In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a small gain. At the time of writing, the benchmark index is up 0.3% to 7,287.2 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are falling:

29Metals Ltd (ASX: 29M)

The 29Metals share price is down 4% to $1.01. This morning, this copper producer released an update on its guidance for Capricorn Copper following the cessation of operations after an extreme weather event. Investors appear disappointed with its revised guidance.

Brainchip Holdings Ltd (ASX: BRN)

The Brainchip share price has crashed 15% to 43.2 cents. This follows the release of the embattled semiconductor company’s annual general meeting presentation and speeches. Brainchip Chairman, Antonio J. Viana, commented: “Let me be clear, nobody at BrainChip is happy or content with our current position. We haven’t hit any significant stride yet with respect to revenue.”

Qantas Airways Limited (ASX: QAN)

The Qantas share price is down 2% to $6.36. Investors have been selling the airline operator’s shares after it released a market update. Qantas revealed that it expects to post an underlying profit before tax of between $2.425 billion and $2.475 billion for FY 2023. This appears to have fallen short of what some investors were expecting from the flag carrier airline.

Serko Ltd (ASX: SKO)

The Serko share price is down 6% to $2.99. This is despite there being no news out of the travel technology company. However, with its shares up strongly since last week, some profit taking could be happening today. The Serko share price is still up 11% since last Tuesday despite today’s decline.

The post Why 29Metals, Brainchip, Qantas, and Serko shares are falling appeared first on The Motley Fool Australia.

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More reading

• ‘Nobody is happy’: Why the BrainChip share price is diving 16% on Tuesday
• Qantas share price drops as airline eyes record profit
• Here are the top 10 ASX 200 shares today
• Have I missed the flight on Qantas shares?
• Here are the top 10 ASX 200 shares today

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Serko. The Motley Fool Australia has recommended Serko. 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 Fortescue Metals Group Ltd (ASX: FMG) share price is up 1.1% in early afternoon trade on Tuesday.

Shares in the S&P/ASX 200 Index (ASX: XJO) miner are currently changing hands for $21.78 apiece.

And in the wake of the Group of Seven (G7) meeting in Hiroshima, Japan on Saturday, the longer-term outlook for the Fortescue share price may well have gotten a boost.

What happened at the G7 that could impact the Fortescue share price?

United States President Joe Biden managed a truncated appearance at the G7, before hurrying home to negotiate a new federal debt ceiling.

But in his shortened attendance, Biden managed to make some extraordinary statements in regard to Aussie companies involved in transitioning the world to clean energy.

The US, as you’re likely aware, is working to decrease China’s dominance in this field.

As part of that effort, Biden and Prime Minister Anthony Albanese announced a new Climate, Critical Minerals and Clean Energy Transformation Compact. This runs parallel with the newly minted US$369bn (AU$555 billion) Inflation Reduction Act, much of which is targeted at sustainable energy transformation.

Speaking at the summit, Biden said (quoted by The Australian Financial Review):

We are going to establish climate and energy as the third pillar of the Australia-US alliance. This will enable the expansion and diversification of clean energy supply chains, especially as it relates to critical materials.

Biden also plans to have Australia added as a “domestic source” under the US Defense Production Act. This could be a boon for the Fortescue share price, as it would enable new US investments in some of the miner’s projects, with a particular focus on green hydrogen.

And Germany added some fuel to the green hydrogen fire, as the member nations discussed energy security in the wake of Russia’s invasion of Ukraine.

“We also need some new gas power stations, but they should be built in a way that they can run on green hydrogen later on as well. So it is an investment in the clean future as well,” a German government official said at the summit (quoted by Reuters).

Hydrogen can be separated from oxygen by running electricity through water. For it to be green hydrogen the electricity needs to come from renewable sources.

Now what?

While a lot of big ideas were floated, many of the details remain to be worked out between the US and Australian governments.

But resources minister Madeleine King was unequivocally enthusiastic about the new pact.

“Importantly, it will ensure Australian resources companies can access US capital and benefit from the US Inflation Reduction Act,” share said (quoted by the AFR).

As for any potential tailwinds for the Fortescue share price, Jason Willoughby, CEO of Fortescue founder Andrew Forrest’s private company Squadron Energy, noted that Biden hadn’t specifically mentioned directly subsidising Aussie green hydrogen.

Willoughby said:

We’ll wait to see the detail. But I think the important message here is intent. And if we hadn’t had that message, the risk was that folks would start adjusting their attention to start to move to the US.

By announcing this and showing intent, that means that companies like ours and others can just keep going with their plans in Australia.

Fortescue’s green arm, Fortescue Future Industries (FFI) has five green hydrogen projects currently underway in various nations. Among those, the Gibson Island project in Queensland is the closest to production.

An FFI spokesman (quoted by The Australian) praised the new pact, saying it recognises the “critical importance of green hydrogen”.

And in what could offer a boost to the Fortescue share price down the road, he said the pact will help FFI demonstrate its green energy projects “around the world”.

This all comes just weeks after the Australian government announced $2 billion to fund green hydrogen projects as part of the 2023 federal budget.

Forrest, as you’d expect, applauded that funding.

“It’s a race to win this race,” he said of the global competition to be a leader in green hydrogen production.

Forrest added at the time:

I see the potential in our country of an industry at least the size of Aramco, a multi-trillion-dollar company that underpins the entire economy of Saudi Arabia and that high standard of living which 34 million people have in their country.

As for any long-term tailwinds for the Fortescue share price from the new pact, as Willoughby said, “We’ll wait to see the detail.”

The post Why the Fortescue share price could be a winner following Joe Biden’s extraordinary G7 statements appeared first on The Motley Fool Australia.

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More reading

• ‘The real struggle’: Can an ASX investment in hydrogen really pay off?
• Could this ‘further strengthening’ boost the Fortescue share price moving forward?
• Could Fortescue be the next ASX 200 miner on the lithium M&A trail?
• How does the Fortescue dividend stack up against BHP and Rio?
• Is the Fortescue share price a buy for its 2024 dividend yield?

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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ASX 200 lithium stocks Core Lithium Ltd (ASX: CXO) and IGO Ltd (ASX: IGO) have been downgraded by a top broker despite predictions of a resurgence in lithium prices over the next few months.

As we reported last week, there are expectations of a 40% rebound in lithium prices by the end of 2023.

So, what’s happening with these two particular ASX 200 lithium stocks?

ASX 200 lithium stocks get the thumbs down

As reported in The Australian, JPMorgan has downgraded both Core Lithium shares and IGO shares.

The broker has cut its rating on Core Lithium to underweight and cut IGO to neutral with a 12-month share price target of $16.

The IGO share price is currently trading at $14.88. So despite the downgraded rating, JP Morgan anticipates a 7.5% increase in the share price over the next 12 months.

Let’s review what’s been happening with these two ASX 200 lithium stocks.

Core Lithium approves budget for second mine at Finniss

The latest price-sensitive news from Core Lithium was an update about its flagship Finniss Project in the Northern Territory.

The board has approved funding for the early works of the second proposed mine at Finniss, called the BP33 underground project.

The company expects to spend $45 million to $50 million on the box-cut and preliminary site establishment for BP33, with completion by the end of the first quarter of 2024.

That’s when the miner hopes to make a final investment decision on BP33.

IGO sells JV interest and raises stake in ASX metals junior

IGO isn’t just an ASX 200 lithium stock. The company also produces a lot of nickel.

The latest price-sensitive news from IGO related to its 51% joint venture interest in the Kanowna East, Emu Lake, and Fraser South projects in Western Australia.

IGO has signed a binding agreement with gold and nickel explorer Metal Hawk Ltd (ASX: MHK) to sell its JV interest in exchange for an increased shareholding in Metal Hawk from 5.4% to 8.2%.

Lithium prices

The lithium carbonate price has lifted 37% over the past month, according to Trading Economics data.

It currently sits at US$32,342.90.

Citigroup says the price could rise to between US$35,000 and US$40,000 per tonne by the end of 2023.

Macquarie thinks the price could go as high as US$57,500, and UBS is tipping US$54,750 per tonne.

The post 2 ASX 200 lithium stocks just downgraded by a top broker appeared first on The Motley Fool Australia.

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More reading

• Is it time to be a bull or a bear on Core Lithium shares?
• Core Lithium share price could be a long-term winner as critical metals steal the spotlight at G7 summit
• ASX 200 lithium shares could be winners as Biden calls critical clean energy metals the ‘third pillar of the Australia-US alliance’
• Here are the 10 most shorted ASX shares
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Bronwyn Allen has positions in Core Lithium. 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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Shares in S&P/ASX 200 Index (ASX: XJO) tech giant TechnologyOne Ltd (ASX: TNE) are outperforming today after the company bolstered its interim dividend.

The $5 billion software-as-a-service (SaaS) provider released its earnings for the first half of financial year 2023 today, as my Fool colleague James covered this morning. Within them, it declared its latest dividend.

Right now, the TechnologyOne share price is lifting 1.89% to trade at $15.61.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.17% and the S&P/ASX 200 Information Technology Index (ASX: XIJ) has risen 0.4%.

Let’s take a closer look at the dividend TechnologyOne slapped on the table today.

ASX 200 tech share outperforms on bolstered dividend

The TechnologyOne share price is in the green after the company upped its latest dividend by 10%.

The ASX 200 tech stock declared a 4.62 cents per share, fully franked, interim dividend ­– up from the prior comparable period’s 4.2 cents per share, fully franked, offering.

However, the growth might not be so surprising to those paying attention to the company’s financials. It’s grown its interim dividend by 10% every year since financial year 2010.

Those who aren’t invested in the ASX 200 tech share but want a piece of the dividend better act quickly. It will trade ex-dividend next Thursday.

That means anyone who isn’t invested in the stock at next Wednesday’s close will miss out.

It will then begin to land in investors’ accounts from 16 June.

And it wasn’t just TechnologyOne’s dividend that has seemingly caught the eye of the market today.

The company also revealed a 24% jump in post-tax profit to a record $41.3 million. It’s the fourteenth year that the company has delivered a record first-half profit.

Commenting on the results driving the ASX 200 tech share higher, TechnologyOne CEO Edward Chung said:

We have a clear and consistent strategy, and our team are executing very well, delivering significant value for our customers.

TechnologyOne share price snapshot

The last few years have been good for the TechnologyOne share price.

The ASX 200 tech share has gained 21% since the start of 2023. It’s also 52% higher than it was this time last year and a whopping 257% higher than it was this time five years ago.

For comparison, the ASX 200 has climbed 5% year to date, 2% over the last 12 months, and 21% over the last five years.

The post Guess which ASX 200 tech share just hiked its dividend 10% appeared first on The Motley Fool Australia.

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• TechnologyOne share price charges higher amid strong half-year growth
• 5 things to watch on the ASX 200 on Tuesday
• Analysts say these ASX 200 growth shares are top buys right now
• Top brokers name 3 ASX shares to buy next week
• Analysts name 2 excellent ASX 300 shares to buy and hold

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Technology One. The Motley Fool Australia has recommended Technology One. 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 Wesfarmers Ltd (ASX: WES) share price is down 0.9% as the diversified business faces competition to buy the Silk Laser Australia Ltd (ASX: SLA) business.

Readers may remember that just over a month ago, Wesfarmers announced it was in the process of buying Silk Laser Australia, one of the largest non-surgical aesthetics clinic operators in Australia and New Zealand with a network of more than 140 clinics.

But it seems it’s not a done deal for Wesfarmers.

Competing bid for Silk Laser Australia shares

Silk Laser Australia announced this morning it has received a competing, non-binding, and indicative proposal from EC Healthcare, which claims to be Hong Kong’s largest non-hospital medical service provider.

The bid from EC Healthcare is $3.35 cash per share, which is a 6.3% premium to the offer from Wesfarmers’ Australian Pharmaceutical Industries (API).

The proposal from EC allows Silk to pay a fully franked dividend of up to 10 cents per share, which would reduce the cash consideration offered.

There are a number of conditions attached to the bid including completing confirmatory due diligence, unanimous recommendation from the Silk board, entry into a scheme implementation agreement, and all necessary regulatory approvals being obtained.

Which offer will be accepted?

Silk Australia said that after careful consideration and receiving advice from both its financial and legal advisers, the Silk board decided the EC proposal is the stronger offer. Indeed, this could be influencing the Wesfarmers share price today.

The ASX healthcare share has told Wesfarmers it has until 30 May 2023 to provide a proposal response. The Silk Laser Australia board will then decide which offer is the strongest.

Silk Laser Australia’s board said shareholders don’t need to take any action at this time. It will provide relevant updates to shareholders about any further offers from API.

It also noted there is no certainty the engagement between either Silk or EC Healthcare will result in a change of control transaction of an offer capable of acceptance by Silk shareholders.

What does this mean for the Wesfarmers share price?

The Silk Laser Australia business has a market capitalisation of around $160 million, whereas Wesfarmers has a market capitalisation of $58 billion. As such, it’s a relatively small deal for Wesfarmers, whether it goes ahead or not.

If it’s successful, it will bolster Wesfarmers’ healthcare division and deliver it more earnings. We’ll have to see what happens next in the fight for Silk.

The post Wesfarmers share price drops as Silk takeover competition heats up appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 dividend shares to buy according to analysts
• No savings? Here’s how I’d target a second income of $1,000 per month from scratch
• No savings at 40? Here’s my 3-step plan for $1,500 of passive income a month
• 3 reasons to buy Wesfarmers shares today
• 2 of the best ASX 200 blue chip shares to buy: Morgans

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 positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Silk Laser Australia. 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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After a nice rebound in recent sessions, the Brainchip Holdings Ltd (ASX: BRN) share price is crashing down to earth again on Tuesday.

In morning trade, the struggling semiconductor company’s shares fell as much as 16% to 42.7 cents.

Why is the Brainchip share price crashing?

Investors have been hitting the sell button this morning after Brainchip released its annual general meeting presentation and speeches.

The latter includes a few choice statements that don’t paint a very positive picture of how things are going for the meme stock.

Brainchip Chairman, Antonio J. Viana, acknowledged that the company’s sales performance was abject and its failure with the hyped-up Akida 1.0 product was largely to blame. He commented:

Let me be clear, nobody at BrainChip is happy or content with our current position. We haven’t hit any significant stride yet with respect to revenue. No one is satisfied, and no one should be.

The trick for many companies comes when the move from technology to product takes place. In the past, BrainChip frankly hasn’t gotten this right. We haven’t had a product that can see its way into end production systems.

The company’s under fire CEO, Sean Hehir, adds:

As we engaged with prospects in the first half of the year, we heard consistent feedback from virtually all engagements, which was while Akida 1.0 was, and is, at leadership levels of performance and power, the addressable number of uses cases was arguably narrow and targeted in places where existing “good enough” solutions were already in place. We simply were not going to be successful with the Version 1 product.

What’s next?

Much like they did with version 1, management has hailed version 2 as the key to its future success. Hehir said:

Fundamentally, Akida 2.0 is a platform that substantially increases the capacity of fan-less, highly efficient devices at the edge to run complex models and networks. We can now supercharge the edge AI device to efficiently run complex AI computation, untethered from the cloud, and without CPU intervention, and reduced system load.

Though, it is worth remembering that there certainly is a lot riding on this new platform and nothing to say that it won’t be another failure and destroy even more shareholder wealth. Especially given the competition it faces in the industry.

Finally, it isn’t known yet if disgruntled shareholders have dealt Brainchip’s renumeration report a strike. Management has attempted to justify its generous payouts, but we will soon find out if that has been enough to pacify shareholders.

The post ‘Nobody is happy’: Why the BrainChip share price is diving 16% on Tuesday appeared first on The Motley Fool Australia.

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• Qantas share price drops as airline eyes record profit
• Why Telstra shares are a ‘low risk’ option for investors: broker
• Afterpay should acquire Zip: broker
• Up 125% in 2023, would I be mad to buy Liontown shares at today’s prices?
• TechnologyOne share price charges higher amid strong half-year growth

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 Qantas Airways Limited (ASX: QAN) share price is slipping despite the flying kangaroo’s three-year recovery program appearing to have paid off.

The airline expects to post an underlying profit before tax of between $2.425 billion and $2.475 billion for financial year 2023. That would mark a record for the Aussie icon.

Not to mention, it’s bolstered its on-market share buyback.

The Qantas share price is struggling on the back of the update, falling 2% to trade at $6.37 at the time of writing.

Let’s take a closer look at Tuesday’s news from the S&P/ASX 200 Index (ASX: XJO) travel giant.

Qantas share price gains on record profit guidance

A recovery in demand for travel and normalising aviation supply chains is on track to bolster Qantas’ bottom line while airfares are trending lower, the ASX 200 company revealed this morning.

Flying activity at the national carrier has increased this half on the arrival of new aircraft, widebody jets returning from storage, and reliability improvements.

By the end of the second half, Qantas expects its domestic capacity to be 104% of pre-COVID levels.

Meanwhile, its international capacity is forecast to be above 80% of pre-COVID capacity. That’s set to rise to around 100% by March 2024.

But there was rough news for travellers.

While airfares have declined recently, Qantas expects them to remain “materially” higher than pre-pandemic levels through the next fiscal year. Particularly, for those flying internationally.

Capacity improvements and falling jet fuel prices are tipped to benefit the company’s financial year 2023 earnings. On the other hand, adverse foreign exchange and bond movements are expected to dent its bottom line.

Qantas expects to end this fiscal year with a net debt position of between $2.7 billion and $2.9 billion — considerably below its targetted range of $3.7 billion to $4.6 billion.

It also expects to fork out between $2.6 billion and $2.7 billion of capital expenditure for the period.

Finally, five aircraft in reserve will be back flying before the end of this half, while another eight new aircraft are on track to be delivered by the end of 2023.

The airline is working to get the last of its stored aircraft back into the air.

Qantas extends on-market share buyback

There’s also been news of the company’s capital return initiatives today. The airline underwent a $400 million buyback last year and announced another $500 million buyback in February.

The latter capital return is now 78% complete, with shares bought for an average of $6.49 apiece.

It will now bolster the buyback by up to another $100 million.

RBC analyst Owen Birrell dubbed the increase to the buyback a “token” given the company’s debt levels are considerably below target, The Australian reports, quoting the expert as saying:

It obviously begs the questions as to whether there will be a major step-up in fleet capex and/or any further capital management coming at the FY23 result.

What did Joyce say?

Qantas CEO Alan Joyce commented on the news apparently weighing on the airline’s share price today, saying:

More parts of the aviation supply chain are returning to normal, which means we’re able to put some of the spare aircraft and crew we kept in reserve back in the schedule. That’s combining with lower fuel prices to help put downward pressure on fares, which is good news for customers.

The industry remains capacity constrained and the travel category remains strong, so there’s still a mismatch between supply and demand that’s likely to persist for some time, especially for international flying.

Qantas share price snapshot

This year has been a good one for the Qantas share price so far.

The stock has lifted 7% since the start of 2023. It’s also 17% higher than it was this time last year.

Comparatively, the ASX 200 has risen 5% year to date and 2% over the last 12 months.

The post Qantas share price drops as airline eyes record profit appeared first on The Motley Fool Australia.

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• Have I missed the flight on Qantas shares?
• Back to 100%: The deal driving Qantas shares into the green on Friday
• Why Goldman Sachs rates these ASX 200 shares as top buys
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• Buyback bender: These ASX All Ords shares can’t get enough of their own stock

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Given the current uncertain economic environment, investors may well be on the lookout for low risk ASX shares with defensive qualities.

If you’re one of these investors, then you may want to consider Telstra Group Ltd (ASX: TLS) shares.

Australia’s largest telco has been tipped as a buy by analysts at Goldman Sachs. And one of the reasons for its bullish view is the company’s defensive earnings.

Why Telstra shares could be a top defensive option

Goldman Sachs currently has a buy rating and $4.70 price target on the telco giant’s shares.

Based on the current Telstra share price of $4.35, this implies potential upside of 8% for investors from current levels.

In addition, the broker is expecting a fully franked dividend yield of approximately 4% this year and next. This brings the total potential return to approximately 12%.

That’s not a bad total return when you consider that Telstra shares are being seen as a defensive option by analysts!

What else is it saying?

Goldman explains its bull thesis. This includes its low risk earnings and the potential for value to be crystalised through asset divestments. It said:

Telstra is the incumbent telecom operator in Australia. We believe the low risk earnings (and dividend) growth that Telstra is delivering across FY22-25, underpinned through its mobile business, is attractive. We also believe that Telstra has a meaningful opportunity to crystalise value through commencing the process to monetize its InfraCo Fixed assets – which we estimate could be worth between A$22-33bn. Although there is some debate around the strategic benefits, we see a strong rationale for monetizing the recurring NBN payment stream, given its inflation linked, long duration cash flows could be worth $14.5bn to $17.9bn, with no loss strategic benefit.

And while the broker acknowledges that Telstra shares are starting to look fully valued on historic numbers, it feels they are worthy of a premium. It adds:

Although at a headline level, Telstra valuation appears relatively full (vs. peers and vs. 10Y yield), we note: (1) Adjusting out NBN recurring payments (a unique asset), Telstra trades at a much more compelling multiple; (2) Although its yield spread is compressed vs. history, when factoring dividend growth this is more attractive. Hence into an uncertain 2023 we rate Telstra Buy.

But every bull thesis isn’t without risks. The broker concludes:

Key risks to our view include: (1) higher competition in mobile/fixed from Optus/TPG or from smaller players using the NBN to loss lead, both which would reduce our earnings & dividend growth; (2) disappointing cost out performance, meaning TLS is unable to offset wage cost inflation; (3) unfavorable regulation in fixed & mobile, including NBN pricing; and (4) delays to infrastructure monetisation or lower than expected realised value.

The post Why Telstra shares are a ‘low risk’ option for investors: broker appeared first on The Motley Fool Australia.

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• Buy Westpac and this ASX 200 dividend stock for income: analysts
• Better buy: Telstra shares or TPG?
• No savings at 40? Here’s my 3-step plan for $1,500 of passive income a month
• 2 ASX 200 blue chip shares that brokers love
• Broker says mobile price increases are good news for the Telstra share price

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 Telstra 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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Zip Co Ltd (ASX: ZIP) shares are racing higher on Tuesday morning.

At the time of writing, the buy now pay later (BNPL) provider’s shares are up over 13% to 62.5 cents.

Why are Zip shares on fire today?

It appears that investors have been scrambling to buy shares today in response to the release of a bullish broker note out of Shaw and Partners.

According to the note, the broker believes that the proposed change to BNPL regulations in Australia are actually a big win for Zip. So much so, its analysts feel that the company is now a very attractive takeover option for rival Afterpay, which is owned by Block Inc (ASX: SQ2).

In light of this, Shaw and Partners has reaffirmed its (high risk) buy rating with a $2.02 price target.

Based on where Zip shares are currently trading, this implies potential upside of 220% for investors over the next 12 months.

Why did the broker say?

In response to the proposed changes announced yesterday, the broker expects Zip to benefit from the “levelling the playing field.” It explains:

Broadly we suspect that there is ~30-50% upside medium term to ANZ volumes if and when implemented from levelling the playing field. In particular these changes would benefit Zip in the following ways: 1) Levelling the origination playing field, seeing other providers having similar at check-out hurdles for origination; 2) Potential changes to fees/merchant charges for competitors, noting higher administrative burden through changes; 3) Focus on larger credit limits via customers upfront due to dynamic responsible lending; and 4) Slow down in competition as responsible changes roll through against varying industry experience. Broadly a number of large and small competitors have also ceased operations in ANZ in the LTM and this market is appearing more attractive for further profit growth for Zip.

All in all, the broker feels that this makes Zip a strategically important player in the BNPL industry and an attractive option for further acquirers in the space. It adds:

This change represents a material net positive to Zip. Importantly with market leadership in the digital space in already utilising this process, Zip’s value appears strategically relevant for further acquirers in the space, particularly if you didn’t want to miss a beat. APT should have a crack at Zip.

The post Afterpay should acquire Zip: broker appeared first on The Motley Fool Australia.

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More reading

• Why Galan Lithium, Metcash, Tyro, and Zip shares are falling today
• Could Zip shares be a winner of more regulation in the BNPL sector?
• Credit call: ASX BNPL shares slump as regulation arrives
• Here are the 10 most shorted ASX shares
• Here are the top 10 ASX 200 shares 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. has positions in and has recommended Zip Co. 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 Liontown Resources Ltd (ASX: LTR) share price has been a standout performer so far this year, surging 125% since the start of 2023.

No doubt, investors will be happy with their stock’s performance. But is it safe to say those not yet on board the company have missed out?

Right now, Liontown shares are trading for $2.77 apiece.

Liontown share price soars 125% in 2023

Fans of S&P/ASX 200 Index (ASX: XJO) lithium shares will have watched the Liontown share price in awe in recent months. But most of its gains were triggered by a single event.

The company was the recipient of a $2.50 per share takeover bid put forward by lithium giant Albemarle in March. The offer, though rejected, saw the stock rocket 68.5% in a single session.

And it didn’t stop there. It kept climbing to peak at $3.02 earlier this month.

But experts are torn on whether the stock will return to such highs or surpass them entirely. Indeed, many are downright bearish on Liontown shares.

What are experts saying about Liontown shares?

Where Liontown shares are heading from here is a contentious subject.

Indeed, three of 10 analysts covering Liontown believe it’s a strong buy while the remainder think it’s worth holding, according to CMC Markets.

Bell Potter is among those most hopeful, my Fool colleague James reported shortly after Albemarle’s offer was announced. It had a speculative buy rating and a $3.35 price target on the stock, a potential 21% upside.

But some experts are more sceptical. Alto Capital’s Tony Locantro is one, tipping the ASX 200 stock a sell this week, saying, as per The Bull:

Prior to the bid, the lithium sector was struggling with a falling price and major cost blowouts on new projects … Investors may want to consider cashing in some gains.

Meanwhile, Goldman Sachs forecasts Liontown shares to fall to $1.50, slapping the stock with a neutral rating. That marks a potential 46% downside.

All in all, whether I’d be mad to buy Liontown shares at their current level apparently depends on who I might ask.

When might the company realise cash flow?

Liontown is still a lithium developer. It’s aiming to bring its Kathleen Valley Project into production in mid-2024. From that point, three off-take agreements will kick off.

LG Energy Solution and Tesla have each signed on to buy 100,000 dry metric tonnes (DMT) in the first year of production, extending that to 150,000 DMTs in each of the subsequent four years. Meanwhile, Ford has agreed to buy 75,000 DMTs in the first year of production, 125,000 DMTs the following year, and 150,000 DMTs annually for another three years.

Each of the agreements will see the lithium product’s value based on market prices.

Thus, the company could be bringing in regular cash flow before the market knows it, if all goes to plan.

The post Up 125% in 2023, would I be mad to buy Liontown shares at today’s prices? appeared first on The Motley Fool Australia.

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More reading

• ASX 200 lithium shares could be winners as Biden calls critical clean energy metals the ‘third pillar of the Australia-US alliance’
• Could another lithium price boom be around the corner? Experts weigh in
• Own Liontown shares? Here’s when the company expects to kick start dividends
• Are ASX 200 lithium shares approaching a ‘tipping point’ for ripper revenues?
• Power portfolios: Millionaire investors shun ASX 200 lithium shares

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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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