It might be counterintuitive, but sometimes investors might be best served to ignore an earnings downgrade.

That’s because if the business is still in a position to take off in the long run, a one-off downgrade may not matter that much.

In fact, it might even present a juicy buying opportunity as skittish shareholders sell off their holdings and bring the price down.

Fortunately for us, Red Leaf Securities chief executive John Athanasiou reckons he’s found an ASX share that’s just in that situation.

‘A dominant position in an industry with high barriers to entry’

The share price for Cleanaway Waste Management Ltd (ASX: CWY) has dropped almost 17% since 21 April.

The movement down wasn’t helped by an update to the market in May.

“The company downgraded earnings due to floods and higher fuel and labour costs,” Athanasiou told The Bull.

But this is a temporary hiccup, and the analyst feels like the structural advantages for Cleanaway are still in play.

“The waste management company has a dominant position in an industry with high barriers to entry,” said Athanasiou.

“The bulk of the company’s revenues are generated from recurring multi-year contracts.”

Athanasiou would buy the stock now for holding over an extended period.

“Despite a lag in cost recoveries, Cleanaway’s longer term outlook is bright.”

Cleanaway is scheduled to report its preliminary numbers on 19 August.

Recurring revenues with pricing power to fight inflation

Back in June, Wilsons head of investment strategy David Cassidy also spruiked Cleanaway’s long-term potential, calling it a “quality” ASX share with inflation protection.

“The majority of Cleanaway’s revenue is contracted and therefore recurring,” he said at the time.

“Multi-year contracts provide steady volumes and recurring revenues and include appropriate price adjustment mechanisms.”

The wider analyst community is somewhat divided over the waste management provider.

According to CMC Markets, seven out of 14 analysts currently recommend Cleanaway shares as a buy, with five rating it as a hold.

The post ‘Outlook is bright’: Expert names ASX share to buy for long-term fortunes appeared first on The Motley Fool Australia.

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More reading

• Why the Tesla share price jumped on Monday
• Is the Telstra share price on the way back up?
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• These ASX dividend shares have been named as buys for income investors
• Morgans names 3 more of the best ASX shares to buy in August

Motley Fool contributor Tony Yoo 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 Telstra Corporation Ltd (ASX: TLS) share price has experienced quite a bit of volatility in 2022, just like many ASX shares in the S&P/ASX 200 Index (ASX: XJO).

In the year to date, the Telstra share price has fallen 5.9%. It closed yesterday’s session at $3.97.

However, there are signs that Telstra could start to generate earnings growth in the next few years. And that could do good things for the share price.

What’s next for the Telstra share price?

For starters, the telco has itself provided guidance that it’s expecting to deliver profit growth in the next couple of years.

But, one interesting line of thought relates to the NBN. There is also potential opportunity when it comes to home broadband.

Let’s look at what one expert, David Cassidy from Wilsons, has said about the situation in an article on Livewire.

NBN difficulties

Cassidy noted Telstra’s net profit after tax (NPAT) has been “plagued” by headwinds created by the NBN over the past decade.

He pointed out that the Telstra share price started hurting in 2015. This was mainly because of the impact of the Federal Government’s NBN rollout, which damaged revenue.

Telstra is not the dominant provider of wholesale fixed-line networks in Australia anymore. The NBN has steadily replaced Telstra’s legacy fixed-line copper wire network. Telstra’s earnings lost out as customers transitioned to NBN broadband services.

Telstra is now just a retail provider that re-sells NBN access. Cassidy said that Telstra has to compete with other service providers on a “level playing field”.

There has also been a “significant increase” in costs in providing fixed broadband services for Telstra and competitors, hurting margins. Intense competition and aggressive price cutting have hurt operator margins.

The expert noted that these impacts can be seen in the heavy decline in Telstra’s earnings before interest, tax, depreciation, and amortisation (EBITDA) from FY17 to FY21.

In parallel, the Telstra share price has fallen by 2.5% over the past five years to date.

Turning point?

The NBN rollout is “effectively complete”, meaning that there aren’t really any more customers to lose. In other words, “the ongoing drag from the migration of its legacy network is all but over”.

While the hole of the lost home broadband revenue/earnings is still there, Cassidy suggested that earnings “will likely” have bottomed in FY22, establishing a new base to grow from.

Telstra is “entering into an earnings per share (EPS) upgrade cycle, with analysts increasing their earnings forecasts in a sustained manner for the first time in years.”

The Telstra 5G network could be a key driver of the business. Not only can it continue its leadership in the sector, but a strong 5G network could allow Telstra to offer wireless broadband, meaning 5G-powered home broadband. This would enable a significant increase in the margin for each household connection.

Telstra’s T25 strategy also focuses on a further reduction of costs. Revenue could also increase for its mobile division as it raises prices in line with CPI inflation.

Foolish takeaway

Cassidy said that the Telstra share price is attractive when looking at cash earnings rather than statutory earnings because of how capital expenditure spending is structured.

At the time of publication, he said that Telstra was valued at a price-to-equity free cash flow multiple of 16.4 times.

The post Is the Telstra share price on the way back up? appeared first on The Motley Fool Australia.

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• Top brokers name 3 ASX shares to buy next week
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• Why is the Telstra share price lagging the ASX 200 on Thursday?
• Here are 2 ASX dividend shares to buy right now according to experts
• Own Telstra shares? Here’s the latest on the telco’s new Microsoft deal

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 Telstra Corporation 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 Appen Ltd (ASX: APX) share price is on watch after the company provided insight on its performance over the first half ahead of its earnings’ release later this month.

The artificial intelligence and machine learning data provider outlined a disappointing six months that saw demand for digital advertising wane and some of its major customers’ spending slow while it continued to invest in transformation activities.

The Appen share price is $5.71 as of Monday’s close.

Let’s take a closer look at today’s news from the tech favourite.

Appen share price in focus amid earnings update

The Appen share price is in focus on Tuesday amid news the company’s earnings took a hit in the first half of 2022 and didn’t recover much in July.

The company expects to post revenue of US$182.9 million for the six months ended 30 June – a 7% drop on that of the same period of 2021. That’s expected to dint its earnings before interest, tax, depreciation, and amortisation (EBITDA).

Appen assumes it will post underlying EBITDA (after foreign exchange impacts) of US$8.5 million – a 69% drop.

The company also expects to suffer a statutory loss of US$9.4 million and an underlying loss of US$3.8 million. That’s compared to the prior corresponding period’s respective profits of US$6.7 million and US$12.5 million.

But it wasn’t all bad. The company’s business in China grew while its enterprise business showed momentum.

Appen CEO Mark Brayan commented on the news likely to move the company’s share price today, saying:

The first half … has been characterised by challenging external operating and macro conditions.

This has especially impacted our global division, particularly those customers with a high exposure to digital advertising. While only 26% of our first half global revenue supports digital advertising, we are seeing a flow on effect to non-ad-related projects and some of our core programs, as our customers reduce their overall spend.

Looking to the future…

Appen expects seasonal projects and a ramp up in existing projects to drive volumes in the current half.

Though, it noted a lack of improvement in July means there’s still uncertainty surrounding its global customers’ spending and their exposure to weaker digital advertising demand.

That means the conversion of forward orders to sales is less certain than it has been in previous years.

The company does expect its earnings to pick up in the second half, however. It also noted that while its customers’ spending has slowed, its AI product development is expected to increase.

Appen is set to release its audited half year earnings on 25 August.

Appen share price snapshot

This year has been particularly rough on the Appen share price.

The stock has tumbled 49% year to date. For comparison, the S&P/ASX All Technology Index(ASX: XTX) has slumped 28% and the S&P/ASX 300 Index (ASX: XKO) has fallen 8% so far this year.

The company’s stock is also 52% lower than it was this time last year. That leaves it having underperformed the All Tech Index by 26% and the ASX 300 by 45%.

The post Appen share price on watch as ‘challenging’ first half dints earnings appeared first on The Motley Fool Australia.

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• Why Appen, Arizona Lithium, Australian Stategic Materials, and Nuix shares are dropping
• Why the upcoming first-half result could be pivotal for Appen shares

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen 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.

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If you’re looking to boost your income portfolio in August, then you may want to look at the shares listed below.

Here’s why these ASX dividend shares could be worth considering right now:

Dicker Data Ltd (ASX: DDR)

The first ASX dividend share to look at is Dicker Data. It is a leading technology hardware, software, and cloud distributor.

Dicker Data has been growing at a solid rate for many years and continued this trend during the first half of FY 2022. Last week the company released its half year update and advised that it expects to report a 36% increase in revenue to $1,459 million and an 11% lift in operating profit before tax to a record of $51 million (excluding acquisition costs).

While this does imply a slight slowdown in growth compared to its first quarter performance, the team at Morgan Stanley remain positive. As a result, the broker retained its overweight rating with a trimmed price target of $14.00.

In addition, the broker is forecasting fully franked dividends per share of 36.2 cents in FY 2022 and 42.2 cents in FY 2023. Based on the current Dicker Data share price of $11.20, this will mean yields of 3.2% and 3.8%, respectively.

South32 Ltd (ASX: S32)

Another ASX dividend share that could be a top option for income investors is diversified mining and metals company South32.

The team at Morgans are very positive on the mining giant. This is due to its attractive valuation, the de-risking of its growth portfolio, and its earnings-linked dividend policy. The broker expects the latter to support some very big dividends in the coming years.

For example, Morgans is forecasting fully franked dividends per share of 28 cents in FY 2022 and 35 cents in FY 2023. Based on the current South32 share price of $3.86, this will mean yields of 7.25% and 9.1%, respectively.

Another positive is that Morgans sees plenty of upside in the South32 share price. It has an add rating and $6.00 price target on the miner’s shares.

The post These ASX dividend shares have been named as buys for income investors appeared first on The Motley Fool Australia.

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• Top ASX shares to buy in August 2022
• Here’s why experts say these are the ASX mining shares to buy now
• Down 1% in a month, what’s next for the Dicker Data share price?
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

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 Dicker Data Limited. The Motley Fool Australia has positions in and has recommended Dicker Data 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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Analysts at Morgans have been busy picking out what they believe are the best ASX shares to buy in August. You can read about the first three here.

Three more that have made the broker’s best ideas list are named below. Here’s why the broker is bullish on them:

Macquarie Group Ltd (ASX: MQG)

The first ASX share to look at is this investment bank. Morgans is a fan of the company due to its exposure to a number of long term structural growth areas. In addition, it feels that its trading businesses are well-placed to profit in the current volatile markets. It explained:

We continue to like MQG’s exposure to long-term structural growth areas such as infrastructure and renewables. The company also stands to benefit from recent market volatility through its trading businesses, while the company continues to gain market share in Australian mortgages.

Morgans has an add rating and $215.00 price target on Macquarie’s shares.

QBE Insurance Group Ltd (ASX: QBE)

The broker is also very positive on this insurance giant. Its analysts believe QBE could be an ASX share to buy thanks to its attractive valuation and positive outlook. The latter is being driven by rising rates and cost reductions. Morgans commented:

With strong rate increases still flowing through QBE’s insurance book, and further cost-out benefits to come, we expect QBE’s earnings profile to improve strongly over the next few years. The stock also has a robust balance sheet and remains relatively inexpensive overall trading on ~9.1x FY23F PE.

The broker has an add rating and $14.76 price target on QBE’s shares.

ResMed Inc (ASX: RMD)

A final ASX share that makes the broker’s best ideas list is ResMed. Morgans believes that the medical device company is well-placed for growth over the long term thanks to its digital business. It explained:

While we believe the next few quarters will likely be volatile, as COVID-related demand for ventilators continues to slow and core sleep apnoea volumes gradually lift, nothing changes our medium/longer term view that the company remains well-placed as it builds a unique, patient-centric, connected-care digital platform that addresses the main pinch points across the healthcare value chain.

Morgans has an add rating and $37.95 price target on ResMed’s shares.

The post Morgans names 3 more of the best ASX shares to buy in August appeared first on The Motley Fool Australia.

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• 5 things to do during ASX results season
• Here are 3 stellar ASX growth shares analysts are tipping as buys
• Broker gives its verdict on the Macquarie share price
• Macquarie share price lifts as CEO spruiks ‘very good inflation protection’
• ASX 200 midday update: Rio Tinto drops, tech shares jump, Macquarie impresses

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 ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. 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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When it comes to dividends, the Commonwealth Bank of Australia (ASX: CBA) dividend is among the most popular on the Australian share market.

And even if your personal portfolio doesn’t include Australia’s largest bank, there’s a very strong probability that your superannuation fund owns its shares.

In light of this, investors will no doubt be wondering where the bank’s dividends are heading in the coming years. So let’s find out.

Where is the CBA dividend heading through to 2024?

Analysts are quite divided on where the CBA dividend is heading from here. But one thing they do agree on, is that it will be increasing over the coming years.

As a reminder, the banking giant paid shareholders a fully franked $3.50 per share dividend in FY 2021.

According to a note out of Macquarie, its analysts are expecting this to increase by 8.6% to $3.80 per share in FY 2022. Based on the current CBA share price of $101.08, this will mean a yield of 3.75% for investors.

The following year, in FY 2023, Macquarie is forecasting an increase to $3.90 per share. This would mean a fully franked 3.85% dividend yield for investors.

Finally, in FY 2024, another 10 cents per share increase is expected by Macquarie, bringing the CBA dividend to $4.00 per share. This represents a 3.95% yield for investors at today’s share price.

What else are brokers saying?

The team at Credit Suisse are a touch more upbeat on the CBA dividend.

They are forecasting fully franked dividends of $3.58 per share in FY 2022, $4.22 per share in FY 2023, and $4.67 per share in FY 2023. This will mean yields of 3.55%, 4.2%, and 4.6%, respectively, for investors over the three years.

Finally, Citi is even more upbeat and forecasting fully franked dividends per share of $3.85 in FY 2022, $4.40 in FY 2023, and $5.00 in FY 2024. This will mean the CBA dividend provides attractive yields of 3.8%, 4.35%, and 4.95%, respectively.

Time will tell which broker makes the right call. But shareholders will no doubt be hoping Citi is on the money with this one.

The post Here’s the CBA dividend forecast through to 2024 appeared first on The Motley Fool Australia.

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• Here’s what’s happening with CBA shares this week
• Can investors bank on a dividend surprise from CBA shares this earnings season?
• Why did the ANZ share price smash the other ASX 200 banks today?
• Own CBA shares? Union labels bank ‘irresponsible’ following major COVID change
• How high will the RBA hike rates in 2022? Here’s what the ASX 200 banks are forecasting

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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Are you a fan of investing at the small side of the market? If you are, then you may want to take a look at the small cap ASX shares listed below that have been tipped as buys by analysts at Goldman Sachs.

Here’s why the broker is bullish on these small cap shares:

Hipages Group Holdings Ltd (ASX: HPG)

The first small cap ASX share to consider is Hipages. It is a growing Australian-based online platform and software as a service (SaaS) provider connecting consumers with trusted tradies.

Hipages recently released its fourth quarter update and delivered further solid growth. This went down well with Goldman Sachs, which believes the update points to a rebound in momentum after a tough period. It said:

We view HPG’s beat in net new tradies (400 vs GSe of 300) as a positive sign that the momentum in the business is returning; a slowing economy and housing cycle should make the HPG platform incrementally more valuable as a source of work for tradies. We believe difficulties in new tradie additions and elevated churn in previous quarters reflected labour shortages across the industry and are confident a rebalancing in industry supply/demand will see these challenges resolve.

Outside this, the broker has previously suggested that “the opportunity for HPG is similar to REA/CAR, which are now the leading online platforms in their respective industries.”

Goldman has a buy rating and $2.55 price target on its shares. Based on the current Hipages share price of $1.40, this implies potential upside of 82% over the next 12 months.

Nitro Software Ltd (ASX: NTO)

Another small cap ASX share that Goldman Sachs is bullish on is Nitro Software. It is a growing software company driving digital transformation in businesses around the world across multiple industries.

It is doing this through its key solution: the Nitro Productivity Suite. This provides integrated PDF productivity and electronic signature tools to customers via a software-as-a-service and desktop-based software solution.

Nitro’s shares were hammered last month after the company downgraded its guidance. While Goldman was disappointed with its update, it hasn’t changed its view that this is a company with enormous long term growth potential.

Goldman explained:

We see the update as re-basing market expectations on NTO’s growth outlook and highlighting the path to breakeven; however, we acknowledge that NTO will likely enter a “show me” phase where consecutive quarters of strong ARR performance are necessary to allay concerns over execution challenges. That said, we continue to see NTO as an undervalued global growth opportunity and highlight that the company now trades at ~12x FY24E EV/EBITDA on a capitalisation-adjusted basis.

The broker has a buy rating and $2.05 price target on its shares. Based on the current Nitro share price of $1.11, this implies potential upside of 85% over the next 12 months.

The post Goldman Sachs names 2 small cap ASX shares to buy with 80%+ upside appeared first on The Motley Fool Australia.

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• ‘Power and resilience’: Hipages share price leaps 14% on revenue boost
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• Why Block, Iluka, Nitro, and Novonix shares are dropping today
• Down 28% in two days: Is the Nitro share price crash a buying opportunity?
• Why Flight Centre, Iress, Nitro, and Perseus shares are dropping 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 Hipages Group Holdings Ltd. The Motley Fool Australia has positions in and has recommended Hipages Group Holdings Ltd. The Motley Fool Australia has recommended Nitro Software 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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ASX dividend shares are rising on investor radars.

More investors are seeking out income paying shares as fast rising interest rates put a brake on the past years of significant share price growth.

But if you’re on the hunt for ASX dividend shares you’ll want to look at more than simply the trailing yields these companies pay.

Even if they continue to payout a substantial portion of their profits to shareholders, what’s the outlook for these profits? And are they likely to be able to deliver some capital growth as well?

Finding an ASX dividend share that ticks the right boxes is no easy feat in today’s volatile market.

But Jack Collopy, portfolio manager at Perpetual, brought one to our attention in a recent interview with Livewire.

Invest in a sector with ‘pockets of good value’

Collopy was asked to offer a sector he believes will outperform as the 2023 financial year unfolds.

“One sector where we see pockets of good value currently is consumer discretionary,” Collopy said. “Many of the small and mid-cap listed retailers have been sold off aggressively in recent months on concerns that central banks are going to push economies into recession in their attempts to get the inflation genie back in the bottle.”

Perpetual believes “the market is pricing in a very negative scenario for many of the retail stocks,” he added. “In general, they are coming into this tougher environment with very strong balance sheets and there are some valid reasons why the Australian consumer may be more resilient than expected.”

‘Extremely well run’ ASX dividend share

Collopy singled out Nick Scali Limited (ASX: NCK) as a retail stock Perpetual has recently increased its holdings of.

“Nick Scali is extremely well run, has an excellent balance sheet and we think the recent Plush acquisition will prove to be a great use of capital,” he said.

Collopy continued:

Whilst there’s a chance that trading is volatile and challenging over the near term, we think a lot of this is already reflected in the share price and that NCK will continue to become a better business and reward shareholders over time.

Collopy didn’t mention Nick Scali’s lengthy track record as a reliable ASX dividend share.

But the company has made two regular dividend payments dating back to 2014, including the horror pandemic addled year of 2020.

The Nick Scali share price is down 39% year-to-date, closing yesterday at $9.45 per share.

At that price, the furniture focused retail company pays a trailing dividend yield of 6.3%, fully franked.

The post ‘Extremely well run’: 1 ASX dividend share this fundie just topped up on for FY23 appeared first on The Motley Fool Australia.

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• Here’s why I think these ASX shares are top ideas to buy right now
• ‘Recession-like levels’: Why ASX retail shares could still be in for a bumpy ride
• Take a seat: What inflation data might mean for ASX retail shares

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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Investors are urged to ignore an 81% tumble in the share price for an up-and-coming Australian company that’s headed for a bright future.

Bluebet Holdings Ltd (ASX: BBT) has seen its stock price tumble from $2.86 on 25 August 2021, to now just 54 cents, less than a year later.

However, Red Leaf Securities chief executive John Athanasiou recommends punters buy the stock while it’s going for cheap.

“This sports betting technology company had cash and cash equivalents of about $51 million at the end of the third quarter of fiscal year 2022,” he told The Bull.

Massive growing market in the USA

The betting provider is a participant in the land grab in the lucrative US market, as individual states move to legalise sports gambling.

“Bluebet is expanding in the lucrative US market,” said Athanasiou.

“It recently signed a 10-year market access agreement to operate in Indiana.”

Another bonus is that Bluebet plays in an industry that can endure an economic downturn, should rising interest rates start to impact Australian and American consumers.

“Gambling stocks traditionally do well during challenging times, and we believe this will be the case with Bluebet.”

Bluebet’s ‘longer-term potential is significant’

Athanasiou is not the only one keen on Bluebet.

According to CMC Markets, both Morgans and Ord Minnett rate the stock as a strong buy.

Morgans senior analyst Alexander Mees explained last month how much his team is looking forward to Bluebet’s annual report.

“The longer-term potential is significant,” he said.

“Bluebet’s Australian business is forecast to achieve strong growth in turnover in FY22 (48%) as it increases marketing costs to drive customer acquisition.”

Bluebet is due to report its numbers on 30 August.

The company was founded by bookmaker Michael Sullivan, who is now executive chair and holds more than 40% of the shares.

He was formerly the chief executive of Sportingbet, which he grew into a multi-billion dollar business.

The post Buy this ASX share that’s 80% cheaper than a year ago: expert appeared first on The Motley Fool Australia.

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• BlueBet share price leaps 8% before flatlining following robust quarter
• 3 ASX All Ords shares tumbling into the weekend
• Players gonna play: 3 ASX shares set for a strong reporting season

Motley Fool contributor Tony Yoo 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 BlueBet Holdings Ltd. 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 Vulcan Energy Resources Ltd (ASX: VUL) share price was out of form on Monday.

The lithium developer’s shares tumbled 6% to close the day at $7.35.

This means the Vulcan share price is now down 32% since the start of the year.

Can the Vulcan share price rise again?

The good news is that a leading broker in Europe sees significant value in the German-based lithium developer’s shares.

According to a note out of Alster Research, its analysts have retained their buy rating with a trimmed price target of $20.00.

Based on the current Vulcan share price, this suggests potential upside of 172% for investors over the next 12 months.

What did the broker say?

Alster highlights that Vulcan is facing a very important 12 months and will soon be pushing ahead with a major drilling program.

The broker also notes that the company’s definitive feasibility study (DFS) and pre-feasibility study (PFS) are on the horizon. Its analysts suspect that they could result in production targets being lifted, which they feel could give the Vulcan share price a boost.

The broker commented:

Vulcan faces a landmark year, as it will soon enter a multi-year capex-intensive phase. Building on a strong cash position of EUR 175m per 30 June 2022, the company is preparing its drilling program to commence, while the rigs are currently being prepared. The favorable political environment should continue to provide tailwinds.

Regarding the upcoming DFS and PFS, we will update our capex projections upon release. More importantly, we expect the production targets to increase, which we believe to be a catalyst for Vulcan’s share price. We confirm our PT with AUD 20.00, equivalent to EUR 13.71 and reiterate to BUY.

The post Lithium alert: Broker says Vulcan share price could rise by 170% appeared first on The Motley Fool Australia.

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More reading

• Charging up: Vulcan share price lifts 3% as cash balance surges
• Why Myer, South32, Vulcan, and Zip shares are racing higher
• Why is the Vulcan share price charging higher today?
• Why is the Vulcan Energy share price leaping 7% on Thursday?
• What’s the ahead for the Vulcan Energy 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 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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