Two ASX energy shares are setting the bar high today.

In afternoon trade on Thursday, the All Ordinaries Index (ASX: XAO) is down 0.1%.

But energy stocks Karoon Energy Ltd (ASX: KAR) and Cue Energy Resources Ltd (ASX: CUE) are up 3% and 40% respectively following the release of their half-year earnings results.

Here’s what they reported.

Karoon share price lifts on profit boost

The Karoon share price is marching higher after the ASX energy share reported underlying net profit after tax (NPAT) of US$145 million, up 129% from the prior six months.

The company attributed the boost in profits to higher hydrocarbon sales, improved oil price realisations and lower unit production costs.

Statutory NPAT of US$122.5 million was up 43% from US$85.4 million in the prior half year. This included one-off costs relating to Karoon’s Who Dat acquisition, along with hedging and foreign exchange losses.

Sales revenue of US$413 million increased 54.5% from the previous half-year. While underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of US$283 million increased by 94%.

Karoon held cash and cash equivalents at 31 December of US$170 million.

Commenting on the results lifting the ASX energy share today, CEO Julian Fowles said:

Karoon achieved underlying NPAT of US$144.7 million, which was a record for the company for a six-month period. Baúna Project sales volumes and realised oil prices both increased, up 36% and 13% respectively when compared to the prior six months.

In addition, we received the first contributions from the Who Dat acquisition in the US Gulf of Mexico, albeit for only 11 days.

Which brings us to…

ASX energy share Cue rockets amid special dividend

The Cue Energy share price is shooting out the lights today on the heels of the company’s own half-year results (1H FY 2024).

The ASX energy share achieved a 22% year on year increase in six-month revenue to $29 million.

Underlying EBITDAX (which excludes items like exploration costs) came in at $19 million, up 21% from 1H FY 2023.

And NPAT leapt 34% year on year to $9 million.

This saw management declare a 2 cent per share special dividend, which they said was supported by strong cash flow and cash reserves.

Cue had a cash balance of $23 million as at 31 December, up from $15 million at 30 June.

Commenting on the strong results sending the ASX energy share rocketing today, Cue CEO Matthew Boyall said, “We’re building on a consistent trend of growth, with revenue increasing more than 200% over the past four years.”

Boyall added:

This success is fuelled by several key factors including strong production performance, disciplined reinvestment and an ongoing focus on lowering costs. Our Indonesian assets, particularly the Mahato PSC, were significant contributors, generating $16.4 million in revenue.

The post 2 ASX energy shares going gangbusters on today’s earnings results appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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 Scott Phillips.

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At first glance, it looks as though this Thursday would be a tough one for most ASX investors. After all, the S&P/ASX 200 Index (ASX: XJO) is currently nursing a loss of 0.11%, putting the index at just over 7,650 points. But it hasn’t been a universally rough day, particularly for investors of four ASX exchange-traded funds (ETFs).

Four ASX ETFs smashing all-time highs today

First up is the iShares S&P 500 ETF (ASX: IVV). It was only earlier this week that we were discussing a new record high for this US-based index fund. But today, IVV has done it again, hitting a new record of $52.06 a share.

Then we have the Vanguard US Total Market Shares Index ETF (ASX: VTS). This Thursday has seen VTS units climb up to a new record of $387.41.

The VanEck Morningstar Wide Moat ETF (ASX: MOAT) hasn’t missed out either. This exchange-traded fund clocked a new high watermark of $126.99 just after market open this morning.

Then we have the BetaShares Crypto Innovators ETF (ASX: CRYP). CRYP units have continued to enjoy a huge surge that started around this time last month. Today has seen this cryptocurrency-focused ETF soar to a new record high of $5.29.

Why so many new record highs today?

You might notice that these four exchange-traded funds have something in common – they all invest in non-ASX shares. Specifically, all four of these ETFs are predominately made up of US shares.

IVV and VTS are both US-based index funds. Although they track slightly different indexes (IVV follows the S&P 500, whilst VTS tracks the CRSP U.S. Total Market Index), both funds are dominated by the likes of Apple, Microsoft, Alphabet and the other ‘magnificent seven’ stocks.

With the S&P 500 and the broader US market’s reach continuing to clock new all-time highs in February, it’s no surprise to see their ASX-listed index fund reflections do the same.

MOAT and CRYP are a little different. Both of these ETFs have more actively managed portfolios. The VanEck Wide Moat ETF holds a concentrated portfolio of companies that are selected on their perceived possession of a wide economic moat.

The Betashares Crypto Innovators ETF holds companies that are all involved in the mining and trading of cryptocurrency. Roughly 70% of these holdings are US-based. With prices of cryptocurrencies like Bitcoin (CRYPTO: BTC) continuing to gallop higher alongside the US markets, it’s not shocking to see this ETF follow suit.

Other ETFs clocking new highs

These four ETFs are not the only ones clocking new highs today.

We’ve also seen the Betashares Future Of Payments ETF (ASX: IPAY), Global X Australia ex Financials and Resources ETF (ASX: OZXX), iShares S&P 500 Mid-Cap ETF (ASX: IJH), Betashares S&P/ASX Australian Technology ETF (ASX: ATEC), iShares Europe ETF (ASX: IEU) and the BetaShares India Quality ETF (ASX: INDD) hit either new 52-week or record highs today. Amongst many others.

It’s a good day to be an ETF investor.

The post 4 hot ASX ETFs smashing all-time highs on Thursday appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Alphabet, Apple, Bitcoin, Microsoft, and VanEck Morningstar Wide Moat ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Apple, Betashares Crypto Innovators ETF, Bitcoin, Microsoft, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Apple, VanEck Morningstar Wide Moat ETF, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is having a subdued session on Thursday. In afternoon trade, the benchmark index is down 0.1% to 7,652.9 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Australian Finance Group Ltd (ASX: AFG)

The Australian Finance Group share price is down 10% to $1.50. This morning, the mortgage broking company released its half-year results and reported a 34% decline in net profit after tax to $7.4 million.

Chalice Mining Ltd (ASX: CHN)

The Chalice Mining share price is down 9% to $1.14. This is despite there being no news out of the mineral exploration company today. However, it is worth noting that its shares were on fire on Wednesday. So, this decline could have been driven by profit taking from some investors. Its shares remain up 13% over the last two sessions.

DroneShield Ltd (ASX: DRO)

The DroneShield share price is down 21% to 73.5 cents. This may also have been driven by profit taking after some incredible gains. Year to date, the counter drone technology company’s shares are still up 100% despite this decline. In other news, this morning Bell Potter downgraded its shares to a hold rating but with an improved price target of 90 cents.

ResMed Inc. (ASX: RMD)

The ResMed share price is down almost 4% to $26.87 despite there being no news out of the sleep treatment company. However, news that there’s a new weight loss wonder drug on the scene could be weighing on sentiment. Viking Therapeutics Inc (NASDAQ: VKTX) shares are up 150% in two days after its experimental drug reportedly helped obesity patients lose almost 15% of their body weight in a mid-stage study.

The post Why Australian Finance Group, Chalice, DroneShield, and ResMed are sinking today appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has followed Wall Street’s lead and dropped into the red. At the time of writing, the benchmark index is down 0.15% to 7,647.9 points.

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

Harvey Norman Holdings Limited (ASX: HVN)

The Harvey Norman share price is up 3% to $4.89. This is despite the retailer releasing its half-year results and reporting a 29.4% decline in profit before tax to $303.8 million and a 23% reduction in its fully franked interim dividend to 10 cents per share. Investors may be pleased to see that the company’s sales returned to growth in January.

Macquarie Technology Group Ltd (ASX: MAQ)

The Macquarie Technology share price is up 9% to $77.49. Investors have been buying the technology company’s shares following the release of its half-year results. Macquarie Technology posted a 5.1% increase in revenue to $181.3 million and a 74% jump in net profit after tax to $14.8 million. The company’s data centre business was a key driver of its growth.

Ramsay Health Care Ltd (ASX: RHC)

The Ramsay Health Care share price is up 6% to $54.25. This private hospital operator’s shares were trading lower following the release of its half-year results before rebounding. Ramsay reported a 23% decline in profit from continuing operations to $140.4 million. However, management is guiding to profit growth for the full year despite the weak start.

Star Entertainment Group Ltd (ASX: SGR)

The Star share price is up 8% to 52 cents. This follows the release of the casino and resorts operator’s first-half results. While the result itself was quite poor, investors appear encouraged by its improving outlook. Management advised: “The start of this calendar year has seen revenue and earnings continue to track our first half run rate.”

The post Why Harvey Norman, Macquarie Technology, Ramsay Health Care, and Star are rising appeared first on The Motley Fool Australia.

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More reading

• This ASX 300 stock just jumped 12%! Here’s why
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• 5 things to watch on the ASX 200 on Thursday

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 positions in and has recommended Harvey Norman. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) seems to be gearing up for another tough day this Thursday. At the time of writing, the ASX 200 has slipped by 0.16% leaving the index at around 7,650 points. But let’s talk about what’s going on with the Medibank Private Ltd (ASX: MPL) share price.

On the surface, it looks as though Medibank shares are having an awful time today thus far. The private health insurance provider closed at $3.66 a share yesterday. But those same shares opened at $3.60 this morning, where they remain at present. That’s a loss worth 1.64%.

Upon deeper inspection though, investors should be happy with this share price drop. That’s because it is a consequence of Medibank shares trading ex-dividend today.

Last week, we covered Medibank’s latest half-year earnings report, covering the six months to 31 December. As we discussed at the time, it was a fairly positive report card from Medibank Private.

The company announced that its revenue for the period rose by 3.3% up to $4.02 billion. Underlying profits rose by an even better 16.3% to $262.5 million, which enabled Medibank to unveil an interim dividend of 7.2 cents per share, fully franked, for the half-year.

This was a big announcement for the company. Firstly, this new dividend of 7.3 cents per share was a 14.3% rise over last year’s interim dividend of 6.3 cents per share.

But this new payout is also set to be the largest interim dividend Medibank has ever paid out in its history as a public company. It takes Medibank’s full-year payouts from 14.6 cents per share to 15.5 cents. That’s including the final dividend of 8.3 cents per share that we saw last October.

Why are Medibank shares dropping this Thursday?

As we warned on Tuesday, yesterday was the last day you could have bought Medibank shares with the rights to receive this dividend attached.

Today, the company has just traded ex-dividend.

When a company trades ex-dividend, it cuts off new investors from eligibility for an upcoming shareholder payment. This means that Medibank shares have just become slightly less valuable, given new investors from today will have to wait until Medibank’s second dividend of 2024 to start receiving income from the company.

So the resulting fall in share price that we are witnessing today is completely normal.

For eligible investors, Medibank’s latest dividend is scheduled to arrive in bank accounts next month on 20 March.

At the current Medibank Private share price, this ASX 200 health insurer is trading on a dividend yield of 4.31%.

The post What’s going on with the Medibank share price today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 Scott Phillips.

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The S&P/ASX 300 Index (ASX: XKO) is down 0.1% today despite some heavy lifting from ASX 300 stock Macquarie Technology Group Ltd (ASX: MAQ).

Shares in the data centre, cloud, cyber security and telecom company closed yesterday trading for $71.20. At the time of writing in late morning trade on Thursday, shares are swapping hands for $79.40, up 11.5%.

This comes following the release of the ASX tech share’s half-year results for the six months ending 31 December (1H FY 2024).

Read on for the highlights.

ASX 300 stock soars on continued profitability growth

• Revenue of $181.3 million, up 5.1% on 1H FY 2023
• Earnings before interest, taxes, depreciation and amortisation (EBITDA) of $53.0, up 3% year on year
• Net profit after tax (NPAT) of $14.8 million, up 74% on 1H FY 2023 ($8.5 million)
• Operating cash flows of $49.5 million

What else happened during the half year for Macquarie Technology?

The ASX 300 stock is enjoying a strong run today after announcing its eighteenth consecutive half-year of profitable growth.

Macquarie Technology attributed the 74% year on year increase in NPAT over the six months to increased earnings, lower interest costs since the paying down of its debt facility in June, and lower depreciation and amortisation levels.

The company reported holding $86 million in cash and deposits, an improvement from 1H FY 2023 due to positive operating cash flow.

Capital expenditure for six months came in at $18.5 million, down from $33.2 million in the prior corresponding period. This was comprised of $9.1 million in growth capex; $6.0 million in customer related capex; and $3.4 million in maintenance capex.

What did management say?

Commenting on the results sending the ASX 300 stock soaring today, chairman Peter James said:

This result represents our eighteenth consecutive half of EBITDA growth, a strong result underpinned by continued growth in cloud and cyber megatrends, and the outstanding customer experience reflected in our high net promoter score.

Macquarie Technology CEO David Tudehope added:

We are pleased to have secured the IC3 Super West DA. With anticipated demand from the AI megatrend, we could increase the IT load of IC3 Super West from 38MW to 45MW. This would take the campus from 56MW to 63MW. Access to 63MW of power is available upon opening of IC3 Super West.

What’s next for Macquarie Technology?

Looking at what could impact the ASX 300 stock’s performance in the months ahead, the company forecasts the FY 2024 EBITDA will be approximately $108 million to $111 million. This includes Macquarie Data Centres’ EBITDA of $34 million to $35 million.

Site preparation and early works are currently underway to prepare the Macquarie Park Data Centre Campus for IC3 Super West. Debt refinancing is to be undertaken in line with the requirements of that project.

Management said they will continue to invest across the group to drive future profitable growth.

How has the ASX 300 stock been tracking?

It’s been a good year for Macquarie Technology shareholders.

With today’s intraday boost factored in, the ASX 300 stock is up 33% in 12 months.

The post This ASX 300 stock just jumped 12%! Here’s why appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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 Scott Phillips.

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Warren Buffett has always advocated that investors should buy businesses at a price that’s less than they’re worth. I think some Aussie companies look like cheap ASX shares following their recent reports.

I only like to look at businesses I think can grow over the long term, meaning they’ll be more valuable in three years or five years than today. With that in mind, when the share prices fall, it seems like a good opportunity for me to buy.

Johns Lyng Group Ltd (ASX: JLG)

The Johns Lyng share price is down 10% since 26 February 2024.

The business specialises in restoring a building and its contents after damage by an insured event, including flooding, storms and fire. It’s also growing its presence in the catastrophe work industry.

I saw several things in the HY24 result that cemented my belief it has an exciting future.

Its core business as usual (BAU) revenue rose 13.7% to $426.1 million, though total revenue declined 4% because catastrophe revenue was lower. Core BAU earnings before interest, tax, depreciation and amortisation (EBITDA) rose 28.1% to $55 million and total EBITDA grew 7.5% to $63.9 million – that’s good evidence of operating leverage.

The ASX share also reported that its BAU normalised net profit after tax (NPAT) rose 15.8% to $25 million. If this number can keep growing by double-digits (in percentage terms), then the compounding can enable Johns Lyng to generate much bigger profits in the coming years.

I was also pleased to see that the company is continuing to make acquisitions in the strata management space. Not only does this mean it can create consistent, resilient earnings, but it can also unlock synergies with the core business by utilising those services. I think Warren Buffett would be a fan of this business.

In my opinion, this short-term pullback is a good buy-point for this cheap(er) ASX share. I’m planning to buy more Johns Lyng shares next week.  

Accent Group Ltd (ASX: AX1)

The Accent share price is down 13% from 14 February 2024.

The business continues to add stores across the brands that it owns as well as shoe brands it acts as a distributor for. In the first half of FY24, it saw a total of 72 new stores added. Accent said 22 new Platypus stores have been opened in Australia and New Zealand, along with 17 new Skechers stores.

The ASX share also saw its contactable customers increase by 0.2 million to 10 million.

It saw its gross profit margin improve from 55.2% to 56.6%, which was enough for the business to report a $2 million increase in its gross profit.

While other profit measures decreased, partly due to the inflation of costs, I think the business has a promising future once retail conditions improve.

Its dividend payment of 8.5 cents per share is still an attractive level of passive income.

The trading update was promising. It said total owned sales in the year to date to the end of January 2024 were up 1.6%, while like-for-like sales for the second half were down just 0.7%. The gross profit margin continues to be above last year, while costs continue to be higher, though at a lower rate of increase compared to the first half.

I’m planning to buy some more Accent shares next week. I think this is a very cheap ASX share.  

The post I’m listening to Warren Buffett and loading up on cheap ASX shares in March appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Accent Group and Johns Lyng Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Johns Lyng Group. The Motley Fool Australia has recommended Accent Group and Johns Lyng Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Mesoblast Ltd (ASX: MSB) share price is under pressure on Thursday.

In morning trade, the biotechnology company’s shares are down 2.5% to 29.3 cents.

This follows the release of the company’s half-year results.

Mesoblast share price falls on big loss

• Revenue down 1% to US$3.4 million
• Research and development of US$12.6 million
• Loss after tax of US$32.5 million

What happened during the half?

During the six months ended 31 December, Mesoblast reported a modest 1% decline in revenue to US$3.4 million.

This revenue was largely from the US$3.2 million in commercialisation revenue relating to royalty income earned on sales of TEMCELL in Japan by its licensee JCR.

One positive was its net cash usage. It came in at US$26.6 million for the half, which is a 14% reduction versus the prior corresponding period.

However, that couldn’t stop Mesoblast from recording a loss after tax of US$32.5 million.

Mesoblast ended the period with a cash balance of US$77.6 million.

Management commentary

Mesoblast’s chief executive, Silviu Itescu, highlights that the company was very busy with trials and applications during the half. He said:

We were very busy operationally during the last quarter and continued to have positive engagement with the United States Food and Drug Administration (FDA) across our lead programs. We have strengthened our balance sheet while maintaining overall spending constraint in line with our corporate objectives.

For our product Ryoncil (remestemcel-L) for life-threatening steroid-refractory acute graft-versus-host disease (SR-aGVHD) ahead of our upcoming meeting in March we have provided the FDA with new data from a second potency assay that provides additional product characterization as requested by FDA.

Itescu also highlights that its “Phase 3 back pain trial with rexlemestrocel-L, aiming to confirm the durable pain reduction that was seen in the first Phase 3 trial, is underway.”

Outlook

Management believes that it is on target to achieve a 23% reduction (US$15 million) in net cash usage compared to FY 2023. Though, this will be partially offset by investment in its Phase 3 programs for SR-aGVHD and CLBP.

The post Mesoblast share price tumbles on US$32.5m half-year loss 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 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 Scott Phillips.

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The Star Entertainment Group Ltd (ASX: SGR) share price is marching higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) casino operator closed yesterday trading for 48 cents. In early trade on Thursday, Star Entertainment shares are swapping hands for 50.5 cents apiece, up 5.2%.

For some context, the ASX 200 is down 0.26% at this same time.

This follows the release of Star Entertainment’s half-year results for the six months ending 31 December (H1 FY2024).

Here are the highlights.

Star Entertainment share price gains alongside balance sheet

• Net revenue of $866 million, down 14.6% year on year
• Earnings before interest, taxes, depreciation and amortisation (EBITDA) before significant items of $114 million, down 43.1% from 1H FY 2023
• Net profit after tax (NPAT) before significant items of $25 million, down 42.7% year on year
• Significant items after tax a loss of $15.9 million, compared to a loss of $1.307 billion in the prior corresponding period
• Net cash position of $171 million as at 31 December, up from a net debt position of $596 million as at 30 June

What else happened during the half?

On the plus side of the ledger, and likely helping lift the Star Entertainment share price today, was the company’s statutory NPAT of $9 million, up from the massive significant item impaired net loss of $1.264 billion in 1H FY 2023.

Star Entertainment also continued to make progress with remediation over the six months, with the company’s remediation plan approved in Queensland.

In New South Wales, the proposed casino duty rate uncertainty was resolved. The company said the new arrangements remove the “considerable uncertainty” introduced in December 2022 and will protect the jobs of thousands of its Sydney employees.

Importantly, the half-year also saw a successful $750 million equity raising alongside $450 million debt refinancing. All of Star’s existing debt was cancelled, with management reporting the new debt had been secured “on more favourable terms”.

Also aiding the balance sheet was the $56 million secured from the sale of Sheraton Grand Mirage.

What did management say?

Commenting on the results lifting the Star Entertainment share price today, CEO Robbie Cooke said, “While the group continues to operate in a challenging regulatory environment, The Star has achieved a number of significant milestones in the period.”

Cooke added:

Notwithstanding these achievements, there is still much work to be done. Remediation remains our number one priority. We continue to uplift our risk management, safer gambling and AML capabilities and are starting to embed greater accountability and more robust governance…

In terms of trading performance, earnings have maintained the run rate experienced on exiting Q4 FY23 with EBITDA of $114 million in the half. The start of this calendar year has seen revenue and earnings continue to track our first half run rate.

Star Entertainment share price snapshot

Despite today’s welcome lift, the ASX 200 Casino Operator has a long way to go to recoup recent losses.

The Star Entertainment share price is down 62% since this time last year.

The post Star Entertainment share price jumps 5% on strengthening outlook appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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 Scott Phillips.

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The high-flying DroneShield Ltd (ASX: DRO) share price is having its wings clipped on Thursday.

In morning trade, the counter drone technology company’s shares are down 20% to 74 cents.

What’s going on with the DroneShield share price?

There appear to have been a couple of catalysts for today’s weakness.

The first is profit taking from investors after some incredible gains in recent weeks.

For example, even after today’s decline, the DroneShield share price is up 100% since the start of 2024.

What else?

A broker note out of Bell Potter this morning is also likely to be weighing on its shares.

According to the note, the broker has downgraded DroneShield’s shares to a hold rating with an improved price target of 90 cents.

The good news is that following today’s decline, this price target now implies potential upside of over 20%. Which isn’t bad for a hold rating!

Why the downgrade?

Bell Potter made the move on valuation grounds after its strong gains year to date. It explained:

Our long-term outlook remains positive for DRO based on current macroeconomic conditions and the detailed sales pipeline. However, based on the recent share price appreciation and the current valuation, we downgrade our recommendation to HOLD.

Speaking of the long-term, Bell Potter adds:

We have made minor downgrades to our short-term forecasts but more substantial upgrades to our longer-term forecasts based on the increased visibility over the long-term pipeline. This has included revenue upgrades of 5%, 13% and 13% in CY24, CY25 and CY26, respectively.

It is forecasting revenue of $84.2 million in FY 2024, $101.8 million in FY 2025, and $115.9 million in FY 2026. Whereas profit after tax is expected to be $18.8 million in FY 2024, $26.2 million in FY 2025, and $32 million in FY 2026.

The post Why is the high-flying DroneShield share price crashing 20% today? 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 positions in and has recommended DroneShield. 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 Scott Phillips.

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