Category: Stock Market

November was a big month for Sydney Airport (ASX: SYD), even if its share price didn’t reflect the enormity.

The airport’s long-discussed takeover finally got the green light early last month.

Despite the exciting happening, the Sydney Airport share price only gained 1.34% over the course of September. It ended the month 11 cents higher than it started, trading at $8.30.

Though, that blew the performance of the S&P/ASX 200 Index (ASX: XJO) out of the water – it tumbled 0.92% last month.

 Let’s take a closer look at the month that was for the major Australian airport.

What drove the Sydney Airport share price last month?

Sydney Airport accepted an $8.75 per share takeover offer posed to it by the Sydney Aviation Alliance – a consortium of infrastructure investors – on 8 November.

As The Motley Fool Australia reported, the deal puts the airport’s enterprise value at $32 billion – a $2 billion premium.

The Sydney Airport share price rose 2.8% following the takeover’s acceptance.

Though, the purchase will now face scrutiny by local and global watchdogs.

The alliance will need to get merger clearance from the European Union before the takeover can be finalised.

Australian bodies will also be casting their eye over the deal.

The Australian Competition and Consumer Commission and the Australian Foreign Investment Review Board will both get a say on the takeover.

There’s also the issue of Australia’s airport cross-ownership laws. Some members of the alliance already own significant stakes in other major Australian airports.

Entities can only own more than 15% of either Sydney, Brisbane, Melbourne, or Perth’s airports.

Whether the alliance can bypass the law is yet to be seen.

Finally, Sydney Airport released promising – albeit not price-sensitive – news on 19 November when it provided its traffic data for October.

While October didn’t see an influx of travellers, the airport noted it saw an uptick in passengers in early November.

Australia’s international borders opened on 1 November, making the data particularly significant.

As of the end of November, the Sydney Airport share price was 29% higher than it was at the start of 2021. Additionally, it gained 39% over the 12 months ended 30 November.

The post How did the Sydney Airport (ASX:SYD) share price perform in November? appeared first on The Motley Fool Australia.

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• These 3 ASX 200 shares are topping the volume charts this Wednesday
• $6m shareholder says Sydney Airport (ASX:SYD) selling too cheap, calls for board spill

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 Beach Energy Ltd (ASX: BPT) share price continued its poor form from last month and has tumbled at the start of December. This comes after the company announced a couple of negative announcements that weighed on investor sentiment.

At Wednesday’s market close, the energy producer’s shares added more pain, finishing the day down 0.84% to $1.175.

What’s happening with Beach Energy?

At the start of November, the company announced the departure of its managing director and CEO, Matt Kay.

The news sent the Beach Energy share price almost 4% lower as the board appointed a temporary replacement.

Chief financial officer, Morné Engelbrecht took over the reins while the company conducts a search process for a permanent CEO. No one has yet to take the top job.

A few days later, Beach Energy held its annual general meeting (AGM), highlighting a strong start to FY22.

The company reaffirmed its plan to achieve production of 28 million barrels of oil equivalent (mmboe) by FY24. In contrast, Beach Energy recorded production of 25.6 mmboe in FY21 – down 4% from the previous year.

However, looking at the near term, Beach Energy expects to have 8 gas plants producing from 5 basins by the end of 2023. The plants will deliver gas to 4 markets including the East Coast gas market and the global LNG market.

Lastly, the company is focused on its approach to sustainability, focusing on becoming a net zero emissions producer by 2050. It is already delivering emissions reductions across its operated assets.

Despite the overall positive update, Beach Energy shares failed to gain traction, losing about 5% in the days following.

More recently, the company was hit with two separate class action lawsuits from Slater & Gordon Lawyers and Shine Lawyers. Both firms are representing shareholders who acquired an interest in ordinary shares in Beach Energy between 17 August 2020 and 29 April 2021.

The company stated that it has at all times complied with its disclosure obligations and denies any wrongdoing.

Beach Energy share price summary

Over the last 12 months, the Beach Energy share price has fallen around 30%, with year-to-date dropping almost 35%. Its shares hit a 52-week low of $1.01 in September before rebounding. However, since late October, Beach Energy shares have been on a downward trend.

Beach Energy presides a market capitalisation of roughly $2.68 billion, with approximately 2.28 billion shares on hand.

The post The Beach Energy (ASX:BPT) share price dropped 15% in November. December is also off to a lousy start appeared first on The Motley Fool Australia.

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• Biden taps oil reserve. What could this mean for ASX oil shares?
• 5 things to watch on the ASX 200 on Wednesday

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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Shares in Helloworld Travel Ltd (ASX: HLO) have been struggling over the past month.

Investors have been dumping the travel management company as concerns of further COVID-19 ramifications spread. In turn, the Helloworld share price has tumbled 22% in the last month.

Like many other ASX-listed travel-exposed companies, Helloworld’s operations remain heavily impacted by travel restrictions. Unfortunately, the latest Omicron concerns have only added to the bleak operating environment for such businesses.

What’s the travel situation?

Many countries have gone back into a defensive approach in response to the new COVID-19 development. The new variant comes at a time when the Northern hemisphere had already been experiencing a substantial increase in case numbers as it enters the colder season.

The situation for Helloworld shares isn’t ideal as governments reintroduce added restrictions. For Australia, the government has imposed new border security measures effectively immediately. These include:

• Anyone who is not a citizen or permanent resident of Australia who has been in African countries where the Omicron variant has been detected — within the past 14 days — will not be able to enter Australia.
• Australia citizens and permanent residents arriving from the affected countries will need to go into supervised quarantine for 14 days.
• Anyone who has arrived from the affected countries in the past 14 days will need to self-isolate and receive a COVID-19 test.
• All flights from the 9 southern African countries will be suspended for 14 days, beginning 27 November 2021.

With a new variant on the loose, demand for travel has likely taken a blow. Currently, there are 6 confirmed cases of Omicron in Australia. The latest confirmed case is a fully vaccinated person who had arrived back from southern Africa.

Furthermore, the latest variant puts uncertainty on when travel companies might resume ‘normal’ operations. The question is an important one as Helloworld burns through its cash. In FY21, Helloworld shares came under pressure as it posted a $35.5 million net loss.

The company reported a cash balance of $131 million at the end of June 2021.

Helloworld shares in review

The S&P/ASX 200 Index (ASX: XJO) has made for a better investment so far this year. Exposure to industries less impacted by COVID-19 has allowed the benchmark index to gain 8.3%. In contrast, Helloworld shares have shaved off 15.4% since the beginning of the year.

Lastly, Helloworld’s market capitalisation has yet to recover to its pre-pandemic level. The company was previously worth around $630 million prior to the 2020 market crash. However, restrictions took a toll on Helloworld. As a result, the company is now valued at approximately $330 million.

The post Why have investors been saying goodbye to Helloworld (ASX:HLO) shares lately? appeared first on The Motley Fool Australia.

More reading

• Why is the Helloworld (ASX:HLO) share price tumbling 6% on Friday?
• Here’s why ASX 200 travel shares are getting hammered today

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. owns shares of and has recommended Helloworld Limited. The Motley Fool Australia owns shares of and has recommended Helloworld 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 Westpac Banking Corp (ASX: WBC) share price was well and truly out of form in November.

The banking giant’s shares were among the worst performers on the S&P/ASX 200 Index (ASX: XJO) last month with a 20.1% decline.

What happened to the Westpac share price?

Investors were selling down the Westpac share price last month following the release of its full year results.

For the 12 months ended 30 September, Australia’s oldest bank reported a 138% increase in statutory net profit to $5,458 million and a 105% jump in cash earnings to $5,352 million.

As strong as this looks on paper, it was still a touch short of the market’s expectations. As was the announcement of a $3.5 billion off-market share buyback.

However, that was not the real reason for the Westpac share price weakness. That weakness was driven largely by management’s net interest margin outlook.

Westpac’s CEO, Peter King, commented: “For our business, loan growth is expected to be sound as the economy rebounds, although net interest margins will remain under pressure from low interest rates and competition.”

Combined with similarly cautious margin commentary from fellow retail-focused bank Commonwealth Bank of Australia (ASX: CBA), analysts were quick to downgrade Westpac’s shares and suggest investors switch to business banking-focused banks.

The teams at Credit Suisse, Goldman Sachs, and Morgan Stanley were among those that downgraded Westpac’s shares following its results.

Is this a buying opportunity?

One leading broker that sees a lot of value in the Westpac share price following the selloff is Morgans.

It currently has an add rating and $30.50 price target on the bank’s shares. This implies potential upside of approximately 48% for investors. The broker also expects a generous fully franked 6% dividend yield in FY 2022 based on the current Westpac share price.

Morgans commented: “We find the management of the margin-volume tradeoff in Australian home lending in FY21 to be disappointing and we hope for better management of this tradeoff going forward. Having said this, our view has been that the stock was not being priced for perfection and was offering considerable value. While the NIM has now re-based notably lower, we continue to see considerable value in the stock particularly due to our expectation of significant cost out by FY24F.”

The post The Westpac (ASX:WBC) share price sank 20% in November: Time to buy? appeared first on The Motley Fool Australia.

More reading

• Morgans names 2 of the best ASX share ideas for December
• ASX shares to buy for the Omicron COVID outbreak
• What’s JP Morgan saying about ASX 200 bank shares?
• These were the 5 worst performing ASX 200 shares in November
• Here’s why some ASX 200 bank shares are having a terrific Tuesday

Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. 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 Westpac Banking Corporation. 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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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part one, Medallion Financial managing director Michael Wayne revealed the 3 ASX shares that have gone gangbusters for him. Today, he explains why he’s getting his clients to buy 3 ASX shares in particular.

Hottest ASX shares

The Motley Fool: What are the 3 best stock buys right now?

Michael Wayne: One that we’ve been buying consistently really over the last couple of years with some degree of success has been Audinate Group Ltd (ASX: AD8). 

We continue to like this company, particularly as we emerge from lockdown. Audinate’s involved in the audio digital space. It essentially allows different pieces of electronic equipment to communicate without the needs for cords and cables. So if you think about a Bose sound system, or Toshiba, all these different brands effectively embed this protocol that Audinate creates called Dante. 

And about 80% of new products coming to market incorporate this Dante product. So they’ve got a pretty strong market position. The adoption rate of their technology is about 18 times the nearest competitor. They’re also now moving into the visual-digital space as well, so that would be a new market for them. 

Obviously COVID wasn’t great for them, because if you think about outdoor concerts or large sporting events, they were on the backburner. But we’re now coming out of that, and this is a company that should benefit from that.

One caveat — and they have been under a little bit of pressure recently, although they’re starting to bounce back now — is that they are having some supply issues, like many other businesses across numerous industries at the moment, which is making it a bit difficult for them to meet their demand. But the good thing is their order backlog is very, very juicy, and it’s growing very, very quickly. So as long as they can continue to meet that demand, they should be in a pretty good position.

MF: This is a long term investment?

MW: Yeah. I mean, long term as long as something can be long term. Obviously, we’re reviewing the updates and the annual reports and half-year reports, et cetera, but we would like to see this one as a long term hold for sure. 

The balance sheet’s improving a lot. They’ve spent a lot on research and development in recent years and that’s starting to come to fruition for them. So we see no reason why this can’t be an unregulated monopoly of sorts… So yeah, we think it’s a long term buy.

Second one on the list is a company called XRF Scientific Limited (ASX: XRF). 

Although it is a smaller company, it’s not trading on the lofty multiples that you would normally associate with the tech space. 

XRF Scientific’s effectively a mining services company. They sell machines to mining companies so that they can conduct tests on their core samples. And what’s good about that is not only do they sell the machines, they then sell them the chemicals which are used in those tests, and the chemicals are consumable in nature. So once they’re used once, they’ve got to be replenished and bought again.

It’s a good recurring revenue stream for them. They’ve obviously been benefitting from the boom that we’ve been seeing across most commodity suites at the moment. 

Pays a good solid dividend yearly, about 3.5%. It’s got a strong balance sheet. They too have spent a lot on research and development in recent years and that’s started to pay off for them. A multiple of 25, 30 times earnings, as well, isn’t too challenging for a company that is growing quite nicely.

MF: Its clients are mining companies, so are there any worries about their cyclical nature?

MW: Look, that is definitely one element of concern, being in the mining space. They do have applications for other industries as well. But the fact is they are growing quickly enough too, we think, offsets any sustained downturn in the mining space. 

That’s definitely something you’ve got to be conscious of. But we’re pretty confident that the commodities space will hold up. I mean, commodities are very, very cyclical, as you say, and almost impossible to predict, but looking across the board, not just at your typical iron ore and coal, et cetera, but some of these newer type commodities that are emerging and becoming more and more prevalent, we think will support that going forward.

MF: And the third one?

MW: The third one, I’m going to go a bit more boring here. Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) is one that we have been buying for clients in the last couple of days, for those that don’t already hold it, and for some clients even topping up. 

They had a very good update. Obviously, being in the respiratory and acute care, they’ve been benefiting from the COVID situation. But much of the market was predicting that that COVID boost would fade, but as it turns out, although the numbers have come back a little bit, their results delivered far in excess of expectations across the market. 

We think that that COVID story, as we’re seeing in Europe and Africa, won’t necessarily disappear overnight, and is going to be a lot more sustained than people originally thought, so we think that Fisher & Paykel will continue to benefit from that.

They’re also seeing some good sales outside of the typical markets of US and Europe, which we think bodes well for future growth drivers, those emerging markets. There have been some strong signs in their nasal high flow therapy adoption as well, which we think is promising for them. 

Also, Fisher & Paykel [has] one of the highest quality balance sheets on the market, and at the moment, it is trading on a PE multiple at the bottom end of its long term average.

We think it’s not a bad time to be looking to pick up a very good quality growth business at a multiple that is very challenging by traditional metrics, but for this business, it’s on the lower end of that scale. For a company that’s growing as quickly as they are, they can very quickly justify and grow into that multiple.

The post 3 hot ASX shares to buy right now: advisor appeared first on The Motley Fool Australia.

More reading

• 2 ASX shares rated as strong buys by top brokers
• Advisor reveals the 3 most popular ASX shares among his clients
• Why Adairs, EML, Fisher & Paykel Healthcare, and NRW are storming higher
• ASX 200 (ASX:XJO) midday update: EML rockets, NAB given ACCC green light
• Fisher & Paykel Healthcare (ASX:FPH) share price higher on half year results

Motley Fool contributor Tony Yoo 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 AUDINATEGL FPO. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO. 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 a few new additions to your portfolio in December, then look no further.

Analysts at Morgans have picked out a number of ASX shares that they class as their best ideas for the month.

Below are two top ASX shares that the broker rates highly this month. They are as follows:

BHP Group Ltd (ASX: BHP)

Morgans is a big fan of this mining giant and has an add rating and $45.70 price target on its shares. The broker likes the Big Australian due to the diversity of its operations, which it notes makes it a lower risk option for investors in the resources sector. Morgans also highlights its resilient dividend profile, which it expects to underpin a ~$3.40 per share dividend in FY 2022. This equates to a fully franked 8.5% yield at current levels.

Morgans commented: “We view BHP as relatively low risk given its superior diversification relative to its major global mining peers. The spread of BHP’s operations also supplies some defence against direct COVID-19 impact on earnings contributors. While there are more leveraged plays sensitive to a global recovery scenario, we see BHP as holding an attractive combination of upside sensitivity, balance sheet strength and resilient dividend profile.”

Westpac Banking Corp (ASX: WBC)

Another giant that Morgans has on its best ideas list is Westpac. It believes Westpac is the best option for investors in the banking sector due to its compelling valuation. The broker also likes Westpac due to its cost reduction plans and risk profile. Morgans has an add rating and $30.50 price target on the bank’s shares.

Its analysts said: “WBC is our preferred major bank. We believe WBC offers the most compelling valuation of the major banks. In terms of quality of overall risk profile, we believe WBC is a close second to CBA. On credit risk, we believe WBC is positioned relatively defensively due to its loan book being more skewed to Australian home lending. […] we expect investors to increasingly warm up to WBC’s medium-term cost out story.”

The post Morgans names 2 of the best ASX share ideas for December appeared first on The Motley Fool Australia.

More reading

• The Fortescue (ASX:FMG) share price hit by broker downgrade
• Why did the BHP (ASX:BHP) share price move up by 8% in November?
• ASX shares to buy for the Omicron COVID outbreak
• What’s JP Morgan saying about ASX 200 bank shares?
• These were the 5 worst performing ASX 200 shares in November

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

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It’s the last month of 2021. There are some very compelling ASX shares that are now trading at good value.

Businesses that are expected to achieve strong growth in the coming years may be able to achieve pleasing results, particularly if they are able to positively surprise investors along the way.

This volatility could mean it’s a good time to buy the following ASX shares:

Airtasker Ltd (ASX: ART)

Airtasker is a leading ASX tech share that owns a marketplace. The idea is that it connects people who want work done with people willing to do that work. It’s rapidly gaining traction in Australia and it is making a promising start in the UK as well.

It is currently rated as a buy with a price target of $1.27 by Morgans. It highlighted that the business achieved growth in the first quarter of FY22 even though Melbourne and Sydney were in lockdown during that quarter.

First quarter gross marketplace volume (GMV) grew 6.2% year on year to $35 million. The company boasted that it is seeing a strong post-lockdown bounce back, with the latest weekly GMV of $3.6 million translating to an equivalent annualised run rate of $185 million.

A key part of the company’s growth plans is international expansion. Airtasker saw international GMV increase more than 100%, driven by “strong growth” year on year in the UK.

The US Zaarly integration and US expansion is progressing well according to management with city-level markets launching in Dallas, Kansas City and Miami.

The ASX share is also seeing “strong positive movement” in its average task value, with this trend expected to continue in the medium-term and the longer-term. Management also noted that as Airtasker becomes more trusted, more people are turning to the marketplace for more complex jobs and therefore higher value tasks.

Kogan.com Ltd (ASX: KGN)

The Kogan share price has fallen 18% over the last month. Some investors and analysts think that it’s an opportunity. One of those positive on the business is Credit Suisse, which has a price target of $13.88 on the company.

Kogan’s FY22 first quarter showed a good level of growth for sales and active customers, though profitability was lower than expected. The broker thinks that the Kogan share price looks good value.

The ASX share has had to deal with the fallout of having too much stock on hand, which led to higher inventory holding costs and an increased level of discounting to reduce stock levels back to the right level. However, Kogan says that it has resolved its excess inventory issues now.

As mentioned by the broker, Kogan revealed double digit top line growth in the first quarter of FY22 with gross sales rising 23.2% quarter on quarter to $330.5 million and gross profit increasing 31.6% quarter on quarter to $52.5 million. Active customers rose 30.7% year on year to 3.35 million for Kogan.com, whilst Mighty Ape ended with 748,000 customers.

In its AGM year to date update to October 2021, Kogan said its gross sales growth was 19.2%, though gross profit was slightly down to $69.2 million. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) was down over 60% to $12.4 million compared to the first four months of FY21.

However, Kogan notes that online retail is in its infancy in Australia and its market share is rising in a rapidly growing market. Its five-year goal for FY26 is gross sales of $3 billion.

Credit Suisse puts the Kogan share price at 20x FY23’s estimated earnings.

The post 2 top ASX shares for December appeared first on The Motley Fool Australia.

More reading

• The Kogan (ASX:KGN) share price has suffered 4 52-week lows in the past week. Here’s why
• Here’s why these 3 All Ordinaries shares just hit 52-week lows
• Why Domino’s, Healius, Kogan, and Vulcan shares are pushing higher
• These are the 10 most shorted ASX shares
• The Kogan (ASX:KGN) share price just hit another 52-week low, its fourth this week. Can it fall any further?

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 Kogan.com ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Airtasker Limited. The Motley Fool Australia owns shares of and has recommended Kogan.com 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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The Fortescue Metals Group Limited (ASX: FMG) share price could start to lag its peers after a leading broker downgraded its shares.

The downgrade came after the Fortescue share price rallied ahead of other ASX iron ore miners even though it has less reason to.

Sure, confidence in the outlook for the steel making commodity has markedly improved recently. But lower quality ore (58% Fe) is lagging the benchmark pricing (62% Fe), noted Citigroup.

Fortescue share price at premium as discounts widen

Fortescue’s ore is lower quality compared to what BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) produces. But someone forgot to mention that to Fortescue.

“In the last month FMG shares are up 21% in USD terms with peers flat to down and with benchmark iron ore down 7%,”.

“In broad terms, FMG has outperformed the benchmark iron ore price since early July 2021 with risk appetite rising strongly from earlier lows.

“There’s been a clear divergence whereby FMG has outperformed RIO despite a falling ratio of 58%/62% iron ore.”

The discount between the 58% Fe price and 62% Fe price has widened to around 74% compared to 91% just two months ago.

What is the Fortescue share price worth?

Even if you are an iron ore bull, the BHP share price and Rio Tinto share price could offer more bang for your investment buck.

This is the key reason behind Citi’s decision to downgrade the Fortescue share price to “neutral” from “buy”.

The broker left its 12-month price target unchanged at $18 a share. That leaves little room for Fortescue to run from Wednesday’s closing price.

Should you buy ASX iron ore shares?

Having said that, Citi believes that the iron ore price is poised for a recovery after the 2022 Chinese New Year (CNY) on 1 February.

“China steel production cuts may persist through to CNY (Oct down 23% on pcp) and we deduce a strong destock cycle is underway,” added the broker.

“However, with China now starting targeted monetary policy easing, we see the increasing likelihood of a strong post CNY recovery in iron ore demand.

“Furthermore, China mill margins are up with rebar producers now making a healthy US$150/t margin.”

Foolish takeaway

Chinese steel mills are the key customers for Australian iron ore. If they are making big margins, they are more willing to pay more for Australian iron ore.

Against this positive backdrop for the commodity, the Fortescue share price may be spared from a heavy sell-off. The only question is whether it can at least keep up with its bigger rivals.

The post The Fortescue (ASX:FMG) share price hit by broker downgrade appeared first on The Motley Fool Australia.

More reading

• Why did the BHP (ASX:BHP) share price move up by 8% in November?
• Why is the Rio Tinto (ASX:RIO) share price having such a great day?
• The Fortescue (ASX:FMG) share price jumped 22% in November
• These were the 5 best performing ASX 200 shares in November
• These are the ASX 200 shares that fundies have been snapping up

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited, Fortescue Metals Group Limited, and Rio Tinto Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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It has been a very disappointing year for the PointsBet Holdings Ltd (ASX: PBH) share price.

Since the start of the year, the sports betting company’s shares have fallen 38% to $7.12.

Though, that is telling only half of the story. The PointsBet share price was up as much as 53% year to date in February.

This means that since peaking at a record high of $17.60 earlier this year, the company’s shares have lost approximately 60% of their value.

Is the PointsBet share price in the buy zone?

Following a meeting with management, the team at Goldman Sachs remains positive on the PointsBet share price.

This morning the broker retained its buy rating and $12.79 price target on its shares. This implies potential upside of almost 80% over the next 12 months.

What did the broker say?

Goldman revealed that it viewed the meeting with management as a positive read for the entire US sports betting industry, which it notes has corrected sharply (not just the PointsBet share price) amidst ramping promotions and mounting EBITDA losses.

In light of this, the broker believes it is worth sticking with PointsBet, especially given the upside potential.

Goldman commented: “Overall we remain positive on PBH, with our thesis underpinned by i) PBH’s leverage to the burgeoning US Sports Betting and iGaming market, which we forecast to be a >US$50 bn TAM opportunity at maturity, ii) our view that PBH remains well-placed to capitalise given its in-house tech stack, iii) upside risk to long-run sustainable margins in Aus and the US, and iv) scalability benefits ahead from NBCUniversal leads and broader coverage from state roll outs.”

“We continue to see significant asymmetric risks ahead for PBH given the entire sector’s recent sell-off, and we note the significant upside opportunity ahead in what will likely be a transformational CY22 year as it expands its North American footprint as well as ongoing M&A attractiveness to peers,” it concluded.

The post Goldman sees “significant upside opportunity” for the PointsBet (ASX:PBH) share price appeared first on The Motley Fool Australia.

More reading

• Why the PointsBet (ASX:PBH) share price is racing higher today
• Leading broker thinks Pointsbet (ASX:PBH) share price offers 60% upside
• These were the worst performing ASX 200 shares last week
• 3 fantastic ASX shares to buy this month
• PointsBet (ASX:PBH) share price tipped to surge 44% higher

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 shares of and has recommended Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings 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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At the current EML Payments Ltd (ASX: EML) share price, one leading broker thinks it’s still got a lot more upside.

Since the middle of last week, EML shares have risen 26%. Before getting to the broker’s thoughts and price target on the business, let’s look at what may have caused the rocketing share price.

EML Payments share price has risen after CBI update

There has been a cloud over the payments business for a number of months regarding issues relating to the Central Bank of Ireland (CBI) and its focus on EML’s PFS Card Services (Ireland) Limited (PCSIL) business.

Whilst there is plenty of payments volume outside of the PCSIL business (such as in Australia), PCSIL is responsible for a substantial portion of EML’s overall volume and also one of the expected growth areas for the EML business.

Last week, EML made an announcement about the CBI.

There were three areas that EML announced what the CBI had said:

• The CBI will permit PCSIL to sign new customers and launch new programs whilst staying within the material growth restrictions. PCSIL is confident that it can meet these obligations
• Next, broad-based reductions in limit controls on the programs will not be imposed. The CBI is satisfied to continue to engage with PCSIL with a view to agreeing appropriate limits under its risk management and controls framework.
• The CBI intends a material growth limitation over PCSIL’s total payment volumes will be imposed for 12 months or rescinded earlier following third party verification to confirm PCSIL’s remediation plan has been effectively implemented.

The CBI had invited PCSIL to provide it with submissions in relation to growth limits, which PCSIL intends to do by 30 November 2021.

PCSIL has been removing higher volume lower yielding programs to enable it to comply with a material growth restriction and is confident it can meet these obligations. EML also said its remediation plan is on track.

It may be important for investors to know about the above news, which could have been influencing the market’s thoughts on EML’s underlying value.

Broker view on the EML share price

UBS is one of the brokers that currently likes EML after the CBI update because the risks are now seemingly lower when it comes to the CBI and intended growth. The broker now thinks that EML will be able to win over new clients more easily.

The broker is expecting that EML Payments shares are going to continue rising. It currently has a price target on the business of $4.40, which is 27% higher than where it is today.

UBS is expecting rapid profit growth over the next couple of years from EML. Based on the broker’s profit estimates, the EML Payments share price is now valued at 29x FY23’s estimated earnings.

Recent growth update

Despite all of the disruption caused to EML by the CBI matter with PCSIL, the overall EML Payments business continues to grow at a fast rate.

In the first quarter of FY22, gross debit volume (GDV) went up 14% to $5.5 billion, which helped revenue increase 29% to $52.4 million and gross profit rose 20% to $34.4 million. Underlying net profit (NPATA) surged 41% to $4.6 million.

The post Top broker tips 27% upside for the EML (ASX:EML) share price appeared first on The Motley Fool Australia.

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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 EML Payments. The Motley Fool Australia owns shares of and has recommended EML Payments. 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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