June turned out to be a month to forget for S&P/ASX 200 Index (ASX: XJO) bank shares. And some of the market’s biggest names were the hardest hit.

Here’s how some of the major ASX 200 bank shares performed last month:

• Commonwealth Bank of Australia Ltd (ASX: CBA) – fell 13.4%
• Westpac Banking Corp (ASX: WBC) – fell 18.3%
• National Australia Bank Ltd (ASX: NAB) – fell 12.4%
• Australia New Zealand Banking Group Ltd (ASX: ANZ) – fell 12%
• Macquarie Group Ltd (ASX: MQG) – fell 11.5%
• Bank of Queensland Limited (ASX: BOQ) – fell 11.2%
• Bendigo and Adelaide Bank Ltd (ASX: BEN) – fell 12.9%

For context, the ASX 200 slipped 8.9% over the course of June. Meanwhile, the S&P/ASX 200 Financials Index (ASX: XFJ) slumped 11.8%.

Did interest rates weigh on ASX 200 bank shares?

Australia’s biggest banks were thrust into the spotlight in early June when the Reserve Bank of Australia hiked the benchmark interest rate for a second consecutive month. The rate was lifted 0.5% in June to 0.85% in an effort to tackle inflation.

On top of that, RBA Governor Philip Lowe noted further rate hikes are likely over coming months.

Readers might be wondering how news of a rate rise has weighed on ASX 200 bank shares, given it’s normally good news for the sector.

Indeed, rate hikes allow banks to increase net interest margins (NIM), thereby potentially boosting their profitability.

However, higher rates and inflation also increase the risk of mortgage foreclosures – particularly given 23.1% of new residential mortgage loans funded during the March quarter had a debt-to-income ratio of at least six times.

Increasing rates could also see house prices fall.

Both happenings would spell bad news for banks’ loan books.

In other banking news from last month, neobank Volt buckled at the knees last week. It’s leaving the Australian market, citing funding issues as the cause of its downfall.

What did ASX banking giants get up to last month?

There was plenty of news out of ASX 200 banks last month as well.

Both NAB and Macquarie underwent capital raises in June.

NAB announced a $1 billion capital notes offer on 6 June. Macquarie announced its own capital notes offering – worth $400 million – on 28 June.

ASX 200 insurance and banking giant Suncorp Group Ltd (ASX: SUN) was also in the spotlight late last month amid rumours it’s looking to spin out its banking arm. The company responded to such speculation, saying:

Suncorp, from time to time, reviews its strategic alternatives in relation to all of its businesses and is currently doing so in respect of its banking operations.

Suncorp was also the best performing ASX 200 bank share in June, falling just 3.2%.

The post June was a terrible month for ASX 200 bank shares. Here’s why appeared first on The Motley Fool Australia.

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More reading

• Why did the Westpac share price crash 18% in June?
• Could the CBA share price turn over a new leaf in July?
• Why did the CBA share price crash 13% in June?
• Why this fundie favours NAB and Westpac shares out of the big four
• Westpac tips another big RBA rate hike next week

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo and Adelaide Bank Limited. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. 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 Link Administration Holdings Ltd (ASX: LNK) share price is trading lower on Monday morning.

In early trade, the administration services company’s shares are down 2% to $3.72.

Why is the Link share price sinking?

Investors have been selling down the Link share price on Monday following the release of a takeover update.

This relates the receipt of an amended proposal from Dye & Durham last week which saw the suitor reduce its takeover offer from $5.50 per share to $4.30 per share.

Dye & Durham reduced its offer to reflect a proposed undertaking to the ACCC in order to obtain approval, the current state of the financial markets, and the values of the shares of both Link and PEXA Group Ltd (ASX: PXA).

What’s the latest?

As you might have guessed from the Link share price weakness this morning, today’s update has not been a positive one.

According to the release, the Link board has carefully considered Dye & Durham’s proposal. This includes considering feedback from stakeholders, changes in share market valuations, and alternatives available to Link if the transaction does not proceed.

After considering all these factors, the Link board does not believe it is able to recommend a $4.30 per share transaction.

Though, it is continuing to engage with Dye & Durham. And if an undertaking is proposed by Dye & Durham to the ACCC which Link considers will satisfy the the competition regulator’s concerns, it would be willing to consider a higher bid.

Nevertheless, in light of these developments, the company has cancelled the scheme meeting that was scheduled for next week.

What are the alternatives?

The release notes that if the scheme does not proceed, Link intends to evaluate alternatives for the business.

One potential alternative is an in specie distribution of a minimum of 80% of Link’s shareholding in PEXA.

The post Link share price drops on takeover rejection appeared first on The Motley Fool Australia.

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More reading

• Why Imugene, Link, Metcash, and Sayona shares are racing higher
• Link share price pushes higher despite revised takeover offer
• Down 20% this week, why is the Link share price outperforming today?
• Why Humm, Inghams, Link, and Smartgroup shares are falling
• ASX 200 midday update: BHP’s NSW coal update, Link takeover on the rocks

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 Link Administration Holdings 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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The Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) share price has been hurting over the last 12 months.

While the Soul Pattinson financial calendar is actually for the 12 months to 31 July 2022, we’re going to look at the past year as most individuals and businesses have their financial year-end at 30 June 2022. That makes it an opportune time to review what has happened.

So, what has happened?

Soul Pattinson share price pain

By mid-September 2021, Soul Pattinson shares had climbed to almost $40. But, they have been on a mostly downward trend since then, dropping around 40%.

As an investment house, a large amount of the underlying value of Soul Pattinson is dictated by the movements in prices of the ASX shares that it owns.

The investment house owns stakes in a number of prominent ASX shares including Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Macquarie Group Ltd (ASX: MQG), Commonwealth Bank of Australia (ASX: CBA), and BHP Group Ltd (ASX: BHP). It also holds many more ASX shares and unlisted assets.

Looking at several of these names, there has been volatility and declines for plenty of them, hurting the underlying value of Soul Pattinson. For example, Brickworks, one of the company’s biggest holdings, has seen a decline of around 25% over the past 12 months.

Another impact on the Soul Pattinson share price this year may have been the rise of inflation, leading to rising interest rates.

As an ASX dividend share that has grown its dividend every year for the past 20 years, some income-seekers may now be less inclined to go for a ‘defensive’ ASX share like Soul Pattinson and choose other investments.

Certainly, one of the main highlights for the company was the acquisition of the listed investment company (LIC) Milton.

Milton merger

Soul Pattinson decided to buy the LIC by offering shareholders new shares to the value of 10% of the adjusted net tangible asset (NTA) value of Milton.

The investment house said there were several advantages to the combination. These included greater portfolio diversification, more cash available for future investment into growth asset classes, access to new investment classes including private markets, real assets, credit and international shares, and higher cash generation from increased portfolio dividends.

FY22 half-year result

Aside from Soul Pattinson acquiring 100% of electrical engineering business Ampcontrol, the latest market-sensitive news from the business was its 2022 half-year result.

It said that its group regular profit after tax (NPAT) went up from $90.2 million to $343 million. Net cash flow from investments was $182.6 million, up from $85.million. Excluding the acquisition of Milton, on a like-for-like basis, this cash flow metric increased by 81%.

Soul Pattinson’s pre-tax net asset value went up 3.4% for the period, outperforming the “market” by 8.6%.

In March, Soul Pattinson managing director Todd Barlow said:

Valuations across a range of asset classes are becoming more reasonable and we continue to see “strong” opportunities to deploy capital across private equity and structured credit.

The post The rise and fall of the Soul Pattinson share price over the past year appeared first on The Motley Fool Australia.

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More reading

• Why did the Soul Pattinson share price go backwards in June?
• Own Soul Patts shares? Here’s how much of its portfolio is exposed to coal
• This is what I’d do with these 3 battered ASX shares: fund manager
• 3 high-quality ASX 200 shares trading at 52-week lows right now
• 3 reasons why I think the Soul Pattinson share price is an excellent buy right now

Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. 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 Westpac Banking Corp (ASX: WBC) share price had a month to forget in June.

Over the period, the banking giant’s shares lost a disappointing 18% of their value.

This means the Westpac share price is now down 24% since this time last year.

What happened to the Westpac share price in June?

Investors were selling down the Westpac share price last month in response to market volatility and the Reserve Bank’s cash rate hike.

While rate hikes are generally good news for the banks as it boosts their interest income, the market wasn’t expecting central banks to move as quickly as they appear to be planning.

For example, at June’s meeting, the RBA elected to increase rates by 50 basis points to 0.85%. It is now expected to do the same at July’s meeting later this week, lifting the cash rate to 1.35%.

But the market doesn’t expect Governor Lowe to stop there. Current cash rate futures are indicating that rates will end the year at 3%. Which is incredible when you consider that just a few months ago the cash rate was at a lowly 0.1%.

But with inflation running wild, Philip Lowe and his team are doing everything necessary to bring it under control. This has many fearing that aggressive rate hikes could bring about a recession and cause a spike in bad debts and mortgage defaults, which wouldn’t be good news for Westpac and the rest of the big four banks.

Is this a buying opportunity?

One leading broker that doesn’t appear overly concerned is Citi. It recently retained its buy rating with a generous $29.00 price target on the bank’s shares.

Based on the current Westpac share price, this implies potential upside of almost 50% for investors over the next 12 months.

The post Why did the Westpac share price crash 18% in June? appeared first on The Motley Fool Australia.

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More reading

• Why this fundie favours NAB and Westpac shares out of the big four
• Westpac tips another big RBA rate hike next week
• Volt gets packing as ASX 200 bank shares prove to be a formidable force
• Westpac share price inches ahead despite broker cutting its price target by 16%
• Analysts name 2 ASX dividend shares to buy today

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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 Westpac Banking Corporation. 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 has struggled in 2022. So much so that it hit 52-week lows last month.

It trades 29% down since January and took another plunge in June along with the broader market. Before the market open on Monday, the Wesfarmers share price rests at $42.15.

What’s in store for Wesfarmers shares in July?

The outlook for consumer cyclical shares has been choppy in 2022 as the economy moves from pandemic fear to inflation.

Add in interest rates and the recipe isn’t too inviting for investors. The S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) has slipped 24% this year to date and trades more than 6% down in the past month.

Meanwhile, talks of inflation and interest rates have been a key driver for shares like Wesfarmers this year.

Uncontrolled inflation is a peculiar theme in that it affects both the real economy and the financial markets in equally destructive ways.

As the cost of goods and services increases, consumers supposedly have less disposable income to spend on discretionary items.

However, the team at Morgans reckons Wesfarmers is well positioned to “navigate through a more cautious consumer environment”.

In the light of rising prices on just about everything, Morgans also reckons that Kmart and Bunnings will stand out as “consumers focus on value”.

“[T]he core Bunnings division remains a solid performer as consumers continue to invest in their homes,” Morgans said in a recent note. Bunnings contributes roughly 60% of group operating income.

“We see the pullback in the share price as a good entry point for longer term investors.”

With that in mind, it’s going to be an interesting month for Wesfarmers shares in July.

The post What’s the outlook for Wesfarmers shares in July? appeared first on The Motley Fool Australia.

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More reading

• Experts name 2 ASX dividend shares to buy next week
• Broker names 3 of the best ASX shares to buy in July
• How does the Woolworths dividend compare to Wesfarmers over the last 5 years?
• Why I think the current Wesfarmers share price is a steal
• 4 ASX dividend shares to buy that aren’t banks or miners: expert

Motley Fool contributor Zach Bristow 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 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 Rio Tinto Limited (ASX: RIO) share price went through quite a lot of volatility in June. But can it turn things around in July?

This ASX mining share is one of the biggest resource businesses in Australia with large iron ore mining operations. It also has exposure to a number of other commodities including bauxite, aluminium, copper and titanium dioxide.

Interestingly, the Rio Tinto share price is now back to where it was at the start of 2022.

The ASX resource share has been making moves to position itself for future growth. This is what brokers are focused on now, and what could influence the company in July and beyond.

Gudai-Darri mine

A few weeks ago, Rio Tinto noted that it had delivered its first ore from the Gudai-Darri iron ore mine. This was the miner’s first ‘greenfield’ mine in the Pilbara, Western Australia, in more than a decade.

Rio Tinto says that Gudai-Darri will help underpin future production of its Pilbara product. Production from the mine will continue to ramp up through the rest of the year and is expected to reach full capacity during 2023.

This mine has an expected life of more than 40 years and an annual capacity of 43 million tonnes. A feasibility study to support an expansion of the new hub is also progressing.

Rio Tinto says that Gudai-Darri is the company’s most technologically advanced iron ore mine, with autonomous trucks, trains and drills, as well as the world’s first autonomous water trucks. It also has a 34MW [megawatt] solar farm that is expected to supply about a third of the mine’s average electricity demand once construction is complete in August.

Broker thoughts on the Rio Tinto share price

No one can know what a share price will do in any given year, or even a month. But, brokers do release price targets which indicate where they think a company’s share price may be in 12 months.

Macquarie recently reduced its target for Rio Tinto shares to $124, but it still has an outperform/buy rating. That implies a rise of more than 20% based on the iron ore price and a lower Australian dollar.

Morgan Stanley has an overweight/buy rating on the Rio Tinto share price. The price target is $119.50, which implies a possible rise of around 20%. The broker likes this ASX mining share because of its high-quality iron ore product and the aluminium in the portfolio.

Both brokers are expecting big dividends from Rio Tinto.

Macquarie predicts a grossed-up dividend yield of 16.1%, while Morgan Stanley’s projected grossed-up dividend yield is 16.2%. So, both of them are expecting big dividend income in the current financial year.

Rio Tinto share price snapshot

Rio Tinto shares have fallen 13.5% over the last month and 20% in the last 12 months.

The post What is the outlook for the Rio Tinto share price in July? appeared first on The Motley Fool Australia.

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• Why did the Rio Tinto share price plunge 11% in June?
• ASX 200 midday update: Regis Resources jumps, BHP and Rio Tinto drop
• These ASX 200 mining shares are digging a deeper hole on Friday
• How have ASX 200 mining shares fared over June?
• Own Rio Tinto shares? Here’s how the company is ‘canning’ carbon emissions

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 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 Goodman Group (ASX: GMG) share price suffered a sizeable drop last month. Goodman shares fell by around 13% in June 2022.

Plenty of S&P/ASX 200 Index (ASX: XJO) shares went down last month as well. That’s why the ASX 200 fell by around 9% last month. So, there has been some underperformance in the short term.

Goodman is one of the largest property businesses on the ASX. It owns and develops industrial properties in various markets around the world.

Interest rates

A change in the interest rate can significantly impact an asset’s value. Why? Legendary investor Warren Buffett once described why interest rates are so important:

The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature… its intrinsic valuation is 100% sensitive to interest rates.

Central banks have been increasing interest rates to try and control elevated levels of inflation.

Last month, the Reserve Bank of Australia (RBA) decided to increase the interest rate by 50 basis points, or 0.5%. The United States Federal Reserve interest rate went up by 75 basis points, or 0.75%.

Both central banks are expected to increase the interest rate in July and in the coming months.

Broker thoughts on Goodman share price

The broker Morgan Stanley recently called Goodman Group a buy, with a price target of $23.70. That implies a possible rise of around 30%. It suggests that higher interest rates are a negative for property businesses like Goodman.

However, the broker UBS is less optimistic. It has a ‘neutral’ rating on the business, with a price target of $18.57. That’s almost exactly where the business is trading at today. However, it was noted that Goodman is looking cheaper on a price/earnings (p/e) ratio basis.

Latest business update

In May 2022, Goodman said that it’s expecting the FY22 operating earnings per security (EPS) to grow by 23%.

Goodman noted that total assets under management increased to $68.7 million at 31 March 2022. This is expected to be more than $70 billion by June 2022.

The property ASX share outlined why it’s seeing growth in demand, rental income and valuation for its real estate:

Consumers continue to seek faster and more flexible delivery. This requires intensification of warehousing in urban locations, and an increase in automation and technology to optimise delivery and improve efficiency. Our global business is concentrated in key urban locations and focused on delivering opportunities through planning, change of use, sustainability features and higher intensity use. This allows our customers to achieve greater value and enhanced productivity from the space, mitigating the higher cost.

Goodman share price snapshot

Since the beginning of 2022, the Goodman share price has fallen by around 32%.

The post Why did the Goodman share price suffer a sell-off in June? appeared first on The Motley Fool Australia.

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• Here’s why the Goodman Group share price is sinking today
• Are these blue chip ASX 200 shares in the buy zone?
• Time is running out to secure the Goodman Group dividend. Here’s what you need to do
• Here’s 3 popular ASX shares that are trading ex-dividend next week
• 5 things to watch on the ASX 200 on Wednesday

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 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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Looking for dividends shares to buy to boost your income portfolio? If you are, you may want to check out the two listed below.

Here’s what you need to know about these ASX dividend shares:

Centuria Industrial REIT (ASX: CIP)

The first ASX dividend share to look at is Centuria Industrial.

It is the owner of a portfolio of high-quality and in-demand industrial assets found across key metropolitan locations throughout Australia.

Centuria Industrial has been on form again so far in FY 2022, delivering 10% rental growth and an occupancy rate just a touch short of 100%. And with demand for industrial properties remaining very strong, the team at Macquarie expect the company to be in a position to pay some very attractive dividends in the near term.

Furthermore, due to recent share price weakness, the broker sees plenty of value in the Centuria Industrial share price at the current level, which it notes is trading at a large discount to net tangible assets. As a result, Macquarie has put an outperform rating and $3.94 price target on its shares.

As for dividends, the broker is forecasting a 17.3 cents per share distribution in FY 2022 and a 16.8 cents per share distribution in FY 2023. Based on the current Centuria Industrial share price of $2.87, this will mean yields of 6% and 5.8%, respectively

HomeCo Daily Needs REIT (ASX: HDN)

Another ASX dividend share that has been rated as a buy is HomeCo Daily Needs REIT. It is a property company with a focus on neighbourhood retail, health and services, and large format retail.

Goldman Sachs is a big fan of HomeCo Daily Needs and has a buy rating and $1.70 price target on its shares.

Its analysts believe the company is well positioned to benefit from the shift to omni channel retailing. The broker also points out that the company has additional opportunities to drive earnings growth over the medium-term from development and asset optimisation.

As for dividends, Goldman is forecasting dividends per share of 8 cents in FY 2022 and 9 cents in FY 2023. Based on the current HomeCo Daily Needs share price of $1.30, this will mean dividend yields of 6.1% and 6.9%, respectively.

The post Analysts name 2 top ASX dividend shares with big yields to buy appeared first on The Motley Fool Australia.

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• This is the latest ASX 200 sector to be hit by downgrades
• Experts name 2 ASX dividend shares with big yields to buy
• Building up income: 2 ASX dividend shares I believe are buys
• Why ASX-listed property shares could be on the chopping block
• Analysts name 2 top ASX 200 dividend shares to buy now

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 Commonwealth Bank of Australia (ASX: CBA) share price has been through a rough time since 6 June 2022, falling by more than 13%. That could be pretty unlucky for shareholders who bought just before the drop.

CBA and the other big four ASX bank shares – Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) – have all fallen amid the Reserve Bank of Australia (RBA) response to the elevated rate of inflation.

Last month, Australia’s central bank increased the interest rate by 50 basis points, or 0.5%.

What does that mean for banks? Well, the market sent the CBA share lower.

Why? It’s a good question because the logic before was that higher interest rates would be good for bank profitability, helping banks’ net interest margin (NIM).

However, investors may not have factored in that the RBA would increase interest rates as much as is happening now. What’s more, the interest rate is expected to go quite high (compared to the 0.1% it was sitting at before).

High interest rate to cause more loan losses?

Experts accept that a higher interest rate will help the banks’ NIM. However, the difficulty could be how much this hurts loan growth. The risk is it could lead to a greater number of loan losses and arrears.

Brokers Morgan Stanley and Morgans, as two examples, have both warned that the big four ASX banks and the CBA share price could hurt from elevated losses on loans.

Households have been saving during the COVID-19 period. Indeed, the RBA governor said that household balance sheets are “generally in good shape” and that “the household saving rate also remains higher than before the pandemic and many households have built up large financial buffers.”

How high could interest rates go?

The RBA will soon announce whether interest rates are increasing a further 25 basis points or 50 basis points in July. Last month, Lowe said:

The Board expects to take further steps in the process of normalising monetary conditions in Australia over the months ahead. The size and timing of future interest rate increases will be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labour market. The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time.

The RBA thinks that inflation could reach 7% by the end of the year. Investors’ expectations imply that the RBA interest rate could reach 3% by the end of 2022.

Is the CBA share price going to go higher?

No one has a crystal ball to know what happens next. But there are plenty of brokers that are negative on CBA right now.

Morgan Stanley is ‘underweight’ on the business. Macquarie rates CBA as ‘underperform’. Meanwhile, Citi has a ‘sell’ rating on CBA.

Citi suggests that the CBA valuation premium could reduce to the other big banks during this period. However, the price target is $90.75, which is where it’s currently trading.

The Morgan Stanley price target is $79, implying a drop of more than 10%. The broker thinks CBA might not just see higher loan losses, but its NIM could be impacted by higher funding costs, including paying savers more. In other words, higher interest rates won’t flow straight onto the bottom line.

The broker Macquarie has a price target of $78 on the business, implying a decline of 14%. Macquarie said that while the NIM could rise in the short term, there may be impacts from slower loan book growth and higher losses.

The post Could the CBA share price turn over a new leaf in July? appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 recommended Macquarie Group Limited and Westpac Banking Corporation. 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 Xero Limited (ASX: XRO) share price suffered again in June, falling by 14%.

Xero shares have been dumped, like plenty of other ASX growth shares. In 2022, the Xero share price has dropped by 47% amid inflation and interest rate rises.

However, some experts believe this could be opening up an opportunity to buy shares of the cloud accounting business at a much cheaper price.

Let’s look at where some brokers feel the Xero share price could go in the shorter term.

Broker ratings on the Xero share price

A price target on the ASX tech share is where the broker thinks the Xero share price will be in 12 months’ time.

Morgans recently slapped an ‘add’ rating on the business with a price target of $90.25. That would imply a possible rise of around 17% over the next year from the current level. It thinks the ongoing growth of subscriber numbers and a rise in the average revenue per user (ARPU) could help the business. The broker thinks that Xero still has plenty of growth to come.

Ord Minnett also thinks it’s a buy, with a price target of $97. That’s a potential rise of around 26%. The broker thinks that recently-announced subscription price increases will help raise ARPU.

Ongoing growth

Despite all of the volatility happening on asset markets, Xero continues to grow and is investing for even more growth.

In the FY22 half-year result, Xero reported that its operating revenue increased by 29% to NZ$1.1 billion and total subscribers went up by 19% to 3.3 million. It also said that the average revenue per user (ARPU) went up 7% to NZ$31.36. Growth here could help the Xero share price.

Other financial statistics have also been showing growth. The Xero annualised monthly recurring revenue (AMRR) went up by 28% to NZ$1.23 billion and the gross profit margin improved by 1.3 percentage points to 87.3%.

Xero CEO Steve Vamos said:

The value Xero brings to our small business customers and the trust they place in us illustrated by this result. Our strong revenue and subscriber growth gives us confidence to continue to invest for growth consistent with our long-term strategy.

We are committed to delivering the world’s most insightful and trusted small business platform by focusing on driving cloud accounting adoption, growing the small business platform and building for global scale and innovation. We continue to prioritise investment in building products and growing partnerships by investing cash generated to help deliver our strategy, drive long-term growth and meet customer needs.

Xero share price snapshot

While the Xero share price is down 44% over the past year, it is up by 216% over the last five years, showing the company’s progress.

The post Should investors zero in on the Xero share price in July? appeared first on The Motley Fool Australia.

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More reading

• The Xero share price lost 14% last month. Here’s the tea
• What on earth happened to ASX 200 tech shares in June?
• Brokers name 3 ASX shares to buy today
• Why this top broker just slapped a buy rating on Xero shares
• Here’s why ASX 200 tech shares are taking a beating on Wednesday

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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 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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