The Xero Limited (ASX: XRO) share price is falling on Wednesday.
In afternoon trade, the cloud accounting platform provider’s shares are down 2% to $77.99.
This follows broad market weakness and particularly heavy selling in the tech sector today. The latter sees the S&P/ASX All Technology Index trading 1.3% lower this afternoon.
Is the Xero share price good value?
According to a note out of Citi, its analysts believe the Xero share price could be great value at the current level.
The note from Tuesday reveals that the broker has retained its buy rating and $106.80 price target.
This price target implies significant potential upside of 37% for investors over the next 12 months.
What did the broker say?
Citi has been looking at the UK market and has a few concerns over rival Sage’s small business plans.
However, the broker believes the market is large enough for Xero to continue growing at a strong rate despite this. As a result, it continues to remain bullish on the company’s long term outlook.
Its analysts explained:
From Xero’s perspective, the two key takeaways from Sage’s Small Business focused investor/analyst event were that: i) Sage is stepping up investment in the accountant channel both from a product as well as go-to-market perspective; and ii) Sage is also increasingly focusing on the sole trader/self-employed segment of the market ahead of the next phase of MTD. We do see a resurgent Sage as a threat to Xero’s UK growth and could result in Xero having to increase investment in the UK, however we see the addressable market as large and continue to forecast strong growth for Xero in the region.
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 Xero. The Motley Fool Australia has positions in and has recommended Xero. 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 coal price closed at US$437.65 overnight. It hit a record of US$460 earlier this month, according to Trading Economics data. The value of the commodity has more than doubled over the past 12 months.
What’s this going to do to ASX coal share prices?
In short, really good things!
According to the article, Macquarie has raised its performance expectations for four ASX coal shares. They are Whitehaven, New Hope, BHP Group Ltd (ASX: BHP) and Coronado Global Resources Inc (ASX: CRN).
The broker has raised its forecasts for the 12-month share price targets and earnings per share (EPS) over the next three years.
Next, New Hope. Macquarie predicts the New Hope share price will reach $7 by this time next year. It has raised its EPS by 34% for FY23, 163% for FY24, and more than 400% for FY25 (nope, that’s not a typo).
Let’s start with Whitehaven. Macquarie has increased its share price target on Whitehaven by 20% to $12. It has raised its EPS forecast by 28% in FY23 and by 100% to 200% for FY24 to FY27.
For the biggest mining company on the planet, Macquarie tips a 16% increase in the BHP share price, which is currently $37.78. Its price target is $44 per share. That’s a 5% increase on previous forecasts. Macquarie’s EPS forecasts for BHP have shifted by 4% to 6% for FY23 to FY26.
Of course, BHP isn’t a coal pure play like the other ASX shares here. But the commodity is a large part of the BHP business and represents 24% of its revenue, according to the company’s FY22 full-year results.
Finally, Macquarie expects the Coronado Global Resources share price to lift to $3.60. This is a 3% increase on previous forecasts. Today, the Coronado Global share price is up 6.6% to $1.62. The broker has upgraded its EPS forecasts by 3% to 6% over CY23 to CY27.
How’s 2022 been for ASX coal shares?
ASX coal shares have skyrocketed in 2022 due to a supply/demand imbalance caused by the war in Ukraine.
Whitehaven shares are up an astounding 226% in the year to date. New Hope shares are up 163%.
Yancoal shares are up 109% and the Coronado Global share price has increased by 26%.
Motley Fool contributor Bronwyn Allen has positions in BHP Billiton Limited and Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. 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 BHP Group Ltd (ASX: BHP) share price is edging higher on Wednesday.
In early afternoon trade, the mining giant’s shares are up 0.5% to $37.35.
This compares favourably to the performance of the ASX 200 index, which is down 0.5% this afternoon.
Why is the BHP share price outperforming?
The catalyst for the rise in the BHP share price on Wednesday appears to have been a bullish broker note out of Macquarie.
According to the note, the broker has retained its outperform rating and lifted its price target on the company’s shares to $44.00.
This implies a potential return of almost 18% for investors over the next 12 months before dividends.
And if you include the fully franked 7% dividend yield that the broker is expecting in FY 2023, the total return on offer with BHP’s shares lifts to approximately 25%.
The note reveals that Macquarie has been looking at thermal coal prices and expects them to remain higher for longer due to supply constraints. This has led to the broker upgrading its earnings estimates for BHP by around 5% per annum through to FY 2026.
What else is happening?
In other news, BHP has revealed that it has given notice to the holders of some hybrid notes that it will exercise its contractual option to redeem and cancel them. These notes, with a value of 600 million pounds, were due to expire in 2077.
The company made the move in accordance with its group strategy and strong liquidity position.
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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
According to Statista, global payment card fraud is a $32 billion problem and is expected to be a $38.5 billion problem by 2027. Riskified Ltd.(NYSE: RSKD) is a small company aiming to solve this big problem. And it may just be cheap enough to have limited downside from here, giving today’s investor a relatively low-risk way to invest in this space.
Keep in mind that all investments are fraught with risks, and Riskified is no exception. We’ll look at what’s holding this company back. But it could be worth taking a speculative position.
Meet Riskified (and its risks)
E-commerce companies obviously don’t like fraud and actively try to avoid it. They’ll decline transactions that look suspicious. If their hunches are correct, they’ll avoid losing money when transactions are disputed and chargebacks result. However, if they’re incorrect, they miss out on legitimate revenue. Riskified aims to solve both of these problems for e-commerce companies.
Riskified believes its artificial intelligence (AI) software is better at identifying fraud than e-commerce companies. Companies that use Riskified enjoy higher revenue by having more transactions approved. And if the software makes a mistake, Riskified pays for it, not the e-commerce company — it’s an undeniable value proposition.
Maybe its value proposition is why Riskified has an impressive 99% customer retention rate. Or maybe it’s simply because the company’s customer base is small and just one customer — presumably Wayfair — accounted for a whopping 16% of Riskified’s revenue in 2021. It’s easier to have a high percentage retention rate when your business is concentrated toward just a few customers.
Riskified’s small customer base makes it a risky investment. While its retention rate is impressive now, losing just one account could result in outsized damage.
The other big risk for Riskified is that its AI software doesn’t appear to be making meaningful improvements, which is the crux of a bullish investment thesis to begin with. When it approves fraudulent transactions, the company refunds its customers. And this cash outflow reduces its gross profit calculations. Other things affect its gross margin as well. However, investors can get a general idea of the effectiveness of Riskified’s AI by watching how its gross margin improves or deteriorates.Â
Here’s a look at Riskified’s gross margin over the past six quarters.
Quarter
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Gross margin
56%
60%
46%
53%
52%
51%
Data source: Riskified’s press releases. Chart by author.
Riskified’s management blames its gross margin underperformance on diversification. It’s picked up new customers in new categories, and its AI software needs to be trained for the particularities in each. Long term, this is a really good thing if true.
However, the point remains that Riskified stock is a risky investment. It’s hard to quantify the quality of its software. And if it’s not quality, the company likely won’t grow and it will lose customers in time, which we’ve already noted would be a big deal.
A risk-adjusted entry point?
As of this writing, Riskified has a market capitalization of $670 million — squarely in small-cap territory. However, the company has a stellar balance sheet of $488 million in cash, cash equivalents, and short-term deposits and has no debt. Adjusting for this gives Riskified an enterprise value (the value of the business itself) of under $200 million, which is really small.
For perspective, Riskified expects to generate between $255 million and $258 million in revenue in 2022. Therefore, its enterprise value is actually below its sales, which is pretty cheap.
The other thing to consider is that Riskified isn’t profitable, but its cash burn is modest. Through the first half of 2022, the company has just negative $19.3 million in cash from operating activities, giving it a really long runway considering its large cash position.
The market isn’t asking investors to pay up for Riskified stock. The company is cheaply valued, is close to profitability, and has a rock-solid balance sheet. Riskified stock is down close to 90% from its all-time high, but these factors mitigate further downside from here.
It could be a buy
The points made early in the article clearly demonstrate that Riskified is a speculative investment, not a sure thing. However, the price could be right to take a small position and add it to a larger portfolio.
If Riskified lives up to its potential, a little stake now will be sufficient for investors. With a market cap of just $670 million, it has ample room to expand in the $32 billion (and growing) payment-fraud space. And the company has additional revenue-growth opportunities not discussed here.
From where it trades today, Riskified can be a multi-bagger investment. But it still has a lot to prove.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Jon Quast has positions in Riskified Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Riskified Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
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It also recorded its maiden revenue after acquiring renewable energy plant, Natür³Lich Insheim. The plant brought in around $4.5 million of revenue since its December acquisition.
What else happened in FY22?
Financial year 2022 was a busy one for the lithium hopeful.
The company has been strategically expanding its granted licence area to cover 1,465.38 square kilometres.
It also produced its first battery-quality lithium hydroxide monohydrate from piloting operations. The plant sample exceeded battery grade specifications required from offtake customers at more than 56.5% lithium hydroxide monohydrate with very low impurities.
The company has also signed lithium offtake agreements with Volkswagen, Renault, Stellantis, LG Energy, and Umicore. Its planned lithium production is now fully booked for the first five years of operation.
It believes such partnerships will see it take a key role in Europe’s transition to electric vehicles.
Finally, the company faced a challenging period on the market when it was hit with a short-seller attack. The Vulcan Energy share price tumbled amid the release of a scathing report by activist short-seller J Capital.
What did management say?
Vulcan Energy chair Gavin Rezos commented on the company’s activities and outlook:
Vulcan anticipates the use of geothermal renewable energy on a mass scale will play an important part in achieving Europe and Germany’s energy security and independence.
In the Upper Rhine Valley Brine Field, the extraction of both renewable heat and lithium from the same geothermal resource will put Vulcan in the front seat of the transition to renewable energy and e-mobility in Europe.
We are confident that we have the right team to deliver for our shareholders, assisting Europe in its much-needed transition away from Russian gas supplies as soon as possible, whilst maintaining a strong sustainability focus.
What’s next?
The company expects to deliver the Net Zero Lithium Project’s definitive prefeasibility study in the first quarter of 2023.
It’s also working to construct and commission its Sorption-Demo Plant. Cold commissioning of the plant is expected to begin later this year. Meanwhile, its lithium hydroxide production demo plant is progressing concurrently and is on track to start commissioning late in the first quarter of 2023.
Finally, Vulcan is progressing a systematic exploration program over its project area in the Upper Rhine Valley Brine Field.
Looking to its sustainability targets, the company plans to expand its taskforce for climate-related financial disclosures, pilot test the taskforce for nature-related financial disclosures, and publish its first communication on progress as part of its United Nations Global Compact membership.
Vulcan Energy share price snapshot
Sadly, the Vulcan Energy share price has been struggling lately.
It has dumped 30% since the start of 2022. It’s also trading 42% lower than it was this time last year.
For comparison, the ASX 300 has fallen 15% year to date and 11% over the last 12 months.
Motley Fool contributor Brooke Cooper has positions in Vulcan Energy Resources Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Volkswagen AG. 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 A2 Milk Company Ltd (ASX: A2M) share price is down 0.93% so far today.
A2 Milk shares closed yesterday trading for $5.35 and are currently trading for $5.30 apiece.
That’s today’s price action.
Now, why has the A2 Milk share price smashed the S&P/ASX 200 Index (ASX: XJO) over this past month’s trading?
Why is the A2 Milk share price outperforming over the month?
On 26 August, the fresh milk and infant formula company closed the session at $4.91 per share. That puts the A2 Milk share price up 8% over the past 22 trading days. A feat that’s particularly noteworthy given ASX 200 has lost 8% over that same period,
So, what’s been stoking ASX investor interest?
As you’re likely aware, the A2 Milk share price hasn’t exactly been a stellar performer over the past two years.
The company managed to shrug off the worst of the pandemic-fuelled sell-off in February and March 2020. But it came under heavy pressure commencing in August 2020, in part because border lockdowns brought a virtual end to its lucrative Daigou buying segment. Shares are down more than 72% since then.
But the company’s FY22 results, released on 29 August, look to have buoyed analyst and investor sentiment alike.
Among the highlights, the company reported a 19.8% increase in revenue to NZ$1.45 billion, some 5% above consensus expectations.
Meanwhile, management reported plans for a NZ$150 million on-market share buyback.
And if that wasn’t enough to boost interest in A2 Milk, the company offered some positive guidance for FY23, forecasting high single-digit revenue growth.
What are the experts saying?
Some positive analyst coverage since reporting its FY22 results has also likely helped lift the A2 Milk share price.
Perpetual noted that A2 Milk “is one of the only international brands to deliver growth during this period”, adding that the strong sales lift from “in-country marketing demonstrates the strength of the brand”. Perpetual also lauded the company for “shifting volumes away from the volatile Daigou distribution channel”.
Wilson Asset Management’s senior equity analyst Shaun Weick is also bullish, noting A2 Milk’s single-digit revenue growth guidance “looks very achievable”.
Weick also pointed to the company’s strong financial position alongside the share buyback as positives:
They’ve got a billion dollars in net cash on the balance sheet. They’ve initiated a $150 million buyback… So that’s sort of the next catalyst we’re looking for there.
A2 Milk share price snapshot
With the past month’s strong run behind it, the A2 Milk share price is down 5.0% in 2022. That compares to a calendar year loss of 14.3% posted by the ASX 200.
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 recommended A2 Milk. 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 New Hope Corporation Limited (ASX: NHC) share price is up 6.63% to $6.11 this morning as energy stocks soar.
The S&P/ASX 200 Energy Index (ASX: XEJ) is leading the 11 sectors of the ASX today, up 2.6% at the time of writing.
New Hope shares have shot the lights out this year. In the year to date, they’re up a staggering 165%.
And top broker Macquarie thinks there’s more green to come.
According to reporting in The Australian, Macquarie has upgraded its outlook for the value of thermal coal. In turn, it has raised its 12-month share price targets on four energy stocks, including New Hope.
What’s next for the New Hope share price?
Thermal coal is used to create electricity. Macquarie says developed economies are exhibiting a “willingness to pay a premium to secure energy supply” given current global constraints.
The supply/demand imbalance is largely due to the war in Ukraine.
Macquarie has raised its outlook for the thermal coal price by 38% to 114% over CY23 to CY27.
The broker reckons the thermal coal price will lift by 25% to $US410 per tonne in the second half of CY22.
The forecast for 2023 is a bit lower at $US367.50 per tonne but still sky-high by historical measures.
The price of coal reached US$437.65 overnight. It hit a record of US$460 earlier this month, according to Trading Economics data. The value of the commodity has more than doubled over the past 12 months.
Let’s get this party started
As a result, Macquarie has increased its forecast earnings per share (EPS) for New Hope. Its expectations are up 34% for FY23 and 163% for FY24. But wait for the FY25 prediction — up by more than 400%.
So yeah, the party is pretty much just kicking off for New Hope shares.
Macquarie predicts the New Hope share price will gain 17% to reach $7 by this time next year.
Motley Fool contributor Bronwyn Allen has positions in Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. 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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Threats of a global recession and heightened market volatility may not be enough to stop the CSL Limited (ASX: CSL) share price from topping $300 again.
Shares in the biotech tried repeatedly and failed to break above this elusive target since July.
But several experts believe this will happen within the next 12 months, if not sooner. This is despite the S&P/ASX 200 Index (ASX: XJO) and global markets being roiled by aggressive rate hikes, geopolitical tensions and a sputtering economy.
Can the CSL share price break its record high?
Citigroup is one that’s tipping the CSL share price to not only race above $300, but to break its record high of $336.40 that was hit in February 2020.
The broker is recommending investors buy CSL and has a 12-month price target of $340 a share. This reflects around a 20% upside to CSL’s closing price yesterday.
Citi isn’t the only one that’s bullish on the company. The analysts at Macquarie Group Ltd (ASX: MQG) have set a target of $329.50 on the CSL share price.
Upside from potential new drug
Macquarie reiterated its outperform call on the shares following the successful Phase 3 trial of garadacimab. This is a factor XIIa-inhibiting monoclonal antibody for the prevention of hereditary angioedema (HAE).
Macquarie believes the drug can take market shares (if approved). This is because of its higher efficacy and favourable dosing when compared to current treatments.
The broker said in its note, which was released two weeks ago:
We also assume pricing in line with Haegarda on an annual cost per patient basis, but with a slightly higher gross margin.
In aggregate, these assumptions imply increased HAE product revenue for CSL to FY27 (ahead of our current assumptions i.e. Haegarda and Berinert only), with solid gross profit and earnings upside (incremental EPS of ~9% by FY27).
Product portfolio and favourable court ruling
Another broker that’s upbeat on CSL’s growth outlook is Morgans. The broker noted that CSL’s world-leading businesses are well placed for growth due to its superior drug portfolios, significant investment in research and development, and strong demand.
Morgans’ 12-month price target on the CSL share price is $321.30 a share.
Meanwhile, a court ruling in the US is adding an extra tailwind for the company. A US District Court issued a preliminary injunction stopping US border officials from preventing Mexicans from entering the US on USB1/B2non-immigrant visas to receive cash for blood donations.
What is the CSL share price worth?
Morgan Stanley noted this is a clear positive for CSL. The company has 304 centres in the US with around 16 near the US-Mexican border.
Morgan Stanley has an overweight rating on the CSL share price with a 12-month price target of $323 a share.
Motley Fool contributor Brendon Lau has positions in CSL Ltd. and Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has recommended Macquarie Group Limited. 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 BetaShares Global Cybersecurity ETF (ASX: HACK) is in focus for Aussies after the Optus hack.
Whether it was a hack or a cybersecurity malfunction, Optus’ security breach has put the concept of cybersecurity in front of Australians.
There are plenty of reasons to want businesses and organisations to have top-notch security systems set up. A key reason is the fact that they have so many of our details, such as the typical ones like name, date of birth, address, phone number and email address. It could cause problems if those details were to get into the wrong hands.
How has the BetaShares Global Cybersecurity ETF performed?
Optus told customers about the attack on Thursday 22 September. That was on the public holiday to honour the Queen.
So, since market close on Wednesday 21 September, the ETF has fallen by around 2%.
But, there are a few different things to keep in mind with this decline.
First, it comes at a time when the global share market is seeing significant volatility.
Over the same period – since Wednesday last week – the Vanguard MSCI Index International Shares ETF (ASX: VGS) has fallen by an almost-identical amount of around 2% as well.
The global share market is contending with a number of issues including high inflation and higher interest rates, and a sell-off of the British pound within the last week.
Changes in how investors value businesses in this economic environment have hurt the share prices of many businesses. The Betashares Global Cybersecurity ETF has fallen in value by nearly 24% since the start of 2022.
It’d be understandable for investors to think that demand for cybersecurity services will increase in light of a major cybersecurity issue. But, keep in mind that many of the cybersecurity businesses inside this ETF earn their profit from across the world. What happens to an Australian telco isn’t likely to spur huge demand globally, in my opinion.
What shares are in the portfolio?
Each business within this portfolio offers different services.
Investors may have heard of some of the 37 holdings including Broadcom, Cisco Systems, Infosys, Crowdstrike, Palo AltoNetworks, Cyberark, Zscaler, Fortinet, Booz Allen Hamilton, Science Applications, F5 Networks, SentinelOne and Verisign.
Whilst it can be hard to identify which specific business will be the winner for a long-term trend, like the growth of cybersecurity, buying a basket of them allows us to capture the overall growth of the sector.
As outlined by fund provider BetaShares, according to Statista, the global cybersecurity market is expected to grow from $137.6 billion in 2017 to $248.3 billion in 2023.
Why could this ETF work in some investor portfolios? BetaShares says:
Australian investors currently have few local options for gaining exposure to the fast-growing cybersecurity sector.
There are very few pure-play cybersecurity firms listed on the Australian share market, and the overall technology sector accounts for less than 2% of Australian equity market capitalisation.
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 positions in and has recommended BETA CYBER ETF UNITS, Cisco Systems, CrowdStrike Holdings, Inc., Fortinet, Palo Alto Networks, Vanguard MSCI Index International Shares ETF, VeriSign, and Zscaler. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Broadcom Ltd. The Motley Fool Australia has positions in and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia has recommended CrowdStrike Holdings, Inc. and Vanguard MSCI Index International Shares 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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