinks, Woolworths bids for API
• API (ASX:API) share price rockets 16% higher after Woolworths launches takeover approach
• Why the Wesfarmers (ASX:WES) share price lost momentum in November

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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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