Category: Stock Market

The Woodside Petroleum Limited (ASX: WPL) share price is a top performer on Wednesday, adding 3% to a 1-month high of $21.55.

Evergrande rattles oil markets

Oil prices fell sharply on Monday, sparked by fears that China’s Evergrande Group could default on its debt obligations and trigger a domino effect across the global economy.

Crude oil fell from US$71.68 to lows of US$69.63 before bouncing back to US$70.63 at the time of writing.

This dragged the Woodside share price lower on Tuesday, sliding 2.51% to $20.58.

The Evergrande crisis has made a dent in OPEC’s positive outlook for oil markets.

In its monthly oil market report, OPEC said that:

… the recovery in various fuels is expected to be stronger than anticipated and further supported by a steady economic outlook in all regions. Oil demand in 2022 is now projected to reach 100.8 mb/d, exceeding prepandemic levels.

S&P Global quoted analysts from Price Futures Group who said that “oil prices are trying to bounce back after being under pressure because of the concerns about China’s economy due to the possible default of China’s biggest property developer”.

“Those concerns had people running for haven protection in the dollar [and] put downward pressure on a lot of commodities.”

That said, analysts believe that oil demand is supported by a “surge in prices of alternative energy sources such as natural gas, particularly in Europe, where UK gas futures surged to record highs”.

“The region is set to face energy issues because of insufficient stockpiles, a situation that may worsen in the coming months as they enter the Northern Hemisphere winter.”

Woodside share price bounces to a 1-month high

The Woodside share price is making a comeback this month, pushing to a 1-month high of $21.55.

Shares in the oil and gas giant have gone nowhere since November last year, despite oil prices rallying more than 60% over the same period.

The post Woodside (ASX:WPL) share price rallies 3% as oil weighs in on Evergrande collapse appeared first on The Motley Fool Australia.

More reading

• ASX 200 rebounds into positive territory led by energy and materials shares
• 5 things to watch on the ASX 200 on Tuesday
• The Woodside (ASX:WPL) share price has just had a great week. What’s next?
• 5 things to watch on the ASX 200 on Monday
• These were the best performing ASX 200 (ASX:XJO) shares last week

Motley Fool contributor Kerry Sun 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.

from The Motley Fool Australia https://ift.tt/3lJs8HH

The South32 Ltd (ASX: S32) share price has been rattled by concerns about China’s economy and the possible default of its second-largest property developer, Evergrande Group.

Despite getting caught in the hysteria, the company announced some positive news regarding its Brazilian operations.

At the time of writing, the South32 share price is 0.76% higher to $3.315.

South 32 share price higher on smelter restart plans

South32 holds a 40% share in the Alumar aluminium smelter, which has been in care and maintenance since 2015.

Earlier this week, its joint venture partner Aloca announced plans to restart its operations. This announcement came on the back of surging spot prices.

The process to restart the idled capacity will begin immediately. First production is due around the second quarter of 2022.

The company expects the plant to ramp up to its full 268,000 metric tonne a year of capacity by the fourth quarter of 2022.

Aloca said that the restart is forecast to cost around US$75 million, including US$10 million in capital expenses.

The South32 share price has so far traded flat this week. Though it has fared much better than the S&P/ASX 200 Index (ASX: XJO).

“Our restart decision is based on an analysis that shows the smelter can be competitive throughout all cycles, leveraging the co-located refinery, a strong workforce, and competitive, renewable power arrangements,” Alcoa COO John Slaven said in a statement.

To add some perspective, South32 produced a total of 982,000 tonnes of aluminium in FY21.

Aluminum prices boom to 10-year highs

Aluminium is a top-performing commodity this year thanks to increasing production mandates from Chinese policymakers.

Aluminium prices were sitting around 2-year lows of about US$1,450 a tonne in May 2020, before rallying to US$2,550 a tonne by the end of FY21.

China’s supply squeeze, in addition to the recent military coup in the West African nation of Guinea, has propped up aluminium prices to a decade high of US$2,700 in early September.

This has helped drive the South32 share price to 2-year highs of $3.52 last Thursday.

The post South32 (ASX:S32) share price edges higher after plan to restart Brazil plant appeared first on The Motley Fool Australia.

More reading

• Here are the ASX 200’s most active shares this Tuesday
• New Hope (ASX:NHC) share price jumps on $337m profit turnaround
• Is the South32 (ASX:S32) share price a buy for dividends?
• Here are 3 of the most popular ASX 200 shares by volume today
• Top broker names 2 ASX dividend shares to buy

Motley Fool contributor Kerry Sun 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.

from The Motley Fool Australia https://ift.tt/3tZD2wA

The Archer Materials Ltd (ASX: AXE) share price has bolted out of the gates in today’s session.  

Shares in the high-tech materials company are flying more than 29% higher after releasing an announcement.

Let’s take a look at why investors are scrambling to bid the Archer share price higher.  

Archer share price soars on US patent

Shares in Archer are flying after announcing a commercialisation milestone earlier today.

The company notified investors that its CQ quantum computing chip has been granted a US patent.

According to Archer, the patent will provide the company with protection of the related intellectual property rights in the US.

Archer regards the US as a critical strategic jurisdiction to help protect and potentially commercialise its products.

As a result, the company noted that the granting of the US Patent is a significant step in its efforts to access global markets and participate in the US technology economy.

In particular, Archer’s announcement highlighted the US government’s commitment to continue investment in quantum technologies.

Archer CEO Dr Mohammad Choucair commented:

Most of the investments, R&D, innovation, and commercialisation in quantum computing takes place in, or originates from, the US. At the core of this thriving innovation ecosystem are patents and the accompanying IP rights. Archer is one of few companies with a patent portfolio protecting quantum computing chip technology and one with a unique global competitive advantage.

More on the Archer Materials share price

Archer is a technology company that operates within the semiconductor industry.

The company has a vast pipeline of semiconductor devices that are in various developmental and commercialisation stages.

Shares in Archer Materials recently rocketed to a record high of $3.08 last month, following a patent update.

However, the company’s share price came under pressure following media speculations regarding its patent application in Australia.

The company rejected the accusations made against its CQ quantum computer chip patent.

Despite suffering a sharp pullback, the Archer share price remains more than 300% higher for the year.

At the time of writing, shares in Archer are trading nearly 9% higher for the day at around $2.19.

Shares in the tech company were up more than 29% earlier after hitting an intra-day high of $2.61.

The post Archer Materials (ASX:AXE) share price soars 29% on US patent appeared first on The Motley Fool Australia.

More reading

• The Archer Materials (ASX:AXE) share price is flying 7% higher today

Motley Fool contributor Nikhil Gangaram 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.

from The Motley Fool Australia https://ift.tt/3lJMxMJ

The Mineral Resources Limited (ASX: MIN) share price is falling today despite good news from its 80%-owned gas discovery.

The Lockyer Deep-1 Gas Discovery is expected to contain more gas than pre-drilling activities found previously.

The resource is 80% owned by Mineral Resources’ subsidiary Energy Resources Limited and 20% owned by Norwest Energy NL (ASX: NWE). It is located in the Perth Basin.

Right now, the Mineral Resources share price is $44.39, 2.7% lower than its previous close.

Let’s take a closer look at today’s news of the Lockyer Deep-1 Gas Discovery.

Positive update on Lockyer Deep-1

The Mineral Resources share price is in the red amid Norwest Energy’s announcement of the companies’ gas discovery.

The Lockyer Deep-1, a joint venture between the companies, has been found to be more prosperous than previously thought.

Norwest Energy released an update on wireline logging operations at the discovery this morning, stating the findings upgrade the discovery’s prospects.

Lockyer Deep-1’s Kingia target, found within Kingia sandstone, has been found to be of higher quality than previously predicted.

Norwest stated high reservoir pressures indicate the target has a gas column of between 600 metres and 800 metres.

This means the indicative areal extent of the discovery is around 66 square kilometres. The area’s estimated gas resources are now believed to be greater than the company’s pre-drill prospective resources.

The reservoir is now estimated to have a net gas pay of 20.2 metres, total vertical depth. It’s expected to have an average porosity of 16% and average permeability of 500 millidarcys.

The companies’ petrophysical analysis of the target found a 34-metre gross pay interval at the top of the Kingia sandstone. The gross pay interval has a total vertical depth of between 3,888 metres and 3,922 metres from sea level, with no gas-to-water contact found.

According to Norwest, the finding is remarkable and confirms the fault-seal integrity of the structure’s main bounding faults despite a very significant gas column.

Mineral Resources share price snapshot

Despite today’s dip, the Mineral Resources share price has been performing well lately.

It is currently 16% higher than it was at the start of 2021. It has also gained 77% since this time last year.

The post Mineral Resources (ASX:MIN) share price falls amid gas discovery update appeared first on The Motley Fool Australia.

More reading

• The Mineral Resources (ASX:MIN) share price is down 7% today. Is it a buy?
• 2 buy-rated ASX dividend shares with attractive yields
• The latest ASX 200 mining shares to get hit by broker downgrade
• ASX 200 midday update: Macquarie jumps, gold miners sink
• Why the Mineral Resources (ASX:MIN) share price is moving higher today

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.

from The Motley Fool Australia https://ift.tt/3u0wOfN

Shareholders in ASX 200 companies heavily reliant on the iron ore price, like BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO), could be a little worried after the Australian Strategic Policy Institute (ASPI) said Australia’s iron ore exports with China may be at risk.

At close of trade yesterday, shares in BHP ended the day at $37.75 – up 0.59%. The Rio share price closed yesterday at $95.71 – up 0.49%. The S&P/ASX 200 Index (ASX: XJO) ended the day 0.35% higher.

Let’s take a closer look.

‘…would (the metal) join the long list of lesser Australian exports subject to Chinese coercion?’

In a report for ASPI, investment analyst David Uren argues the falling iron ore price represents an opportunity for the Chinese government to finally free itself from its dependence on Australia’s iron ore.

Australia is the cheapest and closest iron ore exporter to China and is one of the few surviving exports between the two nations. The People’s Republic has placed heavy tariffs on Australian barley, beef, wine, and seafood and completely banned Australian coal.

“[I]n a market in which there’s surplus iron ore and China has the market power, it’s possible that political rather than market forces may determine which mines survive or close. It might not be the world’s lowest cost producers, which both Rio Tinto and BHP would consider themselves to be, that win the lion’s share of the business,” said Uren.

“There’s no plausible scenario in which China can dispense with Australian iron ore but, in a market with surplus supplies, it could limit supplies through quotas. If China’s campaign of economic coercion against Australia were to continue, it could take, say, 500 million tonnes/year from Australia rather than the 740 million tonnes it bought in 2020.”

Tensions between China and Australia have ratcheted up in recent days on the announcement of a new military alliance between Australia, the United Kingdom, and the United States, AUKUS.

Iron ore price today

At the time of writing, the iron ore price today is hovering around the US $104 per tonne mark. It’s fallen 25% in a month and 34% since the beginning of the year.

The BHP and Rio share prices have both taken similar falls to iron ore. Both companies are highly reliant on the metal and their finances can be largely dependent on the commodity’s movement.

According to the website Trading Economics, cuts to Chinese steelmaking quotas have caused a slump in demand for the product and, thus, the falling price. The situation may also be exacerbated by the Evergrande implosion.

The post Iron ore price may fall further as experts warn of China trade risk appeared first on The Motley Fool Australia.

More reading

• September has been a terrible month so far for the Rio Tinto (ASX:RIO) share price
• What the Evergrande crisis could mean for ASX 200 iron ore shares
• Leading brokers name 3 ASX shares to sell today
• ASX 200 rebounds into positive territory led by energy and materials shares
• New Hope (ASX:NHC) share price jumps on $337m profit turnaround

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.

from The Motley Fool Australia https://ift.tt/3u88wRm

The S&P/ASX 200 index (ASX: XJO) has cooled off over the last month and slipped 2.5% into the red.

Whereas the broad indices have taken a minor hit, the Bluescope Steel Limited (ASX: BSL) share price has lagged well behind its benchmark, and now trades at $21.54.

That’s an 8% drop over the last month, and a further 10% into the red in this past week.

What’s up with the Bluescope share price lately?

The Bluescope Steel share price has been on a rocky ride since the spot price of iron ore took a nosedive in July.

Iron ore’s come off a record high of US$230/Tonne (T) in May, and then US$226/T in July to now trade at US$104.50/T, a 53% drop.

At the same time, the spot price of steel has been in an uptrend since last month. Steel now trades at US$882.80/T, an approximate 15% gain since 19 August.

This disconnect in the price of steel and iron ore appears to have plagued Bluescope’s share price over the past 2 months. As mentioned – it’s been a bumpy road for shareholders.

However, Bluescope hasn’t escaped the elephant in the room, which remains the downward trend in iron ore’s spot price.

Iron ore is one main ingredient used to forge steel, and over 90% of all iron ore mined goes towards the production of steel.

But iron ore seriously appears to be on a one-way ticket to the south pole, having lost US$121.50/T in value over a matter of weeks.

As such, Bluescope shares have dropped a further 10% over successive days since 16 September.

What are analysts saying about Bluescope shares?

One leading broker is taking a more upbeat view on the Bluescope share price, despite the commotion in the commodity markets.

Investment banking giant UBS has weighed in with its view and sees pricing strengths in the steel markets as a plus for Bluescope.

It is bullish on steel prices and sees fundamental drivers propping steel markets higher over the coming periods.

The broker now assumes a US steel spread of US$1,361/T in the first half of FY22, which should favourably impact Bluescope’s financials.

UBS now estimates the steel giant’s earnings before interest and tax (EBIT) for H1 FY22 to come in at A$2.1 billion, which is higher than Bluescope’s guidance of A$1.8billion to A$2 billion.

This scenario is helped by a weaker Australian Dollar, which makes Australian exports cheaper for overseas buyers.

In addition to its steel forecasts, UBS is also keeping a close eye on developments out of China, where steel production has recently been curbed by Chinese authorities.

Whilst it sees “lower Chinese steel production as a positive for Bluescope (on lower Chinese hot rolled coil exports)”, it also does see “some risk that a rapid deterioration” in the Chinese property sector could result in “excess tonnes being exported”.

The Bluescope share price is up 23% this year to date and has gained 68% over the last 12 months – well ahead of the broad index.

The post What this leading broker thinks of the BlueScope Steel (ASX:BSL) share price appeared first on The Motley Fool Australia.

More reading

• BlueScope Steel (ASX:BSL) share price sinks 7% despite strategy update
• These ASX 200 shares are trading ex-dividend today
• Why Appen, BlueScope, Fortescue, & Marley Spoon shares are dropping
• 5 things to watch on the ASX 200 on Tuesday
• 10 ASX shares we’re overweight in right now: fund

The author Zach Bristow has no positions 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.

from The Motley Fool Australia https://ift.tt/3ztbW28

The Zip Co Ltd (ASX: Z1P) share price is rising on Wednesday morning.

At the time of writing, the buy now pay later (BNPL) provider’s shares are up 1.5% to $6.33.

Why is the Zip share price rising?

The Zip share price is pushing higher this morning after investors responded positively to an announcement.

According to the release, the company has agreed to make a strategic US$50 million investment in India-based BNPL operator ZestMoney.

The release notes that ZestMoney was founded in 2015 and is now one of the largest and fastest growing BNPL platforms in India. It currently has 11 million registered users, over 10,000 online merchants on the platform, and a point of presence in over 75,000 physical stores.

Management advised that this investment is consistent with its strategy to build a truly global BNPL business. And one that supports regional and global partners in multiple markets, providing everyone, everywhere with access to fair and transparent payment products.

The India market

The company highlights that the India market is poised for consumption driven boom. This could potentially make it one of the largest markets globally one day.

In fact, the release reveals that the India market is forecast to have US$300 billion+ in BNPL payment volume by FY 2026.

This is expected to be driven by changing consumer spending trends, increased penetration of online shopping, population age demographics, a large underuse of credit, an emerging middle class, and transformation in the digital payment ecosystem.

Overall, the company sees the potential for the overall Indian BNPL user base to reach ~80 to 100 million users by FY 2026. This is more than the estimated 73 million unique credit card users in India at present.

The investment

The release explains that Zip will acquire a minority shareholding in ZestMoney. This will be by investing US$50 million to subscribe for Series C Preference Shares.

Zip has also negotiated terms to increase its shareholding over time, with specific reserved matters requiring Zip approval and a board seat as part of the investment.

It also notes that the investment has been executed using a similar strategy to the one that ultimately led to the acquisition of Quadpay.

Zip’s Co-founder and Chief Executive Officer, Larry Diamond, commented: “We are excited to partner with ZestMoney to drive fair and responsible payment solutions in India. While Buy Now, Pay Later is emerging as a preferred mode of payment globally, in India it also plays a crucial role in driving access to credit.”

“With more people using digital payments and online shopping, ZestMoney can positively impact hundreds of millions of lives in the coming years. With deep partnerships with online and offline merchants and lending partners, ZestMoney is poised to accelerate growth as the market develops. We have been incredibly impressed with the founders and leadership team and look forward to the next stage of the ZestMoney journey,” he added.

The Zip share price is now up 13.5% in 2021.

The post Zip (ASX:Z1P) share price higher on India BNPL investment news appeared first on The Motley Fool Australia.

More reading

• The Zip (ASX:Z1P) share price is down 10% in a week. Here’s why
• These are the 10 most shorted ASX shares
• Why is the Zip (ASX:Z1P) share price faring so much worse than Afterpay today?
• What percentage of Zip (ASX:Z1P) shares are owned by insiders?
• How has the Zip (ASX:Z1P) share price performed since reporting results?

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 ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3ACsRAM

The BetMakers Technology Group Ltd (ASX: BET) share price is struggling in September despite silence from the company.

Making its recent slide more interesting, the wagering technology provider’s share value increased by more than 22% last month. Further, it had a strong start to this month, gaining 14% over the first week of September.

After opening the month at $1.205, the BetMakers share price is currently $1.13, down 1.57% on yesterday’s close, having fallen 1.7% yesterday. That represents a 6% drop over the course of September so far.

Let’s take a look at what might be weighing on Betmakers’ stock lately.

What’s weighing on BetMakers in September?

The BetMakers share price has been struggling recently despite a seemingly positive performance.

BetMakers has been quiet this month. The company hasn’t released any news to the ASX since late August.

However, BetMakers was included in S&P Dow Jones Indices’ quarterly rebalance.

The company’s shares were added to the S&P/ASX 300 Index (ASX: XKO) after they gained 13% over the September quarter. BetMakers has officially been part of the index since Monday.

Additionally, roughly two weeks ago, American betting industry news provider SBCAmericas reported BetMakers’ Global Tote division has provided US$500,000 of sponsorship to the Kentucky Derby.

It is reportedly the company’s first significant US racing sponsorship. It could also be seen as a milestone in the company’s ongoing international expansion.

Unfortunately, the positive news surrounding BetMakers hasn’t been enough to support its share price in September.

It has plunged more than 18% since 8 September for no apparent reason. Though, after its impressive rise throughout August, perhaps September’s losses are part of a routine rebalancing.

BetMakers share price snapshot

Despite its recent struggles, the BetMakers share price is still in the green on the ASX over the long term.

It has gained 64% since the start of 2021. It is also currently 167% higher than it was this time last year.

The post The BetMakers (ASX:BET) share price has fallen 6% this month appeared first on The Motley Fool Australia.

More reading

• Why the BetMakers (ASX:BET) share price has rocketed 50% in 7 weeks
• Why Betmakers (ASX:BET) share price jumped when losses deepened
• How the BetMakers (ASX:BET) share price responded last reporting season

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. owns shares of and has recommended Betmakers Technology Group Ltd. The Motley Fool Australia has recommended Betmakers Technology Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/2XMHTpg

The PointsBet Holdings Ltd (ASX: PBH) share price is climbing on Wednesday.

In morning trade, the sports betting company’s shares are up 3% to $9.79.

This gain has reduced its year to date decline to 15%.

Is the PointsBet share price good value?

According to a note out of Goldman Sachs, its analysts believe the PointsBet share price is in the buy zone.

This morning the broker retained its buy rating and $14.75 price target on its shares.

Based on the latest PointsBet share price, this implies potential upside of 50% over the next 12 months.

What did the broker say?

Goldman Sachs has been looking at recent trends in the gaming sector. Following its review, the broker remains very positive on the company.

In fact, it believes the PointsBet share price doesn’t fully reflect a potentially transformational 12 to 18 months ahead.

Goldman commented: “On the wagering front, domestically we highlight that PBH continued to grow significantly, and having recently moved into profitability for its Australian business, is on our estimate firmly 4th place in terms of market share across digital wagering (~4%). To this end PBH continues to target 10% share of the market by 2025.”

“We continue to see it as well-placed domestically noting it saw a record monthly performance in July 2021, the spring racing carnival and AFL/NRL grand finals should drive 1Q, and recent app DL data suggesting its share domestically continues to outpace its market share. Beyond this, the US remains the key attraction in our investment case, and we are of the view that there are asymmetric risks ahead, with the current share price not fully reflecting what we expect to be a transformational 12-18months ahead for the company as they aim to triple their operational footprint by CY22,” it concluded.

The post Broker says PointsBet (ASX:PBH) share price is undervalued ahead of transformational year appeared first on The Motley Fool Australia.

More reading

• Analysts name 3 stellar ASX growth shares to buy right now
• 2 leading ASX shares that are growing rapidly
• Leading broker says the PointsBet (ASX:PBH) share price has 51% upside
• Here are the top 10 ASX shares today
• Which ASX shares are looking to finish the week as the top movers on the ASX 300 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 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.

from The Motley Fool Australia https://ift.tt/3lOVioG

The Harvey Norman Holdings Limited (ASX: HVN) share price is pushing higher on Wednesday morning.

At the time of writing, the retail giant’s shares are up 1% to $5.02.

Why is the Harvey Norman share price rising?

The catalyst for the rise in the Harvey Norman share price appears to have been a broker note out of Goldman Sachs this morning.

According to the note, the broker has upgraded the company’s shares to a buy rating with an improved price target of $6.00.

Based on the current Harvey Norman share price, this implies potential upside of 19.5% over the next 12 months.

And with Goldman forecasting dividends per share of 36 cents in FY 2022, the potential total return increases to ~27% including dividends.

What did the broker say?

Goldman Sachs made the move on the belief that Harvey Norman is well positioned to capitalise on a stronger outlook for housing related categories such as consumer appliances and furniture.

The broker explained: “We expect the underlying growth outlook into the medium to remain ahead of the pre-pandemic averages for the home related categories. As a result of this, we expect margin execution to remain elevated for longer with EBITDA margin for FY24e expected to be at FY18 levels on a pre-AASB16 basis as the cycle eases. While this still implies FY24 EBIT being A$775mn vs. A$1087.3mn in FY21, the EBIT CAGR over FY19-24e is expected to be at +6.6%, including +7.4% for Australia.”

Goldman believes this growth rate makes the Harvey Norman share price good value based on current multiples.

Its analysts said: “Adjusted for the property valuation, HVN currently trades at a FY22e P/E of 7.1x. This compares to a long-term average of 8.7x and a peer group median of 9.6x. Even on a pre-property adjusted basis, HVN is currently trading at a relative valuation discount of -59% on an Industrials ex financials basis vs. a longer term average of -14% and a 5 year average discount of -42%.”

All in all, Goldman feels this makes Harvey Norman shares worth considering today.

The post Harvey Norman (ASX:HVN) share price rises on broker upgrade appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Top broker tips Harvey Norman (ASX:HVN) share price as a buy
• Top brokers name 3 ASX shares to buy next week
• ASX 200 rises, Harvey Norman falls, Mesoblast sinks
• ASX reporting wrap-up: Harvey Norman, Cettire, PointsBet

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 Harvey Norman Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3kt1bZa