Category: Stock Market

The Senex Energy Ltd (ASX: SXY) share price is pushing higher on Monday morning.

At the time of writing, the energy producer’s shares are up 4.5% to $4.65.

Why is the Senex share price charging higher?

The Senex share price is on the move today after revealing that it has received a further improved non-binding proposal from POSCO International Corporation.

According to the release, POSCO has increased its takeover proposal to $4.60 cash per share.

This is up from previous offers of $4.00 per share in July, $4.20 per share in August, and $4.40 per share in September. In addition, the company notes that it still intends to pay shareholders a 5 cents per share dividend for the six months ending 31 December.

Will a deal be done?

On this occasion, the Senex Board appear pleased with POSCO’s offer.

Subject to negotiating an acceptable scheme implementation agreement, no superior proposal, and the independent expert’s report, the Senex Board intends to unanimously recommend that shareholders vote in favour of the proposed transaction.

It also notes that it has agreed to extend POSCO’s exclusivity period to 26 November. This is to provide time to negotiate and enter into a binding agreement and for POSCO to obtain its internal approvals. POSCO has confirmed to Senex that it has now completed all of its due diligence enquiries.

Senex highlights that during the diligence process, it provided information to POSCO in respect of its proposed acquisition of APLNG natural gas fields PL 209 and PL 445 for $80 million, which was announced to the market today. POSCO has confirmed to Senex that its cash offer price is inclusive of the value attributable to the proposed acquisition of these natural gas fields.

POSCO also informed Senex that it wishes to enter into discussions and share information with Hancock Energy. This is regarding the possible participation of Hancock should the proposed scheme be successful.

The Senex share price is up a massive 84% in 2021.

The post Senex (ASX:SXY) share price charges higher after agreeing takeover deal with POSCO appeared first on The Motley Fool Australia.

More reading

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• Senex (ASX:SXY) share price jumps 16% to multi-year high amid takeover talks

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

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The Wesfarmers Ltd (ASX: WES) share price is pushing higher on Monday following the release of an update on its takeover approach for Australian Pharmaceutical Industries Ltd (ASX: API).

At the time of writing, the conglomerate’s shares are up slightly to $60.74.

Wesfarmers share price higher after takeover update

Investors have been bidding the Wesfarmers share price higher today after it reached an agreement with Priceline pharmacy chain operator Australian Pharmaceutical Industries (API).

According to the release, the two parties have entered into a scheme implementation deed (SID) under which it is proposed that Wesfarmers will acquire 100% of the shares in API that it does not already own via a scheme of arrangement.

Wesfarmers will be paying a cash consideration of $1.55 per API share, less any dividends that are paid. While this represents only a modest premium to the latest API share price, it is a 35.4% premium to its undisturbed closing share price on 9 July 2021.

What now?

The API Board is unanimously recommending that API shareholders vote in favour of the scheme, in the absence of a superior proposal and subject to the independent expert’s report. Each director intends to vote all of the API shares held or controlled by them in favour of it.

The scheme remains subject to customary conditions, including API shareholder approval, court approval, ACCC approval, no material adverse change, and no prescribed occurrences. However, the scheme is not subject to due diligence or financing. The SID also contains exclusivity provisions for Wesfarmers and reciprocal break fees payable in certain circumstances.

Why acquire API?

Wesfarmers’ Managing Director, Rob Scott, expects the acquisition of API to provide an attractive opportunity to enter the growing health, wellbeing, and beauty sector.

He said: “Wesfarmers continues to see opportunities to invest in and strengthen the competitive position of API and its community pharmacy partners by expanding ranges, improving supply chain capabilities and enhancing the online experience for customers.”

Mr Scott also revealed that Wesfarmers will not be making any changes to API’s community pharmacy model.

“In addition to our discussions with API management, we have engaged with industry stakeholders during due diligence. As we have previously stated, Wesfarmers supports the community pharmacy model, including the pharmacy ownership and location rules. Wesfarmers recognises the importance of strong relationships with our trading partners and we look forward to working closely with API’s pharmacy partners, suppliers and other industry stakeholders,” he added.

The Wesfarmers share price is up 18% in 2021.

The post Wesfarmers (ASX:WES) share price rises on API takeover deal appeared first on The Motley Fool Australia.

More reading

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• 2 top ASX 200 shares that might be buys today
• Why did the Wesfarmers (ASX:WES) share price have such a great month in October?
• What were the best performing ASX real estate shares to hold in October?
• What’s going on with the Wesfarmers (ASX:WES) API takeover bid?

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 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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The Bank of Queensland Limited (ASX: BOQ) share price has gained more than 40% since this time last year. In comparison, the S&P/ASX 200 Index (ASX: XJO) is up around 20% over the same timeframe.

The regional bank’s shares are hovering around November 2019 levels. However, they are still a long way off the record high $13 mark seen in 2015.

In early morning trade on Monday, Bank of Queensland shares are heading higher, up 0.11% to $8.71.

What did Bank of Queensland last report?

The bank delivered its full-year results for the 2021 financial year on 13 October. Investors reacted negatively to the news, sending the company’s shares down 4.32% on the day. This is despite Bank of Queensland reporting strong growth across key metrics.

In summary, statutory net profit after tax (NPAT) for FY21 rose 221% year over year to $369 million. An increased net interest income and credit to loan impairment expense, partly offset by higher operating expenses, underpinned the result.

Management notes that the digital transformation and ME Bank integration is executing as planned. Bank of Queensland is aiming for all of its retail brands to operate from a common cloud-based digital platform.

How much is the bank scheduled to pay in dividends?

Bank of Queensland will pay a fully-franked FY21 dividend of 22 cents per share on 18 November. This was a substantial increase on the first-half dividend of 17 cents and almost double the FY20 dividend of 12 cents.

When calculating against the current share price, Bank of Queensland is trailing on a forecast fully-franked dividend yield of 4.4%. The payout ratio is calculated to be 61% of the bank’s profits.

It’s worth remembering that the company has paid relatively consistent dividends over the years. Before the onset of COVID-19, the regional bank had been paying shareholders fully-franked dividends of above 30 cents on a biannual basis.

Bank of Queensland share price summary

In 2021, the Bank of Queensland share price has continued to rise in value, gaining more than 15% for investors.

Bank of Queensland commands a market capitalisation of $5.57 billion, with about 640.88 million shares on its books.

The post The Bank of Queensland (ASX:BOQ) share price is now trading on a forecast 4.4% fully-franked dividend yield appeared first on The Motley Fool Australia.

More reading

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• Here’s why the Bank of Queensland (ASX:BOQ) share price tumbled 5% in October
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• Why is the Bank of Queensland (ASX:BOQ) share price plunging today?
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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Is the Coles Group Ltd (ASX: COL) share price worth looking at with a grossed-up dividend yield of around 5%?

Coles is one of the largest supermarket businesses in Australia, with over 800 supermarket locations. The business also has other segments including Coles Online, Coles Liquor, Coles Express, loyalty program Flybuys and Coles Financial Services.

The Coles Liquor business has over 900 stores across Liquorland, Vintage Cellars, First Choice Liquor and First Choice Liquor Market.

What is the Coles dividend yield right now?

In FY21, the Coles board decided to pay a total dividend of $0.61 per share. That was an increase of 6.1% compared to the total payment from FY20. This came after a 1.8% increase to the final dividend, bringing it to $0.28 per share.

Coles generated a total of 75.3 cents of earnings per share (EPS) in FY21. That means the supermarket business paid out around 81% of its FY21 profit to investors. This shows that Coles is keeping close to 20% of its net profit to re-invest back into the business.

At the current Coles share price, it has a trailing dividend yield of 4.9%.

Will the dividend grow in FY22?

The next 12 months of dividends may be similar to the last 12 months. Commsec numbers suggest a slight increase of the annual dividend to 61.4 cents per share.

Other analysts have similar thoughts. The brokers at Macquarie Group Ltd (ASX: MQG) think that Coles could pay an annual dividend per share of 61.2 cents.

Latest trading update

How a business performs with its sales can have a sizeable impact on profit and potentially the board’s thoughts on the dividend. Trading updates can also influence the Coles share price.

Coles recently gave an update for its first quarter numbers, showing sales generated in the 13 weeks from 28 June 2021 to 26 September 2021.

Supermarkets sales came to $8.62 billion, an increase of 1.8% year on year and 11.9% over two years. The online penetration of that was 9% for the quarter. Supermarket e-commerce sales grew by 48%.

Liquor sales were $874 million, which was up 2.6% compared to the first quarter of FY21 and up 20.4% compared to two years ago. Finally, Coles Express sales were $262 million, down 10.1% year on year and down 0.8% over two years.

The total sales for Coles were $9.756 billion for the first quarter, up 1.5% year on year and up 12.2% in two years.

Coles said that it’s on track to deliver ‘smarter selling’ benefits of more than $200 million in FY22.

The supermarket business is optimistic about the Christmas and the holiday period as families and friends get together again.

In the first four weeks of the second quarter of FY22, supermarket comparable sales were “broadly in-line” with the first quarter. Lower COVID-19 costs are expected in the second half of FY22, as changes to isolation policies lead to moderating impacts in November and December.

It also said that construction delays mean that some of its capital program will be re-phased into FY23.

Is the Coles share price a buy?

Macquarie thinks so, rating Coles as a buy, with a price target of $19.80. That suggests the brokers think that the shares can rise around 10% over the next 12 months. It’s valued at 23x FY22’s estimated earnings.

The post Is the Coles (ASX:COL) share price a buy for the 5% dividend yield? 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. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET and Macquarie 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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The Peter Warren Automotive Holdings Ltd (ASX: PWR) share price is in focus on Monday. This comes as the new and used car dealership operator announces its expansion through a substantial $104 million acquisition this morning.

At the time of writing, shares in the company are sitting at $3.00 ahead of the market opening today.

Let’s walk through the car dealerships’ latest announcement.

Expanding Melbourne presence with Penfold Motor

In its first acquisition since commencing its listed life on the ASX, Peter Warren Automotive has made a land grab for a Melbourne-based car dealership. The move will see the 63-year-old company explore outside its current bounds of Queensland and New South Wales.

According to the release, Peter Warren has agreed to acquire 100% of Penfold Motor Group. The automotive dealership being acquired is a family-owned and operated outfit that began its operations in 1964. Currently, Penfold has 10 leasehold operations sprawled across South and East Melbourne.

Additionally, Penfold Motor Group’s portfolio of brands includes Audi, Mazda, Volkswagen, Hyundai, and Suzuki. These recognisable vehicle brands align with those that are within Peter Warren Automotive’s offerings.

In terms of the business financials, Penfold recorded $354 million in revenue in the FY21 full year. This metric was achieved despite the significant disruptions imposed by lockdowns at the fault of COVID-19. Furthermore, the deal is expected to be double-digit earnings per share (EPS) accretive on a pro forma FY22 basis.

To fund the acquisition, the company will be providing $88 million in cash. This will be partly from existing cash reserves and partly through the drawdown of new debt facilities. Lastly, a $16 million portion of the total $104 million consideration will be a scrip component.

For the purpose of the scrip deal, 5.2 million new shares will be issued to shareholders of Penfold Motor Group at $3.02 per share.

Peter Warren Automotive share price snapshot

Peter Warren Automotive was listed on the ASX back in April of this year. Despite posting revenue and earnings growth in its maiden full-year result on the public market, shares in the company have underperformed.

Since listing, the Peter Warren Automotive share price has fallen 13.3%. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has gained 6% over the same time period.

The post Peter Warren Automotive (ASX:PWR) share price in view amid $104m acquisition appeared first on The Motley Fool Australia.

More reading

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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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The Telstra Corporation Ltd (ASX: TLS) share price has accelerated over the past 11 months, up 33%. This comes as Australia’s largest telco provider has managed to navigate its way around COVID-19 and the NBN headwind.

At the end of Friday, the telco’s shares recorded gains of 1.27% to $3.98.

What’s driving Telstra shares upwards in 2021?

Without a doubt, the Telstra share price has been on fire this year, buoyed by upbeat investor sentiment.

The company’s mobile division has been a standout performer as Australians continue to work from home. In addition, management’s focus on cutting down costs across the business has had a positive effect on its share price.

Telstra’s acquisition of Pacific-based telco, Digicel is also expected to provide ample returns with relatively low risk. The telco paid US$270 million while the Australian government chipped in the majority of the $1.6 billion price tag.

The deal is anticipated to be earnings per share accretive, more than a share buyback.

More recently, the company signed a significant renewal contract with the Australian Department of Defence.

Extended for 5-years and worth over $1 billion, the agreement will see Telstra deliver critical network and telecommunications services.

It’s the largest ever customer contract signed by Telstra Enterprise and will aid the business in returning to growth.

Are Telstra shares a buy?

A couple of brokers have weighed in on the company’s share price last month.

Australian leading investment firm, Morgans raised its price target for Telstra shares by 2.5% to $4.55.

Analysts at Goldman reaffirmed their outlook on Telstra shares as a ‘buy‘, putting a price target of $4.40. Based on the current share price, this implies an upside of around 10%.

Goldman Sachs remains bullish following Telstra’s T25 update, which highlighted a number of initiatives to boost future growth.

Telstra share price snapshot

In 2021, the Telstra share price has gained above 30%, reaching pre-pandemic levels. If the company’s share price can push above $4.05 today, it will be at a multi-year high from 2017.

Telstra commands a market capitalisation of around $47.34 billion, making it the 10th largest company on the ASX.

The post Here’s why the Telstra (ASX:TLS) share price is up 33% so far in 2021 appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras owns shares of Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns 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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A consortium of investors led by IFM Investors and Global Infrastructure Partners will take the reigns of Sydney Airport (ASX: SYD) after the trio agreed to a deal over the weekend.

After a period of due diligence, Sydney Airport’s board has unanimously agreed to advance with the deal.

The transaction values Sydney Airport securities at $8.75 per share. This is equal to the final offer the consortium made earlier this year.

After the company’s share price finished in the green at $8.23 last week, this represents a 6% premium before the open today.

Here is what we know so far.

What do we know about the Sydney Airport acquisition?

Under the scheme of arrangement, Sydney Airport shareholders will receive a number of considerations, including the $8.75 in cash per stapled share.

UniSuper Limited is also expected to transfer its existing interest of 15.01% “for an equivalent interest in the holding structure of the consortium.”

Sydney Airport’s board has unanimously recommended its shareholders vote in favour of the scheme. Shareholders will have their chance to vote at an upcoming scheme meeting planned for Q1 2022.

The consortium, which calls itself the Sydney Aviation Alliance, originally put in offers of $8.25 and then $8.45 per share respectively. Sydney Airport’s board declined both of these offers.

As such, the revised offer values Sydney Airport’s equity at $23.6 billion with the $8.75 per share bid.

This equates to an enterprise value of almost $32 billion on the company when including its debt and preferred equity, then stripping out its cash.

Hence, the deal also represents an approximate $2 billion or 6.7% premium to Sydney Airport’s current enterprise value of $30 billion.

But it’s not going to be all smooth sailing from here, especially for the consortium buying Australia’s largest airport.

Under the legislature, no single investor can own more than 15% of any two major Australian airports. That includes Sydney, Melbourne, Perth and Brisbane.

The rules are in place to protect consumers and prevent airport owners from price gouging and manipulating the price function of airline tickets.

But IFM – one party leading the Sydney Aviation Alliance consortium – already owns significant stakes in Melbourne and Brisbane’s airports, and has done for many years.

For instance, it owns a 25% stake in the Melbourne airport and is a 20% owner of the Brisbane airport. Under the legislature, it can only own a 15% stake in its newly-acquired asset.

As such, IFM has some prudent portfolio management decisions to make, but may also argue its other airport interests should be classified differently due to the new consortium structure.

What’s next for Sydney Airport shareholders?

The scheme is still yet to be approved by shareholders, who will vote in the first quarter of 2022 at the planned scheme meetings.

The resolutions must be approved by at least 75% of the vote cast by shareholders, per the company.

The deal is also subject to a number of conditions and still must pass a fair bit of scrutiny before finalisation.

For instance, it still requires approval from Australia’s Foreign Investment Review Board (FIRB) and must seek approval from the Australian Competition and Consumer Commission (ACCC).

As for now, it appears the wheels are set in motion for the deal to go ahead, pending the full approval of Sydney Airport’s shareholders.

For the record, this deal represents the largest ever cash bid for a publicly listed company in Australia, should it all go ahead according to plan.

At the minute, Sydney Airport shareholders have been instructed to take no action until the upcoming meetings.

Sydney Airport share price snapshot

The deal represents an almost $8 billion hike from the original offer laid down by the Sydney Aviation Alliance.

The Sydney Airport share price is expected to open at $8.23 today. It has climbed 39% in the last 12 months after rallying 28% this year to date.

Both of these results are ahead of the S&P/ASX 200 Index (ASX: XJO)‘s 20% climb in the last year.

The post Confirmed: $32 billion Sydney Airport (ASX:SYD) deal to land today appeared first on The Motley Fool Australia.

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

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There are a number of ASX dividend shares that have dividend yields of more than 4%.

But, just because a business pays a dividend doesn’t automatically make it worth owning for income.

Some brokers have rated businesses with higher yields as buys, such as these two:

Nick Scali Limited (ASX: NCK)

Nick Scali is a large retailer of furniture in Australia. It has a growing network of stores in Australia and New Zealand. At the time of the FY21 result release, it had 61 showrooms across Australia and New Zealand with a long-term target of 85.

The business had a bumper year in FY21, with sales revenue growth of 42.1% and underlying net profit growth of 100% to $84.2 million.

Online was a small, but rapidly growing, contribution to the result. Online written sales orders for FY21 were $18.3 million compared to $3 million in FY20. The earnings before interest and tax (EBIT) contribution from the online channel for FY21 was $8.8 million, compared to $0.6 million in FY20.

Whilst the business recently reported that FY22 first quarter revenue was in line with the FY21 first quarter, October trading has been “buoyant”.

The ASX dividend share also recently completed the acquisition of Plush, which comes with a network of 46 showrooms across Australia. In FY21, Plush generated $160 million of revenue and $27 million of underlying earnings before interest, tax, depreciation and amortisation (EBITDA).

Citi currently rates Nick Scali as a buy, with the Plush purchase being a good deal. The broker thinks Nick Scali will pay a grossed-up dividend yield of 5.1% in FY22 and 6.3% in FY23. It has increased its dividend every year since 2013.

JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi is one of Australia’s largest electronic and appliance retailers with both its JB Hi-Fi and The Good Guys businesses.

It has also increased its dividend every year since 2013.

FY21 was a bumper year for JB Hi-Fi too, with total sales rising 12.6% to $8.9 billion and net profit after tax (NPAT) rising by 67.4% to $506.1 million. The business focused on its margins over the year and benefited from improvements across the business.

In the ASX dividend share’s recent annual general meeting (AGM) presentation, it said that it is underpinned by five unique competitive advantages: scale, low cost operating model, quality store locations, supplier partnerships and multichannel sales capability.

Looking at the dividend, JB Hi-Fi said the board will continue to regularly review the group’s capital structure with a focus on maximising returns to shareholders and maintaining balance sheet strength and flexibility.

Citi rates JB Hi-Fi as a buy, with a price target of $53. The broker thought the FY22 first quarter was a decent start to the year. JB Hi-Fi Australia sales fell 7.5% in the first three months of FY21, whilst The Good Guys sales were down 5.6%.

The broker thinks households will keep spending on their homes in FY22.

Citi thinks that JB Hi-Fi will pay a grossed-up dividend yield of 6.5% in FY22 and 5.8% in FY23.

The post 2 ASX dividend shares that could be buys with yields above 4% 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. 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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With inflation persisting and Reserve Bank stimulus about to fade, it’s more important now than ever to invest in quality ASX shares.

Perhaps the biggest victim out of any rise in the cost of money will be the technology sector, as it has many growth businesses with variable future cash flow.

Fortunately, if you know where to look, there are some ASX tech shares that have rock-solid business models that could withstand worsening macroeconomic conditions.

Medallion Financial Group managing director Michael Wayne named 2 such shares this week:

Cheap ASX tech share perfectly set up for the future

Wayne rates ELMO Software Ltd (ASX: ELO) as a “very high-quality company”.

“They’ve recently had an update to the market, which has been well received and has allayed a lot of the fears out there regarding a pathway to cash-flow positivity,” he told Switzer TV Investing.

“They flagged a 78% increase in their cash receipts.”

Indeed, after losing about 29% since January, the Elmo share price has surged 20% upwards in the past month and closed on Friday at $5.25.

The sticky nature of the business, Wayne forecasts, will push further growth.

“They’re one of these businesses that has very low customer churn rates, the average recurring revenue has been growing very, very quickly over the years,” he said.

“As a customer comes on, they might use one or two of their modules, but over time as they get comfortable… they tend to bolt on more modules as time goes on.”

Elmo shares have a 52-week high of $7.44, reached way back in January.

Wayne has no qualms about the stock price returning to those heights.

“It doesn’t trade on the lofty multiples of many other tech companies, and I think the recent good news could be the impetus to push it back towards that $7, $8 mark — with potential upside from there.”

No one is using less data these days

Network-as-a-service provider Megaport Ltd (ASX: MP1) has already had a great run this year, with its shares pushing almost 39% higher.

“It allows companies to pay-as-they-go in terms of capacity use,” he said.

“When they need a lot of bandwidth or a lot of internet, they can go to Megaport. When they don’t need as much, they can then pull away from that service.”

Wayne recommended his clients buy it back when it was in the low $3s. At Friday’s close, Megaport shares were going for $19.70.

Despite the spectacular rise, he still can’t resist the insatiable demand for its services.

“It’s a very good business, and had a very good update recently as well. They’re now on track to reach that $100 million recurring revenue mark,” said Wayne.

“We’re using more and more data these days and this is one of those businesses that should benefit from that.”

The post 2 quality ASX tech shares ripe for the picking appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Tony Yoo owns shares of Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Elmo Software and MEGAPORT FPO. The Motley Fool Australia owns shares of and has recommended Elmo Software. The Motley Fool Australia has recommended MEGAPORT 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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The REA Group Limited (ASX: REA) share price stormed to a record high on Friday following the release of its first quarter update.

The online property listings company’s shares jumped 8% to $180.67 before ending the period at $176.81.

This means the REA share price is now up just under 15% since the start of the year.

Can the REA share price keep rising?

The good news is that one leading broker still sees value in the REA share price at the current level.

According to a note out of Goldman Sachs, its analysts have retained their buy rating and lifted their price target on the company’s shares by 2% to $193.00.

Based on the current REA share price, this implies potential upside of 9.2% for investors over the next 12 months.

What did the broker say?

Goldman was pleased with REA’s “strong” first quarter result. It notes that price increases and stronger than expected depth advertising uptake were highlights during the period.

In response, the broker has lifted its earnings estimates for the company and the target on the REA share price accordingly.

Goldman commented: “The strong REA result was driven by momentum in residential listings (+11%), the impact of July price rises (c.8%), and better than expected benefits from depth uptake and adjacent services (i.e. Audience maximiser). REA broke out full-year core operating cost guidance for high single digits (Excl. India/MOC), with domestic costs offsetting savings from PropertyGuru/99 Group changes, while it signaled a reduction in associate contributions due to Move reinvestment and recent acquisitions.”

“Overall we revise higher our FY22 listing assumptions (+2% vs. -3% prior) but continue to expect declines in 2H22 (+7%/-3% in 1H/2H22 given the Fed election & tough comparable in 4Q21). Combined with higher yield growth & domestic opex assumptions, our FY22-24 core Australia EBITDA is +1% to +5%. When including the higher associate contributions our REA FY22-24 EPS +1% to +4% and our 12m SOTP-based TP increases +2% to A$193,” the broker added.

The post Top broker gives its verdict on the REA (ASX:REA) share price appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA 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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