In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a disappointing decline. At the time of writing, the benchmark index is down 0.5% to 7,265.8 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are storming higher:

Alumina Limited (ASX: AWC)

The Alumina share price is up almost 4% to $2.23. This solid gain appears to have been driven by rising alumina prices. Demand has been increasing at a time when supply has been tightening. Much to the delight of Alumina and its shareholders, the company’s shares hit a 52-week high this morning.

Aurelia Metals Ltd (ASX: AMI)

The Aurelia Metals share price is up 4% to 31.7 cents. This follows the release of drilling results from its Great Cobar deposit. According to the release, exceptional copper-gold mineralisation was intercepted in follow-up drilling targeting down-plunge extensions. The Great Cobar deposit is located to the north of the company’s Peak Mine near Cobar, New South Wales.

Netwealth Group Ltd (ASX: NWL)

The Netwealth share price is up 3.5% to $14.13. Today’s gain appears to have been driven by a broker note out of Credit Suisse this morning. According to the note, the broker has retained its outperform rating and lifted its price target to $17.00. Credit Suisse believes that Netwealth could win a 15% share of the platform market by the end of the decade.

Piedmont Lithium Inc (ASX: PLL)

The Piedmont Lithium share price has jumped 5.5% to 77 cents. Investors have been buying this lithium developer’s shares recently after the price of the battery making ingredient increased further. Prices for battery-grade lithium carbonate rose 26.5% in China to 160,000 yuan (US$24,800) a tonne during the final two weeks of September.

The post Why Alumina, Aurelia Metals, Netwealth, & Piedmont Lithium are storming higher appeared first on The Motley Fool Australia.

More reading

• ASX lithium shares lift as spot prices hit all-time highs
• ASX 200 (ASX:XJO) midday update: Westpac’s $1.3bn earnings hit, Ansell sinks
• How did ASX lithium shares perform in the FY22 first quarter?
• These were the 5 best performing ASX 200 resources in September
• Alumina (ASX:AWC) share price lifts on project update

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 Netwealth. The Motley Fool Australia owns shares of and has recommended Netwealth. 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 S&P/ASX 300 Index (ASX: XKO) is sliding again today, adding to yesterday’s 0.27% loss.

During afternoon trade, the ASX 300 is down a further 0.33% to 7,278.9 points. This means that the index has dropped around 3.5% since the start of September.

Let’s take a look at which ASX companies are the strong performers today.

Australian Strategic Materials Ltd (ASX: ASM)

The Australian Strategic Materials share price is on the rebound, following a drop of 6% since Friday.

The rare earth metals company hasn’t released any news in the past few weeks. However, a strong gain in the commodities markets could be a catalyst for its recent rise.

The spot price for rare earths mineral, neodymium, is fetching around 777,500 Chinese yuan per tonne, up 24.9% year-to-date.

Perseus Mining Ltd (ASX: PRU)

The Perseus share price is pushing higher with a 4.50% gain to $1.56.

The gold miner released an update today advising that it plans to hold a quarterly investor webinar on 21 October. Furthermore, Perseus will also provide more information on its Edikan and Yaouré exploration activities next week.

Investors appear to be buying up Perseus shares in expectation that positive results will come.

Zimplats Holdings Ltd (ASX: ZIM)

Also flying higher is the Zimplats share price, up 4.25% to $21.33 apiece.

The mining company hasn’t provided the market with any new information in the past few weeks.

A possible catalyst for the upward trend could be the improvement in platinum prices since last Tuesday.

Now, let’s take a look at the weaker ASX 300 companies.

Sezzle Inc (ASX: SZL)

Falling today is the Sezzle share price, down 6.46% to $5.65, with no new market announcements from the company.

Investors have sold off the buy-now pay-later (BNPL) company’s shares after registering a 20% gain over the last 3 days.

Just last week, United States retail giant Target announced the launch of a BNPL offering in partnership with Sezzle. This service will be used to attract customers with affordable payment solutions.

Target is the eighth largest retailer in the United States and has a network of more than 1,909 stores. The deal could have a huge impact on Sezzle’s bottom line for the future.

Yancoal Australia Ltd (ASX: YAL)

Another company’s shares being weighed down by investors today is the Yancoal share price, down 5.10% to $3.91.

The energy producer’s shares frequently make the ASX 300 headlines, bouncing from the top gains to biggest losers.

The spot price of coal has taken a break from its wild rise over the past 12 months, currently at US$244.50 a tonne.

It’s worth noting that a number of ASX energy sector companies are also slipping into the red today. The S&P/ASX200 Energy Index (ASX: XEJ) is down 1.60% to 8,922.4 points.

The post Which ASX shares are the top movers in the ASX 300 today? appeared first on The Motley Fool Australia.

More reading

• Why has the Australian Strategic Materials (ASX:ASM) share price tumbled 22% since August?
• Here are the top 10 ASX shares today
• Which ASX 300 shares are making headlines on Monday?
• Which shares are set to finish the week as the top movers on the ASX 300?
• Why Fletcher Building, Magellan, Sezzle, & Starpharma are racing higher

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

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The Bank of Queensland Ltd (ASX: BOQ) share price is up 0.1% in early afternoon trading, at $9.74 per share.

That’s a bit better than the 0.39% loss posted by the S&P/ASX 200 Index (ASX: XJO) at this same time.

With intraday moves factored in, the bank’s shares are up 4.9% since the start of the new quarter (Q2 FY22) on 1 October, compared to a 1.04% gain on the ASX 200.

That’s the recent action.

Below, we look at how the Bank of Queensland share price moved in Q1 FY22.

What happened with the Bank of Queensland share price in the last quarter?

The bank started the quarter trading at $9.11 per share.

By the closing bell on 30 September, the Bank of Queensland share price was at $9.36.

That’s a gain of 2.7% over a quarter that saw the ASX 200 gain a meagre 0.3%.

However, shareholders had to contend with some volatility over the quarter.

Shares hit closing lows of $8.74 on 20 July and reached closing highs of $9.72 on 8 September. That’s more than an 11% price swing during the 3-month period.

What moved shares over the quarter

Investors had numerous factors to consider over the quarter.

One of the tailwinds helping the Bank of Queensland share price was, and continues to be, Australia’s red hot property market. Home loans represent a major component of the bank’s lending sheet.

The bank also started the quarter off by announcing that it had officially sealed the deal to acquire Members Equity Bank (ME Bank). The deal, valued at some $1.33 billion, had been in the works since February but ran into a few legal headaches before final approval.

Commenting on the completed acquisition on 1 July, Bank of Queensland’s CEO George Frazis said:

Importantly, what [the acquisition] enables us to do is to invest heavily in terms of our digital transformation… enabling us to be more competitive in terms of the service that we’re providing for customers that choose to bank with us.

On 22 July, the bank announced that former ME Bank director Deborah Kiers was joining its board.

That appointment likely offered another boost for the Bank of Queensland share price.

As my Foolish colleague, Aaron, noted on the day, “Ms Kiers has more than 26 years’ experience in providing strategic advice to international boards and executive teams. In addition, she has spent almost 10 years as the managing director of business management consulting company JMW Consultants.”

While that leadership position appeared to be welcomed by investors, additional executive shakeups in September may have dragged on the Bank of Queensland share price.

Late in the month, the bank appointed a new chief risk officer and a new chief product officer.

It seems the leadership churn rate at the bank caused some concern.

As my colleague, Nikhil, reported on 23 September, “Of particular concern was the departure of business group executive Fiamma Morton who was in the role for 15 months. Morton had replaced Peter Sarantzouklis, who assumed the role in August 2019, before leaving five months later in January 2020.”

Despite those concerns, the Bank of Queensland share price beat the ASX 200 over the last quarter and is up an impressive 59% over the last 12 months.

The post Here’s what happened to the Bank of Queensland share price in the FY22 first quarter appeared first on The Motley Fool Australia.

More reading

• Own Bank of Queensland (ASX:BOQ) shares? Here’s what to expect from its FY21 results
• Bank of Queensland (ASX:BOQ) share price hits 52-week high on Friday
• Top broker tips Bank of Queensland (ASX:BOQ) share price as a buy
• 5 things to watch on the ASX 200 on Wednesday
• If you invested $1,000 in Bank of Queensland (ASX:BOQ) shares a decade ago, here’s what it would be worth now

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 CSL Limited (ASX: CSL) share price has been underperforming in 2021.

Since the start of the year, the biotherapeutics giant’s shares have risen just a touch over 1.5% to $289.65.

This compares unfavourably to a 9% gain by the S&P/ASX 200 Index (ASX: XJO) over the same period.

Could the CSL share price hit $325 by the end of 2021?

While the underperformance in the CSL share price has been disappointing, one leading broker appears to see it as an opportunity for investors to buy the shares of a company that would make a great core holding in a portfolio.

According to a recent note out of Morgans, its analysts have an add rating and $324.40 price target on its shares.

Based on the current CSL share price, this implies potential upside of approximately 12% for investors.

As a result, Morgans appears to see potential for the CSL share price to be trading in or around the $325.00 mark come the end of the year.

What did the broker say?

Morgans acknowledges that FY 2022 is going to be a transitional year for the company due to plasma collection headwinds.

It commented: “FY22 guidance is targeting cc NPAT between US$2,150-2,250bn (-9% to -5%) on revenue growth between 2-5%, with management flagging a “transitional year”, core plasma products “robust”, but margins contracting on increased costs, and Seqirus strength ongoing.”

“Plasma collections through FY22 is the key focus and main determinate of margin growth and earnings trajectory into FY23 and beyond, having improved off its nadir (-40%+ last Apr) albeit, not back at pre pandemic levels, on vaccine momentum, CSL initiatives (eg enhanced marketing; new technologies; better donor programs; 40 new collection centres in FY22) and as US COVID stimulus checks ending.”

“As such, we view the exact timing of a recovery as uncertain, especially in light of a 9-12 month manufacturing cycle, possibly sticky costs and increasing US restrictions on COVID variants now seen even outside the approaching flu season,” it added.

Nevertheless, the broker believes the company is well-positioned for growth once the headwinds ease and remains bullish on the CSL share price.

It concluded: “We view CSL as a core holding and best positioned among its peers to meet growing patient demand, but the near term remains challenged, with timing uncertainty around a full recovery in plasma collections and increasing costs.”

The post Could the CSL (ASX:CSL) share price hit $325 by the end of 2021? appeared first on The Motley Fool Australia.

More reading

• Here’s what happened to the CSL (ASX:CSL) share price in the FY22 first quarter
• Why do Pilbara Minerals (ASX:PLS) shares keep topping the volume charts?
• Why did the CSL (ASX:CSL) share price have such a lousy month in September?
• 5 defensive ASX shares to guide you through the market correction
• Is the CSL (ASX:CSL) share price a buy 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. owns shares of and has recommended CSL Ltd. 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 AMP Ltd (ASX: AMP) share price is having a day in the green. It comes after the company made a few changes to its board.

At the time of writing, shares in the financial institution are trading for $1.112 – up 0.63%. The S&P/ASX 200 Index (ASX: XJO), meanwhile, is down 0.34%.

Let’s take a closer look at today’s news.

Board changes come with rising AMP share price

In a statement to the ASX, AMP says it has appointed Patrick Snowball as Chair designate, as well as Andrew Fay as Deputy Chair designate to the board of AMP’s Private Markets business.

Snowball was the former CEO of Suncorp Group Ltd (ASX: SUN) between 2009 and 2015. He has also held senior roles in many publicly-listed, and privately-held, companies. Fay too has a plethora of experience in corporate management, such as a non-executive director of Spark Infrastructure Group (ASX: SKI).

Investors may be confident in these appointments, at least judging by the rising AMP share price.

“Together Mr Snowball and Mr Fay bring broad international experience of financial services and investment management, including real estate and infrastructure investment. Both have strong knowledge and experience of listed companies, corporate governance, and investor engagement,” AMP said.

This is the first step in the eventual demerger of AMP from its private markets business.

Management commentary

AMP Chair Debra Hazelton said of the new appointments:

Patrick and Andy are respected business leaders who will bring deep experience, market knowledge and integrity to the Board of Private Markets when it lists next year. Both have led significant financial institutions and have the experience of bringing businesses to a share market listing. Patrick has been a CEO of one of Australia’s largest financial services groups and led its transformation, as well as chairing listed companies in the UK. Andy is a highly regarded non-executive director with an impressive track record in investment management, including infrastructure and real estate.

AMP share price snapshot

Over the past 12 months, the AMP share price has dropped by a whopping 20.7%. Year-to-date, it’s down an even worse 28%.

AMP has a market capitalisation of approximately $3.7 billion.

The post AMP (ASX:AMP) share price lifts amid new board appointments appeared first on The Motley Fool Australia.

More reading

• Why this top broker sees 16% upside for the AMP (ASX:AMP) share price
• How has the AMP (ASX:AMP) share price beaten the market over the past week?
• Why did the AMP (ASX:AMP) share price have such a terrible September?
• Here are the 3 most traded ASX 200 shares so far this Tuesday
• The AMP share price is up 6% in a week, here’s why

Motley Fool contributor Marc Sidarous 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 BHP Group Ltd (ASX: BHP) share price is currently up more than 1% amid rumours regarding its coal assets.

BHP generates most of its profit from iron ore and copper, but the business also has metallurgical coal and thermal coal divisions.

Coal asset sale on the cards?

According to reporting by The Australian, BHP may be considering selling its coal assets.

Previously, it was rumoured that BHP was very close to selling its coal assets to Peabody Energy in August, though nothing has happened.

However, the discussions have reportedly continued.

Coal prices continue to climb and BHP is benefiting from the surge in profit that the coal segment is generating.

The Australian reported that the high coal price is encouraging other potential bidders to think about it such as BUMA and Sinar Mas Group. However, New Hope Corporation Limited (ASX: NHC) is apparently not one of the businesses that are currently interested.

The newspaper quoted a figure of approximately $2 billion for the potential worth of the coal business.

It was noted that BHP may be motivated to sell off its coal assets whilst the coal price is so high, rather than waiting for when there may be no buyers.

However, it may be possible that BHP decides to hold onto the assets and benefit from the cashflow it makes and “run them down” over the coming years.

BHP to exit all fossil fuels?

If BHP were to exit coal, then that would leave it with a portfolio of iron ore, copper, nickel and potash. That might put the BHP share price in focus for investors that exclude ‘fossil fuels’ from their portfolios.

If readers are wondering about the petroleum business, it’s currently in the process of merging that with Woodside Petroleum Limited (ASX: WPL).

The two businesses have agreed to merge the oil and gas portfolios in an all-share merger to create a global top 10 independent energy company by production.

After BHP shareholders receive new Woodside shares, BHP investors will own 48% of the business and Woodside will own 52% of the combined company.

Describing the benefits of the merger, Woodside and BHP said:

With the combination of two high-quality asset portfolios, the proposed merger would create the largest energy company listed on the ASX, with a global top 10 position in the LNG industry by production. The combined company will have a high margin oil portfolio, long life LNG assets and the financial resilience to help supply the energy needed for global growth and development over the energy transition.

One of the benefits that the companies provided further detail on was estimated synergies of more than US$400 million per annum from optimising corporate processes and systems, leveraging combined capabilities and improving capital efficiency on future growth projects and exploration.

BHP share price snapshot

According to the ASX, BHP has a market capitalisation of $112.3 billion.

Commsec puts BHP shares at around 10x FY23’s estimated earnings.

The post BHP (ASX:BHP) share price rises amid coal asset sale rumours appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Monday

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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The Seafarms Group Ltd (ASX: SFG) share price is plummeting today following news of a budget blowout.

The aquaculture company broke its trading halt this morning when it announced the cost of the first stage of its Project Sea Dragon has increased by as much as 49%.

As can be expected, the market has reacted poorly to today’s news from Seafarms.

At the time of writing, the Seafarms share price is 5.2 cents, 8.77% lower than its previous close.

However, that’s better than its intraday low of 4.8 cents. Then, it was sporting a 15% drop.

Let’s take a closer look at the project’s increased cost estimates.

Seafarms’ budget blowout

The Seafarms share price is sliding after the company announced the expected cost of its Project Sea Dragon’s stage 1a has soared by as much as $135 million.

Sea Dragon is a proposed, large-scale, prawn aquaculture project being developed in various sites across northern Australia to supply high-quality prawns to export markets.

Last time the company updated the market on the project’s costs, it outlined it expected to spend $275 million to $290 million for its first stage.

Today, that estimate has increased to between $370 million and $410 million.

The company has once more flagged that it will need additional equity funding to finish the project’s first stage.

However, Seafarms made it clear the original estimate didn’t include contingencies or escalation. The company also believes the true cost will be at the lower end of the new range.

Additionally, Seafarms has given another $17 million worth of work to the head contractor of the Legune section of the project in the Northern Territory. Canstruct was originally contracted to provide $78 million worth of work.

The extra funds will cover the project’s jetty hardstands, roads, and quarry services.

Of the construction works now awarded to Canstruct, the price, in aggregate, is within 8% of company’s budget estimates. That represents around 54% of the capex required at the Legune site.

Further, Canstruct is only authorised to do $57 million worth of work so costs remain within the limits of the company’s recent capital raise.

Seafarms is also making progress with its construction debt facility. Agreements for construction facilities of between $100 million and $150 million and between $15 million and $35 million of working capital are targeted for the final quarter of 2021.

Finally, the company’s experiencing some construction delays at the project’s Exmouth and Bynoe sites. It’s also keeping an eye on the incoming wet season and COVID-19-related border closures, which could cause more delays.

Seafarm share price snapshot

Today’s dip has added to Seafarms’ recent struggles on the ASX.

The company’s share price has fallen 38% since the start of 2021. It is also 51% lower than it was this time last year.

The post Here’s why the Seafarms (ASX:SFG) share price is plunging 8% today appeared first on The Motley Fool Australia.

More reading

• Why is the Seafarms (ASX:SFG) share price frozen on Thursday?

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 Commonwealth Bank of Australia (ASX: CBA) share price is in positive territory on Tuesday. This comes after Australia’s largest bank provided an update regarding its prudential inquiry remedial action plan.

During early afternoon trade, CBA shares are up 0.24% to $104.94.

CBA completes remedial action plan

In today’s statement, CBA published the final report on its remedial action plan, improving on governance, culture, and accountability issues.

In 2018, the Australian Prudential Regulation Authority (APRA) launched an inquiry into CBA following a number of scandals. This included giving out poor advice, major anti-money laundering breaches, fee errors, and issues with insurance.

At the time, APRA’s findings led it to believe the bank had a negligent attitude to non-financial risks.

Independent consulting firm Promontory made a suite of recommendations to improve the bank’s culture. Since then, the agency has conducted quarterly reviews to monitor CBA’s progress in remedying the issues at hand.

As such, the bank has noted that all milestones have been completed and all recommendations have been implemented.

APRA will undertake further validation work to assess the sustainability of CBA’s improvements with Promontory. In addition, APRA will also continue to monitor the bank’s prudential inquiry work.

However, this latest report is unlikely to be directly affecting the CBA share price today.

CBA chief executive Matt Comyn commented:

Three years ago, we committed to delivering all recommendations in the prudential inquiry final report.

Completing the Remedial Action Plan is a significant milestone but we recognise there is still much more for us to do. Our focus is to now demonstrate that the changes we’ve made are sustained and continuously improved.

About the CBA share price

It has been a strong 12 months for the CBA share price, rising by more than 50% despite moving in circles since mid-June. However, when looking at the year to date, the company’s shares have travelled more than 25% higher.

Based on today’s price, CBA commands a market capitalisation of roughly $178 billion and has approximately 1.7 billion shares outstanding.

The post CBA share price (ASX:CBA) gains amid remedial action plan update appeared first on The Motley Fool Australia.

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

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The Telstra Corporation Ltd (ASX: TLS) share price has been an interesting one to watch over the past year. Since bottoming out around $2.66 back in October last year, Telstra shares have been on quite the run. The telco is today sitting at a share price of $3.86. That’s roughly 45% off of the 52-week low that we saw back in October. We also see Telstra shares up 28.4% year to date in 2021 so far, and up 39% over the past 12 months to date.

But how did Telstra shares perform over the most recent quarter? The FY2022 year just saw its first quarter (running 1 July – 30 September) end, so how did Telstra shares go?

Well, this ASX 200 telco started the quarter off at a share price of $3.76. It finished up the quarter on 30 September at a price of $3.93. That puts its raw capital gains at roughly 4.52% for the quarter just passed. Not bad, one could say, especially considering that the broader S&P/ASX 200 Index (ASX: XJO) only managed a performance of 0.26% over the same period. That means the Telstra share price handily outperformed the market over the FY22 first quarter.

It’s also worth noting that this performance includes Telstra going ex-dividend for its final shareholder dividend during the quarter. Telstra traded ex-dividend on 25 August for its 8 cents per share payout, which naturally resulted in the Telstra share price taking a commensurate hit.

But this payout only hit shareholders’ pockets on 23 September, after the quarter ended. If these dates had been shuffled around to include the dividend payment in the quarter, shareholder returns for the period would have been even better.

So where to now for Telstra shares?

Could the Telstra share price be a buy today?

One broker who thinks so is investment bank Goldman Sachs. Goldman last month reaffirmed Telstra shares as a ‘buy‘, with a 12-month share price target of $4.40. That implies a future potential 12-month upside of roughly 14% on current pricing.

Goldman is bullish on Telstra following the company’s T25 update, which outlined a number of further cost-saving measures Telstra is planning on implementing. It also notes Telstra’s prioritisation of “growing franked dividends over time” as well as an expected share buyback program.

At the current Telstra share price, this telco has a market capitalisation of $44 billion and a dividend yield of 4.15%.

The post What happened for the Telstra (ASX:TLS) share price in the FY22 first quarter? appeared first on The Motley Fool Australia.

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• When will the Telstra (ASX:TLS) dividend increase?
• Could the Telstra (ASX:TLS) share price reach $4.50 by the end of 2021?
• Why these experts say the Telstra (ASX:TLS) share price is tempting right now
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Motley Fool contributor Sebastian Bowen 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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The Ansell Limited (ASX: ANN) share price took a dive this morning after a leading broker urged investors to dump the shares.

That sent the glove maker’s ASX share price crashing over 4% to $32.33 at the time of writing. Adding insult to injury, the Ansell share price is the worst performer on the S&P/ASX 200 Index (Index:^AXJO).

If you are wondering, the Corporate Travel Management Ltd (ASX: CTD) share price is the second worse while the Clinuvel Pharmaceuticals Limited (ASX: CUV) is in third spot.

Ansell share price whacked by broker downgrade

Investors are hitting the “sell” button after Macquarie Group Ltd (ASX: MQG) downgraded the Ansell share price to “underperform”.

That may sound counterintuitive as we are still in the midst of the COVID-19 pandemic. Demand for personal protective equipment (PPE) is still strong and that’s unlikely to change.

In fact, single-use gloves for examinations (Exam/SU) were Ansell’s biggest revenue contributor in FY20. The product accounted for around one-third of group revenue.

From hero to zero?

The item remained a hot product in FY21 but price pressures started to bite and management was able to increase prices to offset the squeeze.

They did such a good job that Macquarie estimates that the price increase was above the extra cost for raw materials.

This pretty much shows the price inelasticity for essential items like PPE during a pandemic!

Victim of its own success

Based on Macquarie’s numbers, the price increase added $70 million to Ansell’s gross profit in 2HFY21. This equates to around a 60% increase of the year-on-year gross profit improvement in FY21.

But cracks in the Ansell share price growth story have started to appear that prompted the downgrade.

“Recent industry feedback suggests reduced demand and increased supply thinner nitrile Exam/SU gloves, leading to lower ASPs (approaching pre-COVID-19 levels),” said Macquarie.

“In addition, feedback suggests a refocus of supply into other segments (thicker exam/single use, surgical). We now assume weaker volumes for Exam/SU in FY22/23 as well as the reversal of the majority of price increases implemented in FY21.”

Ansell share price at risk of consensus downgrades

In other words, the Ansell share price could soon be facing a consensus downgrade cycle, if Macquarie is right.

The broker’s FY22 earnings per share (EPS) forecast for Ansell of US$1.70 sits under the low-end of the company’s guidance. The guidance is for between US$1.75 and US$1.95 a share.

What is the Ansell share price worth?

Further, Macquarie’s FY23 EPS estimate is 16% under consensus. The broker’s 12-month price target on the Ansell share price is $32.

At least the shares don’t have to fall by much more to reach fair value after today’s big sell-off.

The post Why the Ansell (ASX: ANN) share price is crashing today appeared first on The Motley Fool Australia.

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Motley Fool contributor Brendon Lau owns shares of Ansell Ltd. and Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Macquarie Group Limited. The Motley Fool Australia has recommended Ansell 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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