The Appen Ltd (ASX: APX) share price is tumbling today, but could it turn around in the future?

The technology company’s share price has fallen nearly 7% today and is currently trading at $5.53. For perspective, the S&P/ASX All Technology Index (ASX: XTX) is down nearly 1% today.

So what are analysts tipping for the Appen share price?

What’s the outlook for the Appen share price?

The Appen share price is currently trading at its lowest price since November 2017, a more than 4 year low.

Appen is a technology company that provides data for machine learning and artificial intelligence. Appen’s customers include technology giants such as Google, Amazon, Microsoft and Salesforce.

But on Monday, Appen was booted out of the benchmark S&P/ASX 200 Index (ASX: XJO) as part of the June quarterly rebalance. Shares fell nearly 4% on this day.

Analysts at Citi have recently cut the company’s shares to a neutral rating and cut the price target by 28%. However, Citi still has a $6.60 price target on the Appen share price, which is a nearly 20% upside on the current share price.

The broker downgraded its outlook on Appen due to a tough start to FY22. Citi said this was “weakness primarily due to one customer”. As my Foolish colleague James reported, Citi thinks this customer could be Facebook based on analysis. Citi believes Appen will need to have a stronger second half of the year.

However, in an address to shareholders at the company’s AGM in late May, CEO Mark Brayan outlined Appen’s plans to double revenue by 2026. Brayan said:

We have always been ambitious in growing our business.

By 2026 we are aspiring to at least double FY2021 revenue of US$447 million, improve the mix of our business with one-third revenue from non-Global customers and achieve an EBITDA margin of 20%

Bell Potter recently retained a hold rating on the company’s shares with a $6.50 price target. The broker downgraded the company’s earnings per share (EPS) predictions by 5% for 2022, 5% for 2023 and 4% for 2024.

Appen share price snapshot

The Appen share price has slumped 57% in the past year and plummeted 51% in the year to date.

For perspective, the benchmark ASX 200 index has lost about 3% in the past year.

Appen has a market capitalisation of about $679.9 million based on the current share price.

The post Appen share price sinks 7% to 4-year low. Time to pounce? appeared first on The Motley Fool Australia.

More reading

• Why Appen, Cleanaway, Syrah, and Westpac shares are dropping
• Appen shares still an attractive acquisition target: Citi
• Expert reveals what to do with 4 ASX shares in trouble
• Why A2 Milk, Appen, Magellan, and Tyro shares are dropping today
• ASX 200 midday update: Magellan smashed, Liontown signs Tesla deal

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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The future of the price of lithium could vastly different that previous expected, according to one top broker. However, ASX lithium favourite Core Lithium Ltd (ASX: CXO) isn’t worried.

The company’s chief financial officer Simon Iacopetta is reportedly bullish on lithium prices. He’s also confident of the company’s profitability, even if prices drop.

At the time of writing, the Core Lithium share price is $1.20. That’s 5.16% lower than its previous close and 14.29% lower than it was at the end of last week.

For context, the broader market is also in the red on Thursday. Right now, the S&P/ASX 200 Index (ASX: XJO) is slumping 0.9% while the All Ordinaries Index (ASX: XAO) has fallen 0.96%.

Let’s take a closer look at Core Lithium’s outlook for lithium prices.

ASX lithium developer optimistic despite bearish brokers

A burgeoning supply of lithium could cause demand for the ‘white gold’ to fall over the next 18-months, causing the materials’ price to halve. That’s according to Credit Suisse. The broker is expecting lithium spot prices to slip to US$2,500 by the end of 2023, reports ABC News.

It comes after Goldman Sachs released its own bearish note on the near-term future of lithium last week. The note was likely one reason behind a sell-off among ASX lithium shares.

The brokers’ predictions come on the back of more companies looking to profit on the lithium boom by ramping up production.

One such company is ASX materials share, Core Lithium. It’s focused on developing the Finniss Lithium Project in the Northern Territory.

Iacopetta reportedly told the publication the company was expecting a brighter future for the battery-making material’s price than many brokers. He was quoted as saying:

We expect the shortfall of supply or new products coming to market to result in a continued strengthening of [prices] for the near term … We should be selling into a fairly positive price environment and generating healthy margins.

A recent update from Core Lithium stated the mine’s first production was on schedule to be delivered before the end of the year.

However, Iacopetta reportedly also noted the mine’s feasibility factored in realised prices of its spodumene concentrate lithium ore falling to $1,000.

Core Lithium share price snapshot

While the last fortnight has been rough on the Core Lithium share price, it’s still trading on notable long-term gains.

It’s currently nearly 90% higher than it was at the start of 2022. Shares in the lithium miner have also gained close to 360% since this time last year.

The post Brokers say lithium price could halve by 2023 but Core Lithium disagrees. Here’s why appeared first on The Motley Fool Australia.

More reading

• Why Macquarie still sees ‘material upside’ for ASX lithium shares
• 3 ASX All Ordinaries shares that had a terrific Tuesday
• Core Lithium share price shakes off oversupply concerns to march 8% higher today
• Why Core Lithium, Perenti, Strandline, and Yancoal shares are pushing higher
• Could the Core Lithium share price be set to take off again in June?

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 Goldman Sachs. 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 Santos Ltd (ASX: STO) share price is enjoying a good day on the ASX on Thursday.

It spiked to a two-year high in early trade this morning, stretching to $8.85 before nestling back down to $8.77 — up 0.11% — at the time of writing.

In its Annual Energy Paper 2022, released last month, JP Morgan noted that “fossil fuel reliance across the developed and developing world is still high (70% even in Europe) and the International Energy Agency projects that the world may still be 66% reliant on fossil fuels in 2050”.

This is reflected in the current oil and gas rally that’s seen Brent crude break out to new multi-year highs on Thursday, to trade at US$123 per barrel on last check.

Meanwhile, US natural gas futures flared up to yearly highs on Wednesday before reversing course south in today’s session. They are still up more than 160% year on year.

The correlation and dispersion between Santos and the oil and gas prices since March is plotted below.

Why is the Santos share price rallying?

All the recent talk around ASX energy players such as Santos has been on the outlook for oil and gas in coming years.

Unfortunately, opinion varies widely. Analysts at Macquarie said that, while near-term pricing looks strong, prices are expected to simmer down in H2 FY22.

Those at Macquarie note that increased supply from OPEC and other producers should clamp prices back down below Q2 FY22 averages for Brent crude of US$107/barrel.

“We maintain our long-term assumption of $65/barrel but defer this to Q1 of FY24,” the broker said. Previously it forecasted that target for Q1 FY23.

Despite the planned wind-back, the investment bank is still constructive on the Santos share price, rating it a buy on a $10 per share valuation.

Meanwhile, analysts at JP Morgan see the outlook differently in the bank’s 2022 energy outlook. The JP Morgan team said that, back in 2021, “the stars were aligning” for a rebound in oil and gas.

The reason, it said, was “the result of management decisions to focus on market share and revenue rather than profits, and not because of imminent displacement by renewable energy”.

The big picture [is that] global gas and coal consumption in 2021 were already above pre-COVID levels, and global oil consumption should surpass pre-COVID levels sometime next year.

Aside from that, today’s rise in the Santos share price continues the upward trend experienced by the company this year, having set a series of previous 52-week highs up until today’s session.

Macro backdrop might be a factor

The JP Morgan team also notes that, on a global scale, the energy sector trades at a discount on forward earnings multiples to its historical averages dated back to 1990.

“[The] energy sector trades at 1x book value and is an inflation hedge; also capital intensive and less sensitive to wages,” it added.

Santos currently trades on a forward price to earnings (P/E) ratio of 7.13x and trades at 1.6x book value, according to consensus data obtained from Bloomberg.

These points are yet to be priced in by the market, JP Morgan says, meaning there’s potential for further upside should the market realise these numbers.

“With energy demand still in excess of supply, [we] believe the MSCI Global Energy Composite will outperform both renewable energy stocks and the broad equity market again over the next year,” JP Morgan remarked.

Buyers have pushed the Santos share price almost 39% into the green this year to date, and 14% higher over the past 12 months.

The post Why did the Santos share price smash a 2-year high on Thursday? appeared first on The Motley Fool Australia.

More reading

• Are these 2 ASX energy shares a buy amid booming oil prices?
• 5 things to watch on the ASX 200 on Thursday
• Why are ASX 200 energy shares jumping today?
• 3 ASX 200 shares cracking new 52-week highs on Wednesday
• 5 things to watch on the ASX 200 on Wednesday

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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 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 All Ordinaries Index (ASX: XAO) is down 1% in early afternoon trade, but this ASX retail share is bucking the selling trend.

Big time.

Having earlier posted gains of more than 30% the Mosaic Brands Ltd (ASX: MOZ) share price is currently up 22%.

The specialty fashion retailer owns a number of name brands including the popular Noni B.

Why is the ASX retail share rocketing?

With no fresh news out from the company today, it looks like investors may be driving up the Mosaic Brands share price following yesterday’s 53% selloff.

Investors punished the ASX retail share after it released an announcement yesterday revealing that difficult trading conditions related to the pandemic will likely result in a full year loss for the 2022 financial year. Management forecast the full year loss despite Mosaic Brands delivering a profit in the first half of the financial year.

The company said, “The May trading month, which included the key Mother’s Day period, continued to see overall trading conditions improve gradually, however at a rate that was below expectations, as our core customers remained highly cautious of the ongoing risks associated with Omicron.”

The ASX retail share closed at 20 cents yesterday and is currently trading for 25 cents.

Year-to-date the Mosaic Brands share price remains down a painful 61%.

The post Guess which ASX retail share is rebounding 22% on Thursday? appeared first on The Motley Fool Australia.

More reading

• Here’s why the Mosaic Brands share price just crashed 56%

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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a disappointing decline. At the time of writing, the benchmark index is down 0.85% to 7,060.7 points.

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

Appen Ltd (ASX: APX)

The Appen share price is down 6% to $5.57. Investors have been selling Appen’s shares this week following a broker downgrade by Citi and weakness in the tech sector. The former saw Citi downgrade the artificial intelligence data services company’s shares to a neutral rating with a $6.60 price target.

Cleanaway Waste Management Ltd (ASX: CWY)

The Cleanaway share price is down 3% to $2.80. This morning this waste management company revealed that a fire at its medical waste processing facility in Dandenong has caused significant damage. This is expected to disrupt operations at the site “for a period of time.” Management estimates that it will impact EBITDA by $2 million to $3 million per month while out of action.

Syrah Resources Ltd (ASX: SYR)

The Syrah share price is down 10% to $1.38. Investors have been selling this graphite producer’s shares amid worrying events near Ancuabe in the Cabo Delgado Province of Mozambique. This is 200 kilometres away from Syrah’s massive Balama Graphite Project. According to the release, the company has received reports of an insurgent attack at a mine project site near Ancuabe. Syrah has suspended transport activities but its mining and processing operations continue for now.

Westpac Banking Corp (ASX: WBC)

The Westpac share price is down over 3% to $21.26. This morning analysts at UBS downgraded this banking giant’s shares to a neutral rating and cut the price target on them to $26.00. UBS highlights that banks have traditionally underperformed the market during periods of high inflation and low growth.

The post Why Appen, Cleanaway, Syrah, and Westpac shares are dropping appeared first on The Motley Fool Australia.

More reading

• Westpac share price slides again and is now down 12% this week
• What exactly is going on with ASX 200 bank shares and the RBA rate rise?
• Why is the Syrah share price crashing 14% today?
• Why BrainChip, Firefinch, Magellan, and Westpac shares are dropping
• Here are the 3 most traded ASX 200 shares on Wednesday

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd. 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 share price of ASX lithium miner Lake Resources N.L. (ASX: LKE) is slumping today.

The Lake Resources share price is currently trading at $1.36, a 6.21% fall. However, in earlier trade, the Lake Resources share price plunged 8% before pulling back. For perspective, the S&P/ASX 200 Index (ASX: XJO) is sliding 0.90% at the time of writing.

So why is the Lake Resources share price struggling today?

More lithium mines in production?

Lake Resources is not the only ASX lithium share having a tough day. The Core Lithium Ltd (ASX: CXO) share price is descending 5.16%, while the Allkem Ltd (ASX: AKE) share price is sliding 2.15%. Meanwhile, the Liontown Resources Limited (ASX: LTR) share price is descending 3.77% and the Mineral Resources Limited share price (ASX: MIN) is 3.01% in the red.

The fall comes after Credit Suisse analysts further weighed in on the lithium price outlook. Head of energy resources research Saul Kavonic warned of a balanced lithium market, in comments to the ABC. Credit Suisse is tipping lithium prices to halve to $US2,500 a tonne, the publication reported. Kavonic added:

We actually might see the market return to balance or even a surplus over the next 18 months. That was a situation we thought was unfathomable only a few months ago.

The analyst also noted there are now more lithium mines in production. This could increase supply. Kavonic said:

We’ve seen a lot of new mines being brought into production, incentivised by the high prices

Goldman Sachs also recently forecast a sharp correction in lithium prices last week, sending ASX lithium shares plunging last Wednesday.

However, not every broker agrees. Analysts at Macquarie have a more optimistic outlook for lithium, predicting a “material valuation upside” on the ASX lithium shares it covers.

Lake Resources was added to the ASX 200 index early this week as part of the June 2022 quarterly rebalance.

Meanwhile, a similar trend in lithium prices was seen in the United States overnight. Lithium giant Lithium Americas Corp‘s (NYSE: LAC) shares fell 4.45% in US markets, while Livent Corp (NYSE: LTHM) shares slid 3.16%. Meanwhile, Piedmont Lithium (NASDAQ: PLL) shares dropped 3%.

Share price snapshot

The Lake Resources share price has exploded 413% in the past year and 35% year to date. However, in the past month, it has descended 18%.

For perspective, the benchmark ASX 200 has lost nearly 3% in a year.

Lake Resources has a market capitalisation of about $1.83 billion based on its current share price.

The post Why is the Lake Resources share price plunging 6%? appeared first on The Motley Fool Australia.

More reading

• 3 ASX All Ordinaries shares that had a terrific Tuesday
• Why is the Lake Resources share price rising 6%?
• Appen and PolyNovo tumble after being kicked out of the ASX 200 along with these shares
• The Lake Resources share price has surged 11% today. Can it sustain the rally?
• Which ASX lithium shares are rebounding on Thursday, and which are not?

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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has followed Wall Street’s lead and tumbled lower. At the time of writing, the benchmark index is down 0.9% to 7,058.5 points.

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

Boss Energy Ltd (ASX: BOE)

The Boss Energy share price is up 3% to $2.52. This uranium developer’s shares were given a boost this morning from a broker note out of Macquarie. According to the note, the broker has retained its outperform rating and $3.20 price target on Boss Energy’s shares. This follows news that the US is seeking to wean itself off Russian uranium.

Crown Resorts Ltd (ASX: CWN)

The Crown share price is up 2% to $13.02. Investors have been buying the casino and resorts operator’s shares following the release of an update on Blackstone’s takeover bid. According to the release, the bid has received approval from the Victorian Gambling and Casino Control Commission and New South Wales Independent Gaming and Liquor Authority. This brings the $8.9 billion takeover a step closer to completion.

Magellan Financial Group Ltd (ASX: MFG)

The Magellan share price is up 2% to $12.83. This morning the fund manager announced the return of co-founder Hamish Douglass in a new consultancy role. From October, Mr Douglass will provide investment insights, including geopolitical and macroeconomic views.

Shaver Shop Group Ltd (ASX: SSG)

The Shaver Shop share price is up 4% to $1.06. The catalyst for this was the release of a trading update from the retailer. That update reveals that the grooming and beauty products retailer’s sales are up 5.7% so far in the second half and 3.9% financial year to date. A key driver of this growth has been its online business, which reported year to date sales growth of 27.5%.

The post Why Boss Energy, Crown, Magellan, and Shaver Shop shares are rising appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Magellan rebounds, Crown’s takeover boost
• Why is the Crown share price beating the ASX 200 today?
• Magellan share price pushes higher on Hamish Douglass return
• Why BrainChip, Firefinch, Magellan, and Westpac shares are dropping
• Why are ASX uranium shares having such a cracker run on Wednesday?

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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ASX coal shares may not be everyone’s cup of tea.

ESG-focused investors may choose to look elsewhere over concerns that the coal being dug out of the Earth and sold both domestically and internationally is adding to greenhouse gas emissions.

While those concerns are valid, global demand for coal remains massive, with coking coal used for steel production, and nations including India and China among the nations rolling out new coal-fired power plants requiring thermal coal.

And much of the coal produced in Australia is high quality, burning hotter and cleaner than lower quality products sourced elsewhere.

Russia’s war in Ukraine saw ASX coal shares soar

Coal prices reached all-time highs in the wake of Russia’s invasion of Ukraine, sending ASX coal shares soaring.

Western Europe is not only heavily reliant on Russian oil and gas, the nations source much of their coal from Russia as well. Before the war, Poland imported some 90% of its coal from Russia.

With many nations now working to ween themselves off Russian energy, ASX coal shares have received some international attention as potentially filling the void.

While they’ve expressed a willingness to do what they can, it takes years to get new projects to the production stage or significantly ramp up production from existing projects.

Meaning high coal prices are likely here for a goodly while yet.

Australia needs coal power stations back online

Despite significant investment in renewables, Australia also remains highly dependent on coal – and the ASX coal shares that dig it up – to keep the lights on.

In fact, coal is the top energy provider Down Under.

According to the Australian Government, coal accounts for about 54% of Australia’s electricity generation, followed by gas at 20%.

With electricity prices already soaring, and driven still higher by the unplanned shutdown of some coal-fired power stations, Resources Minister Madeleine King sounded a call to action.

According to King (speaking on ABC radio):

In the very short term, what we really need to do is to have the coal power stations come back online because that is the missing piece of the puzzle right now. There’s been unplanned outages for many reasons, many beyond the control of those operators and I do accept that, but I hope they’re doing their best to make sure this power source comes online as well.

It is the coal companies themselves, and the operators of the power stations, that need to get these power stations back online. It’s 30% of the energy capacity taken out of the mix because of unforeseen circumstances in many respects.

How have these ASX coal shares been performing

Amid the tight supplies and strong demand, ASX coal shares have been among the top performers on the index.

Year-to-date, the Whitehaven Coal Ltd (ASX: WHC) share price has soared by 96%, New Hope Corporation Limited (ASX: NHC) shares are up 69%, and the Yancoal Australia Ltd (ASX: YAL) share price is up an eyewatering 114% so far in 2022.

For some context, the All Ordinaries Index (ASX: XAO) is down 3% this calendar year.

The post ASX coal shares have been soaring lately. Here’s why appeared first on The Motley Fool Australia.

More reading

• 3 ASX All Ordinaries shares up by more than 130% so far in 2022
• Do Whitehaven Coal shares pay dividends?
• Why Core Lithium, Perenti, Strandline, and Yancoal shares are pushing higher
• Yancoal share price lifts as potential takeover slammed
• Here are the best performing ASX dividend shares so far this year

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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There’s no doubt uncertainty and the recent volatility in the ASX share market can make trading a little unnerving for investors. But this roller-coaster ride we’re on may have opened up some big opportunities in June 2022, according to experts.

While no-one can know what share prices are going to do, particularly in the shorter-term, it’s possible to search for good value investments that could do well over the longer-term.

Experts like to analyse ASX shares and aim to identify the ones that could deliver good returns. It’s up to investors to decide if they agree with the optimism (or negativity).

Sometimes brokers get it wrong, but here are two ASX shares that they rate as having sizeable upside.

Charter Hall Group (ASX: CHC)

Charter Hall is one of the largest property managers in Australia. It looks after more than $60 billion in properties, and has a property development pipeline worth $13.2 billion.

It also recently extended its funds management business into another asset class, with the 50% acquisition of the $18.2 billion equities fund manager Paradice Investment Management. Paradice invests on behalf of wholesale and retail investors across domestic and global listed equities.

Credit Suisse currently rates Charter Hall as a buy with a price target of $16.71. That implies a possible rise of more than 30%.

Looking at the projection for FY23, Credit Suisse thinks that the Charter Hall share price is valued at 14x FY23’s estimated earnings, with a predicted distribution yield of 4.9%.

One of the latest moves by the ASX share is, as part of a partnership, to buy the ASX property business Irongate Group (ASX: IAP). Although interest rates are rising, Credit Suisse’s judgements are taking that into account with Charter Hall.

Pacific Smiles Group Ltd (ASX: PSQ)

This company owns and operates the Pacific Smiles Dental Care Centres and the nib Dental Care Centres which are located throughout Australian Capital Territory, New South Wales, Victoria and Queensland.

Pacific Smiles said it was “committed to delivering outstanding patient care and customer service through a growing network of quality dental centres which provide practitioners, patients, private health insurers and other third-party funders with services and care.”

With a plan to expand its portfolio steadily, Pacific Smiles says it’s on track to open between 15 to 20 new centres in FY22. By the end of May, it expected to have 125 centres, as well as six centres in the HBF Dental network.

Pacific Smiles recently said that in the financial year to date to April 2022, total patient fees of $183.8 million were down 8.2%. Comparable patient fees from dentist centres that have been operating for more than 12 months were down 12.4%.

But, total patient fees for the period of February 2022 to April 2022 were only down 3.1% year on year.

Morgan Stanley has a price target of $3 on the company. That implies a possible rise of more than 100% for the dental business. One of the main positives for the broker is the expansion of the network.

The post 2 great ASX shares to buy in June 2022: experts appeared first on The Motley Fool Australia.

More reading

• 2 ASX shares just had a shocker but are awesome long-term buys: fund

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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The Race Oncology Ltd (ASX: RAC) share price is surging today after the specialty pharmaceutical company made an announcement regarding an on-market share buyback.

At the time of writing, Race Oncology shares are swapping hands at $1.96, up 15.68%.

Race Oncology set to commence share buyback

In today’s statement, Race Oncology advised that the board has approved an on-market share buyback over the next 12 months.

The maximum amount the company is willing to take off the market is four million Race Oncology shares.

Based on valuation metrics, the buyback represents around 2.5% of the current total issued capital.

Management noted that the on-market buyback is an efficient capital management option available to maximize shareholder value.

It also allows Race Oncology to take advantage of the share price weakness when it doesn’t reflect the underlying value of the business.

Traditionally, when a company looks to purchase its own stock, this pumps up the earnings per share (EPS) metric.

Furthermore, the value of each individual share also increases as there are fewer shares on the company’s registry.

Shareholders won’t need to do anything as there is no approval required.

However, the board stated that it will execute the on-market buyback at its own discretion.

Race Oncology CEO Phillip Lynch commented:

The Board believes Race is currently undervalued due to a range of factors external to the company’s fundamentals.

We believe a share buyback is an appropriate use of capital at this point in time, and that the quantum involved will not compromise pre-clinical and clinical programs as committed under our recent Share Purchase Plan.

What else has been happening at Race Oncology?

The Race Oncology share price could also be benefiting from an announcement yesterday that the company is expanding a clinical trial of its anti-cancer drug candidate Zantrene to Europe.

The company is expanding the BISECT (RAC-006) phase 1b/2a clinical trial in extramedullary acute myeloid leukaemia and myelodysplastic syndromes patients to include five additional trial sites in Spain and Italy.

Furthermore, to support the additional trial monitoring activities, Race has signed a new clinical support agreement with global clinical research organisation Parexel International.

The Race Oncology share price climbed 3% yesterday on the back of the news.

Race Oncology share price snapshot

Despite soaring today, it’s been a disappointing 12 months for the Race Oncology share price, which has fallen almost 50%.

Year-to-date, its shares are also heavily down by 46%.

Race Oncology commands a market capitalisation of roughly $339.78 million and has approximately 159.52 million shares outstanding.

The post Race Oncology share price soars 16% on buyback news appeared first on The Motley Fool Australia.

More reading

• Why is the Race Oncology share price in a trading halt?

Motley Fool contributor Aaron Teboneras 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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