Shares in CSR Ltd (ASX: CSR) are flat today and holding the line at $6.05 apiece. As we approach the mid-point in April, CSR shares are just 8% higher in the past 12 months.

After trading within a fairly wide sideways channel in that time, shares have recently spiked from a low of $5.54 in March to sit back near 52-week highs.

What about the CSR dividend?

Whilst dividend growth has been lumpy over recent years, payment consistency has been a forte of CSR’s for more than 30 years now.

“CSR has paid twice yearly dividends every year since 1990 as well as issuing periodic special dividends,” according to TMF.

“The company’s dividends vary between unfranked, partially franked and fully franked and are typically paid in July and December each year. CSR has also executed a number of share buybacks over the past 15 years.”

Most recently, it paid a fully franked interim dividend of 13.5 cents on 10 December 2021.

Analysts are baking in a fairly stable growth schedule over the coming periods for CSR as well. If there are no hiccups, CSR could recognise a pre-tax profit of $142 million in H2 FY22, up from $126 million in H1, according to Bloomberg consensus estimates.

As a result, consensus forecasts for CSR’s dividend are for a 16.2 cents per share payment in H2 FY22, followed by a 16.3 cents per share payout in H1FY23.

Factoring in last year’s payment, that would bring the FY22 dividend to 29.7 cents per share, with full franking credits available as a taxable offset.

At the current share price, that signifies a forward dividend yield of 4.89%, higher than most investment grade fixed income instruments at the moment.

On a sequential basis, the dividend growth forecasted over the next few semi-annual periods is set to outpace the level of inflation, in real terms.

In the last 12 months, CSR shares have spiked 8% and are now up 3% for the year to date.

The post How big will the CSR dividend be in 2022? appeared first on The Motley Fool Australia.

More reading

• Top broker warns this ASX 200 share may be next to issue a profit warning
• Guess what $10,000 worth of CSR (ASX:CSR) shares bought a decade ago looks like today
• Could the CSR (ASX:CSR) share price be set for a boost?
• The CSR (ASX:CSR) share price has a dividend yield of 7%. Does this make it a buy?

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 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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/eO5P2R0

The Krakatoa Resources Ltd (ASX: KTA) share price is back in the red today following yesterday’s 94.92% surge.

At the time of writing, the Krakatoa share price is 10.5 cents, 8.7% lower than its previous close.

For context, the broader market is in the green on Wednesday. Right now, the All Ordinaries Index (ASX: XAO) has gained 0.28% while the S&P/ASX 200 Index (ASX: XJO) is up 0.19%.

Let’s take a closer look at what’s been going on with the precious metals explorer’s stock lately.

What’s weighing on Krakatoa shares today?

The Krakatoa share price is trading in the red on Wednesday despite no news being released by the company.

It’s possible the slip could be due to investors cashing in at a higher price, spurred by yesterday’s whopping gain.

That lift was inspired by a major ionic rare earth elements discovery at the company’s Mt Clere Project.

Drilling at the project’s Tower Prospects found thick intersections of clay hosting the elements.

For those unaware, rare earth elements are essential for all sorts of technology, including gadgets, cameras, machinery, and lights.

Krakatoa CEO Mark Major also pointed out that demand for rare earth elements was expected to take off over the coming decade. Major said:

We are now in a strong position to capitalise on this potential as we have only covered a six square kilometre area, mineralisation is open, thick, and close to surface.

Significantly, we have multiple other high priority targets within the extensive 2,300 square kilometre property.

About the Krakatoa share price

While today’s drop is likely to be disappointing for some, the Krakatoa Resources share price is still in a pretty good position.

Right now, it’s 19% lower than its 52-week high, reached in intraday trade yesterday. Comparatively, it’s trading for 162.5% more than its 52-week low of 4 cents.

It’s also trading 114% higher right now than it was at the start of 2022.

The post Krakatoa share price sinks 9% following Tuesday’s surge appeared first on The Motley Fool Australia.

More reading

• 3 ASX mining shares skyrocketing on major new discoveries
• Why Iress, Krakatoa Resources, Paradigm, and SE Advanced Materials are pushing higher
• Krakatoa Resources share price explodes 95% on major discovery

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 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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/7bPzU0Q

The Webjet Limited (ASX: WEB) share price has been a positive performer on Wednesday.

In afternoon trade, the online travel agent’s shares are up 2.5% to $5.44.

Why is the Webjet share price taking off?

The catalyst for the rise in the Webjet share price today appears to have been a broker note out of Citi.

According to the note, the broker has upgraded the travel company’s shares to a buy rating with an improved price target on $6.50.

Based on the current Webjet share price, this implies potential upside of almost 20% for investors over the next 12 months.

What did the broker say?

Citi believes it is time for investors to check-in with Webjet, highlighting that the company could be a big winner from the COVID reopening.

And while the broker still expects Webjet to post a loss in FY 2022, it is forecasting a return to profit in FY 2023. Citi has forecast a loss per share of 13 cents in FY 2022, and then earnings per share of 18 cents in FY 2023 and 30 cents in FY 2024.

Based on the current Webjet share price, this would mean it currently trades at 30x FY 2023 earnings and a much more respectable 18x FY 2024 earnings.

Citi commented: “With a user pay business model largely exposed to volumes and low fixed costs, we expect Webjet should be a relative leader in re-opening stock earnings. Additionally we think B2B should return in a stronger position with an American growth leg, lower costs and a better industry position. While B2C has the opportunity to pick up share as Flight Centre shifts business online, and the number of domestic carriers increase. Subsequently we upgrade our rating to a Buy and a $6.50 target price.”

The post Webjet share price takes off following broker upgrade appeared first on The Motley Fool Australia.

More reading

• Why is the Webjet share price having such a lousy start to the week?
• These are the 10 most shorted ASX shares
• What went so wrong for ASX travel shares today?
• The Webjet share price is tumbling 5% on Thursday. Could this be why?
• ASX travel shares have been flying higher over the past month. Here’s why

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 recommended Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/5G4AdIX

The EML Payments Ltd (ASX: EML) share price is up more than 11% at the time of writing after the company confirmed it has been in takeover talks.

In a statement to the ASX, EML noted media speculation that the business has been subject to takeover interest from private investment group Bain Capital.

How close is a takeover for EML?

EML confirmed that it had been in talks with Bain Capital earlier in the year about a potential takeover proposal. However, those discussions have now ceased.

The board of EML said that it would always consider proposals presented to the company and that it’s fully committed to acting in the best interests of shareholders. The goal of EML’s board is to maximise value for shareholders, the company said.

While no deal happened, EML disclosed that it appointed Goldman Sachs as its financial advisor and Herbert Smith Freehills as its legal advisor.

What happens now?

According to reporting by the Australian Financial Review, sources indicated that Bain has walked away “for now” because of the high price tag after looking at the due diligence numbers.

Time will tell whether this activates other interested parties to start having a look at the global payments business.

The EML share price has fallen by 10% in 2022 to date, including today’s rise.

However, over the last year, the EML share price still registers a decline of 48%.

The post EML share price soars 11% amid takeover attention appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: AVZ and EML shares jump
• Takeover talks: EML share price in focus
• 5 things to watch on the ASX 200 on Wednesday
• These are the 10 most shorted ASX shares
• The EML share price jumped 25% in March 2022. What happened?

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. owns and has recommended EML Payments. The Motley Fool Australia owns and has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/udUvfF2

ASX dividend shares are back in the spotlight in 2022.

This comes in an environment of fast-rising prices, with interest rate hikes likely to follow. An environment that younger investors will have had no real life experience with.

As investors young and old have mulled the prospect of higher rates, growth shares, like many tech companies, have seen the brunt of the selling.

Witness the 21% decline in the S&P/ASX All Technology Index (ASX: XTX) so far in 2022, compared to the 2% loss posted by the All Ordinaries Index (ASX: XAO).

Many ASX dividend shares, on the other hand, have outperformed as investors seek income atop potential share price gains.

Why investors are increasing their focus on dividends

Ben Lofthouse is the head of global equity income at Janus Henderson Australia.

On the topic of ASX dividend shares, Lofthouse said:

In many cases, dividend investing is focused on sustainability of cash flows. Companies that can afford to pay dividends often have good profitability and strong balance sheets, something that provides support through periods of uncertainty.

During past periods of rising inflation and rising interest rates, equity valuations have often begun to stagnate or even decline in terms of P/E (price-to-earnings) ratios. During these periods, dividends have formed an important part of returns as investors are ‘paid to wait’ for more supportive conditions for equities more broadly.

Noting that current conditions make forecasting quite difficult, Lofthouse added, “With valuations of income stocks still relatively low versus the market, we are seeing some indications of a rotation toward these value companies.”

Two leading ASX dividend shares to consider

There are numerous ASX dividend shares to choose from. And many offer franking credits, enabling you to reduce your tax burden on the income they pay out.

Two leading ASX dividend shares worth investigating are BHP Group Ltd (ASX: BHP) and Macquarie Group Ltd (ASX: MQG).

Peter Gardner, co-founder of Plato Investment Management, lists both of these blue-chip stocks as his top two ASX dividend share picks. (Full details here.)

Gardner said that “Macquarie has continued to deliver consistent earnings growth and consistent dividends in recent years despite the challenges that have faced the financial services sector.”

He also noted that its cash-heavy balance sheet “indicates it can sustainably grow dividends in the foreseeable future.”

As for why BHP is one of his top ASX dividend share picks, Gardner said, “The big Australian is in a really good position to continue delivering big dividends for its Australian shareholders.”

The post How ASX dividend shares can provide support through periods of uncertainty appeared first on The Motley Fool Australia.

More reading

• Own BHP shares? Here’s why the miner could be gearing up to offload more carbon-heavy projects
• Here are the top 10 ASX mining companies by market cap
• What is the biggest mining company on the ASX right now?
• These are the 2 best ASX dividend shares to buy right now: fund manager
• ASX mining shares were the leaders last quarter. Here are the top performers

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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/zW714ro

On paper, the Vanguard MSCI Index International Shares ETF (ASX: VGS) might look like one of the most diversified exchange-traded funds (ETFs) on the ASX. VGS holds close to 1,500 individual shares within its ETF portfolio. Those near-1,500 companies hail from more than 20 countries. These include Canada, the United Kingdom, Singapore, Japan, Hong Kong, and most of Europe. But also the United States.

But digging deeper, it appears that VGS’s diversification could arguably be described as shallow at best.

Yes, this ETF holds close to 1,500 shares. But it is also a top-heavy ETF. Although VGS represents the share markets of more than 20 countries, the United States alone makes up just under 70% of its entire portfolio.

Its largest ten companies by market capitalisation and portfolio weighting are all American too. Here’s a list of VGS’s top ten holdings and their weightings in this ETF (as of 28 February):

1. Apple Inc (NASDAQ: AAPL) with an ETF weighting of 4.82%
2. Microsoft Corporation (NASDAQ: MSFT) with a weighting of 3.79%
3. Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) with a weighting of 2.82%
4. Amazon.com Inc (NASDAQ: AMZN) with a weighting of 2.49%
5. Tesla Inc (NASDAQ: TSLA) with a weighting of 1.32%
6. NVIDIA Corporation (NASDAQ: NVDA) with a weighting of 1.08%
7. Meta Platforms Inc (NASDAQ: FB) with a weighting of 0.89%
8. UnitedHealth Group Inc (NYSE: UNH) with a weighting of 0.8%
9. Johnson & Johnson (NYSE: JNJ) with a weighting of 0.77%
10. Berkshire Hathaway Inc (NYSE: BRK.B) with a weighting of 0.75%

So as you can see, VGS is dominated by the big US tech companies. In fact, if we put Apple, Alphabet (owner of Google), Amazon, and Meta (formerly known as Facebook) together, we get a total weighting of approximately 11.02%. Throw in Netflix Inc (NASDAQ: NFLX), the final stock in the old ‘FAANG’ group, and we get 11.33%.

FAANG, FAANG+ dominate VGS ETF

So 11.33% of VGS’s entire portfolio of almost 1,500 shares is concentrated in the FAANG stocks.

Going further, Tesla, NVIDIA, and Microsoft are often added to the traditional FAANG grouping in what investors describe as ‘FAANG+’.

If we include these FAANG+ stocks, we get to a total weighting of 17.53%.

So really, close to $1 in every $5 invested in the Vanguard MSCI Index International Shares ETF is going to go to the FAANG+ stocks. Now there’s nothing inherently wrong with that, of course. FAANG+ shares arguably represent some of the strongest and most dominant companies on the planet.

However, it does mean that VGS isn’t as diversified an ETF as it might initially appear if one just looks at its total portfolio and raw geographic exposure. The Vanguard MSCI Index International Shares ETF charges a management fee of 0.18% per annum.

The post Is the Vanguard International Shares ETF just a big bet on the FANG stocks? appeared first on The Motley Fool Australia.

More reading

• How did the Vanguard MSCI Index International Shares ETF fare in March?
• Does the Vanguard MSCI Index International Shares ETF (ASX:VGS) pay dividends?
• Here are 2 top ETFs for ASX investors next week
• How is the Vanguard International Shares ETF (ASX:VGS) performing in the 2022 volatility?
• 3 highly rated ETFs for ASX investors to check out this week

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen owns Alphabet (A shares), Amazon, Apple, Johnson & Johnson, Meta Platforms, Inc., Microsoft, Nvidia, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Alphabet (A shares), Amazon, Apple, Berkshire Hathaway (B shares), Meta Platforms, Inc., Microsoft, Netflix, Nvidia, Tesla, and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Alphabet (C shares) and Johnson & Johnson and has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Meta Platforms, Inc., Netflix, Nvidia, and Vanguard MSCI Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/1UNoSym

Wednesday has shaped up to be a good day on the market, and these S&P/ASX 300 Index (ASX: XKO) shares are revelling in the green.

In fact, they’ve each jumped to new multi-year record highs today.

Right now, the ASX 300’s performance is beating that of its more renowned peer, the S&P/ASX 200 Index (ASX: XJO). The former has gained 0.25% while the latter is recording a 0.19% increase.

So, which of the ASX 300’s constituents are pushing it higher today? Let’s take a look.

3 ASX 300 shares trading at long-forgotten heights today

Ampol Ltd (ASX: ALD)

The Ampol share price hit a new post-pandemic high on Wednesday, surging 3.5% to trade at $32.80.

There’s been no news to explain the ASX 300 fuel and convenience retailer’s gains today. Though, it did release an exciting update regarding an acquisition yesterday.

Then, the company announced its takeover of Z Energy Ltd (ASX: ZEL) has been given the green light from New Zealand’s Overseas Investment Office.

It follows from the New Zealand Commerce Commission’s approval of the sale of Ampol’s Gull business, handed down last week.

Iluka Resources Limited (ASX: ILU)

The Iluka Resources share price is also in the green today. The ASX 300 resource explorer’s share price reached a new all-time high of $12.83 in early morning trade, representing a 3.2% gain.

The increase followed news the company intends to spin off its Sierra Rutile business.

If the demerger is successful, the newly-listed Sierra Rutile will focus on mineral sands projects in West Africa.

Capricorn Metals Ltd (ASX: CMM)

Finally, the Capricorn Metals share price is hitting another all-time high on Wednesday. It leapt 1.3% to reach a new record of $4.45.

While there’s been no news from the gold producer this week, it did announce encouraging early assay results on Friday.

Additionally, the price of gold has been gaining lately, likely bolstering sentiment in the ASX 300 gold stock’s share price.

However, the gold spot price has slipped into the red on Wednesday, trading 0.3% lower at US$1,969.20 per ounce, according to data from CNBC.

The post 3 ASX 300 shares smashing new multi-year highs on Wednesday appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: AVZ and EML shares jump
• Iluka Resources share price marching higher on demerger news
• Should you buy Iluka or Lynas shares for rare earths exposure?
• 3 ASX All Ordinaries mining shares smashing 52-week highs today
• Top brokers name 3 ASX shares to buy 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 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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/W0GJXQr

At lunch on Wednesday, the S&P/ASX 200 Index (ASX: XJO) has defied weakness on Wall Street and is pushing higher. The benchmark index is currently up 0.1% to 7,462.1 points.

Here’s what is happening on the ASX 200 today:

AVZ shares jump on Manono lithium update

The AVZ Minerals Ltd (ASX: AVZ) share price is racing higher today after releasing an update on the Manono Lithium and Tin Project in the Democratic Republic of the Congo. AVZ revealed that it has now received a positive technical opinion from the Department of Mines. This paves way for an imminent decision on the award of a mining licence for its flagship project.

EML jumps on takeover talks

The EML Payments Ltd (ASX: EML) share price is rocketing higher after the payments company confirmed that it has been in takeover talks. EML revealed that earlier this year, the company held talks with private equity firm Bain Capital. However, no deal was agreed and talks have since ended. This appears to have spooked short sellers, which may have led to a short squeeze today. At the last count, EML was one of the most shorted ASX 200 shares with short interest of ~9.5%.

Iluka to demerge Sierra Rutile operations

The Iluka Resources Limited (ASX: ILU) share price is rising today after announcing demerger plans. According to the release, Iluka notes that demerging the West African mineral sands operation will allow the company to focus on its core activities and growth opportunities in Australia. It also believes that a demerger represents the optimal pathway for Sierra Rutile to reach its full potential.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Wednesday has been the EML share price with a 12% gain following confirmation of failed takeover talks with Bain Capital. Going the other way, the worst performer has been the Adbri Ltd (ASX: ABC) share price with a 4% decline. This morning Morgan Stanley downgraded the building products company’s shares to an equal-weight rating from overweight.

The post ASX 200 midday update: AVZ and EML shares jump appeared first on The Motley Fool Australia.

More reading

• 3 ASX 300 shares smashing new multi-year highs on Wednesday
• Top broker warns this ASX 200 share may be next to issue a profit warning
• Iluka Resources share price marching higher on demerger news
• AVZ Minerals share price shoots 10% higher on Manono Lithium project update
• Takeover talks: EML share price in focus

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. owns and has recommended EML Payments. The Motley Fool Australia owns and has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/oRK0xAu

Shares in Flight Centre Travel Group Ltd (ASX: FLT) are walking forwards today and now trade 2 percentage points higher at $20.15.

As airlines get their first major test since the lifting of major COVID-19 restrictions, there’s been somewhat of pandemonium at Sydney Airport, reports say.

Talks of long queues and equally as long waiting times have been circling around the media, but nevertheless, the images of endless foot traffic are signs people are flying again.

Are travel conditions warming up?

Despite the wind down in operating activity, Flight Centre appears to be heading back towards its pre-pandemic outcome measures.

Today it advised it purchased an additional 47.5% interest in travel technology business, TP Connects.

Flight Centre originally took a 22.5% stake in the Dubai software-as-a-service (SaaS) business back in February 2020, then advised its intention to up its interest in TP Connects from 22.5% to 70% roughly one year later.

Although, we won’t know the particulars of the deal, as “the terms of [its] investment are currently confidential and are not disclosed,” the company says.

“[Flight Centre] initially invested in TPC in February 2020 with a view to supercharging the development
of TPC’s innovative technology platform, which aims to shape the future of travel distribution
by aggregating content from multiple sources,” it remarked.

With the latest acquisition in place, the company looks to be capitalising on any potential upside from flight bookings.

Speaking to Sky News this morning, Flight Centre CEO Graham Turner acknowledged that whilst there’s been airport delays, current trends are encouraging.

“Talking to Sydney Airport and Qantas, they seem to think they will be able to sort this [delays etc] out reasonably quickly,” he said.

“[T]he good news is that so many people are travelling of course – it’s certainly a relief after the last couple of years.”

Flight Centre shares have spiked 11% in the last year and are up 14% this year to date.

The post What’s impacting the Flight Centre share price today? appeared first on The Motley Fool Australia.

More reading

• Why is the Flight Centre share price still the most shorted on the ASX?
• These are the 10 most shorted ASX shares
• What went so wrong for ASX travel shares today?
• The Flight Centre share price is diving 5% today. What’s next in April?
• ASX travel shares have been flying higher over the past month. Here’s why

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 Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/joWEynL

Corporate earnings have proven to be resilient during these turbulent times, but there may be an S&P/ASX 200 Index (ASX: XJO) share that is about to issue a profit warning.

The company in question is cement and lime producer Adbri Ltd (ASX: ABC), according to Morgan Stanley.

The broker’s pessimistic view follows a profit warning issued by Boral Limited (ASX: BLD) due to adverse weather. Higher energy costs were another headwind.

Dark clouds over the Adbri share price

The devastating floods in New South Wales and Queensland were a blow to the sector. Plus, the bad weather could persist for a while yet — and the same could be true for energy costs.

“The five capital cities collectively recorded higher numbers of rain days in the quarter ending Mar 22 vs prior year’s corresponding period,” Morgan Stanley said.

“The increase in rain days was primarily driven by a wet February and March, particularly in Sydney and Brisbane, which have so far recorded 37 and 23 rain days respectively.”

Not all ASX 200 building shares are built the same

The broker reckons Adbri is most at risk. This is because of its exposure to construction material, which is most impacted by the weather.

What’s more, NSW and Queensland account for around 36% of Adbri’s earnings. For these reasons, Morgan Stanley has cut its FY22 earnings before interest and tax forecast by 5% to $213 million.

This, in turn, prompted the broker to downgrade the Adbri share price to “equal-weight” from “overweight”. It also lowered its 12-month price target to $3.40 from $3.60 a share.

On higher ground but also facing headwinds

On the flipside, the broker believes the CSR Limited (ASX: CSR) share price is better placed to weather the storm. It says strong housing activity offers CSR better protection in the short term.

“We believe that the building products end of the spectrum will be better able to smooth wet weather impacts,” added Morgan Stanley.

“However, we believe the near-term upside is largely reflected in the current share price, with ~9% upside to our A$6.60 PT [price target].

“Interest rates are likely to create a sentiment headwind as CY22 progress and prompt medium-term caution.”

The broker has an “equal-weight” rating on the CSR share price.

What is priced in the Boral share price

As for the Boral share price, market expectations have been rebased following its disappointing market update.

But this doesn’t mean investors should be rushing out to buy its shares either, noted Morgan Stanley.

“In spite of the recent earnings downgrade and short-term challenges, we see opportunity from improving macro dynamics, cost-out and property,” said the broker.

“We believe all of this has been priced in, and as a result, BLD currently trades only 5% above our price target of A$3.20.”

Morgan Stanley’s rating on the Boral share price is “equal-weight”.

The post Top broker warns this ASX 200 share may be next to issue a profit warning appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX shares today
• What was the highest ever AGL Energy share price?
• 3 ASX 200 shares sliding to 52-week lows on Tuesday
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

Motley Fool contributor Brendon Lau owns Boral Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/W0Z6ToU