ASX uranium shares could be a mover on Tuesday after the world’s largest uranium producer, Kazatomprom, announced plans to participate in a physical uranium fund. 

Kazatomprom, the national atomic company of Kazakhstan, contributed approximately 23% of global primary uranium production in 2020.

According to World Nuclear News, Kazatomprom’s fund will hold physical uranium as a long-term investment, with an initial US$50 million of purchases financed by its founders. 

Once the fund is operating, the company plans an additional public or private offering to raise up to US$500 million for additional uranium purchases. 

The timing and details of this second development stage will be determined by market conditions, Kazatomprom said.

The company believes the global transition towards clean energy and, more specifically, nuclear power, provides a “strong investment thesis” for the uranium industry.

Opportunities for uranium exposure have been scarce, with two uranium funds being the Sprott’s Physical Uranium Trust listed on the Toronto Stock Exchange and London-based Yellow Cake. 

Why is this a big deal for ASX uranium shares? 

Sprott Asset Management and its Physical Uranium Trust has been viewed as a major driver behind the recent surge in uranium prices. 

The fund began trading on the Toronto Stock Exchange in July. It now holds more than 30 million pounds of physical uranium. 

Its strategy is simple — aggressively buy physical uranium off the spot market which tightens supply. 

By mid-September, uranium prices briefly crossed US$50/lb for the first time in 9 years. 

During this time, many ASX uranium shares such as Paladin Energy Ltd (ASX: PDN), Boss Energy Ltd (ASX: BOE), and Deep Yellow Limited (ASX: DYL) surged to multi-year highs.

Now the world’s largest uranium producer has its eyes set on accumulating its own stash. 

While the funds are busy taking uranium off the spot market, the supply of uranium remains constrained. 

In August, Kazatomprom announced it will extend its 20% production cut through to 2023. 

“Although the uranium market is starting to show signs of improvement, including an increase in long-term contracting interest, a thinning spot market, and slightly improved pricing, we still find ourselves in a position where adding tonnes back into the market in 2023 would be unlikely to maximise returns for our shareholders,” said Kazatomprom CEO Galymzhan Pirmatov. 

This could act as another tailwind for ASX uranium shares, especially following recent government interest in nuclear energy. 

The post Why ASX uranium shares are in focus on Tuesday appeared first on The Motley Fool Australia.

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Motley Fool contributor Kerry Sun 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.

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The BHP Group Ltd (ASX: BHP) share price will be one to watch on Tuesday.

This follows the release of the mining giant’s first quarter update this morning.

BHP share price on watch after unspectacular but in line quarter

The BHP share price could be on the move today after it delivered a first quarter update in line with its guidance for the full year.

BHP’s Iron Ore production came in at 63.3Mt for the quarter. This was down 3% quarter on quarter and 4% year on year. Management advised that this reflects planned major maintenance including car dumper one and the impacts of temporary rail labour shortages due to COVID-19 related border restrictions. Positively, the latter improved during September.

Copper production was down 7% quarter on quarter and 9% year on year to 376.5kt. This was driven by lower volumes at Olympic Dam due to the commencement of the planned smelter maintenance campaign. This activity was delayed by approximately one month due to COVID-19 related border restrictions.

BHP’s Petroleum production was a highlight, growing 2% quarter on quarter and 3% year on year to 27.5 MMboe. These higher volumes were driven by increased production from Ruby and higher seasonal gas demand at Bass Strait. This was partially offset by lower production at North West Shelf and natural field decline.

Elsewhere, Metallurgical coal and Energy coal production was down 25% and 6%, respectively, quarter on quarter. For the former, this was due partly to planned maintenance at BMA. Whereas the latter was impacted by lower volumes at NSWEC due to mining in higher strip ratio areas.

Finally, Nickel production dropped 21% quarter on quarter to 17.8kt due to planned maintenance across the supply chain.

Management commentary

BHP’s Chief Executive Officer, Mike Henry, appears pleased with the company’s performance given the challenges faced from COVID-19.

He said: “BHP’s operations delivered reliably during the first quarter and we completed planned major maintenance activities across a number of our assets. We continue to skilfully navigate the ongoing challenges of COVID-19.”

“We progressed the ramp-up of production of high quality iron ore at South Flank and copper from the Spence Growth Option, and we delivered first nickel sulphate from our new plant at Kwinana. We sanctioned the Jansen Stage 1 potash project in Canada, and made a series of targeted investments in copper and nickel exploration in Australia and Canada.”

“These are aligned with our efforts to increase our exposure to future facing commodities and to position the portfolio to continue to deliver attractive returns and long-term value to shareholders,” he added.

FY 2022 guidance

One thing that could support the BHP share price today is confirmation that its FY 2022 guidance remains unchanged.

This includes iron ore production of 249 to 259Mt, copper production of 1,590 to 1,760kt, and petroleum production of 99 to 106MMboe.

Management also confirmed that the proposed merger of its Petroleum business with Woodside Petroleum Limited (ASX: WPL) is progressing to plan. The full form transaction documents are expected in November 2021. It notes that if the deal goes ahead, it will create a global top 10 independent energy company.

The post BHP (ASX:BHP) share price on watch after Q1 update and reaffirming guidance appeared first on The Motley Fool Australia.

More reading

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• BHP (ASX:BHP) share price climbs as miner hones in on ESG future

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 Bruce Jackson.

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The entire industry of buying and selling ASX shares is based on predicting the future.

How will this business do in the future? Will it keep producing what people want? Will it lose customers to competitors?

To assist the average punter who doesn’t have time to work it out themselves, there is an entire sector of advisors and fund managers that can do the research on their behalf.

But time and time again, evidence comes back that, on average, even those who do it for a living don’t fare much better than the overall share market.

“Professional mutual fund managers fail to outperform the market most of the time,” wrote The Motley Fool’s Catherine Brock this year.

“Over the past 10 years through mid-2020, the S&P 500 Index (SP: .INX) outperformed 82% of large-cap stock funds.”

So it’s clear no one holds a crystal ball.

But this week a team of Australian academics released an algorithm that they claim can predict market movements for up to the next 2 days, based on an analysis of 10 pictures.

How 10 photos can forecast stock market sentiment

A team of researchers at RMIT and Swinburne University of Technology developed the algorithm, building on earlier work from the University of Missouri.

The programme takes in the daily top 10 news pictures from photog service Getty. Machine learning then analyses the photos to judge societal mood, which is extrapolated out to how the share market will turn.

Lead author of the study, RMIT’s Dr Angel Zhong, said one need not read hundreds of news articles to get a feel for where stocks are headed.

“You can get a snapshot of global investment mood by looking at the 10 most popular photos,” she said. 

“This technology could have a huge impact for those wanting to get the feel of the day quickly and accurately.”

In general, bad news makes investors buy and sell “impulsively and intensively”.

“When the photo sentiment measure reflects a bad mood, it predicts a large increase in trading volume.”

While the earlier study was based only on US news and markets, the Australian team has broadened the algorithm to apply internationally.

“We can predict stock returns in global markets in 37 countries,” said Zhong. 

“If you only look at the text of news articles, you often miss out capturing non-English speaking markets. Analysing images removes that problem.”

The team is now seeking strategic partners to further refine the algorithm to one day be ASX-specific.

The post Can 10 pictures predict what the share market will do? appeared first on The Motley Fool Australia.

More reading

• Top broker says Westpac (ASX:WBC) share price could rise 15%
• 2 interest rate hikes by the end of 2022? Seriously?
• 2 excellent ASX dividend shares to buy now
• What is the outlook for the NAB (ASX:NAB) share price?
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Westpac Banking Corp (ASX: WBC) share price has come under a spot of pressure since announcing $1.3 billion of notable items impacting FY 2021 last week.

The good news for investors is that one leading broker remains positive on the banking giant despite this new.

Who is positive on the Westpac share price?

According to a note out of Morgans, its analysts have retained their add rating and $29.50 price target on the bank’s shares.

Based on the current Westpac share price of $25.58, this implies potential upside of 15% for its shares over the next 12 months before dividends.

And with Morgans forecasting a $1.36 per share fully franked dividend in FY 2022, the total potential return stretches to over 20% if you include it.

What did the broker say?

The note reveals that Morgans has reduced its earnings and dividend forecasts for FY 2021 to reflect these notable items.

It explained: “Our FY21F cash EPS is reduced by 21%, however we have not changed our cash EPS forecasts for outer years as we view the notable items to be non-recurring in nature.”

“We are uncertain as to whether WBC will decide to exclude these notable items when determining the final dividend payout ratio. We are being conservative on this front and are assuming a final dividend payout ratio of 65% of 2H21 cash earnings (inclusive of notable items). Our final dividend forecast has consequently reduced from 54cps to 30cps,” it added.

What about the share buyback?

Positively for shareholders and the Westpac share price, despite these notable items, Morgans still expects the bank to announce a significant share buyback with its full year results next month.

It commented: “Whilst the notable items serve to reduce WBC’s CET1 ratio by ~15bps, we have reduced our RWA forecasts […] We continue to expect a $5bn off-market share buyback to be announced on 1 November 2021 when WBC reports its FY21 result.

The post Top broker says Westpac (ASX:WBC) share price could rise 15% appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro owns shares of 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 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.

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One expert has warned that one part of the market is signalling that there will be 2 interest rate rises from the Reserve Bank in the next 13 months or so.

The share market has obsessed over a jump in inflation, and therefore interest rates, all throughout this year.

Rate hikes make borrowing money more expensive, therefore it is generally not helpful to stocks, especially for growth companies.

Higher interest rates also pull up the yield for bonds, making them more attractive to investors. Money that might have been ploughed into the share market is then diverted away, thereby decreasing demand for stocks.

BetaShares chief economist David Bassanese warned Monday that the Australian bond market is rising.

“Despite the [protests] of RBA governor [Philip] Lowe, the local bond market is now pricing in two rate hikes by end of 2022.”

Australian bonds have risen more than US

While the US Federal Reserve has flagged that a tapering in COVID-era stimulus would be coming soon, the RBA has insisted rate rises are years away.

The market reaction seems to suggest that message is falling on deaf ears.

“Indeed, local 10-year bond yields have lifted a little more than those in the US since the bottom in yields in late July – the yield spread has widened – with the market simply not believing the RBA won’t follow the Fed.”

Bassanese added that this means Australian fixed-rate bonds are looking attractive, especially compared to its US counterpart.

“RBA minutes are due tomorrow and governor Lowe speaks on ‘Independence, Mandates and Policies’ on Thursday.”

Pengana Australian Equities Fund analyst Mark Christensen said earlier this month that his team has been buying up ASX shares that could be resilient against higher rates.

“We look for business models that have an element of inflation protection built into them, and which have pricing power.”

Inflation triggers coming

The Delta variant of COVID-19 that brought Australia’s 2 most populous cities to a standstill for months now seems to be waning.

Vaccination coverage is now high in both Sydney and Melbourne, with the former already lifting many restrictions.

But funnily enough, this good news may translate to higher inflation, as the economy roars back to life.

Bassanese said last week’s numbers expectedly showed that employment and business conditions both suffered during the lockdowns.

But underlying sentiment was positive, suggesting a rapid recovery.

“Business and consumer confidence are still holding up fairly well – at or above long-run average levels – suggesting the economy is poised to bounce back solidly once the NSW/Victoria lockdown ends.”

The post 2 interest rate hikes by the end of 2022? Seriously? appeared first on The Motley Fool Australia.

More reading

• What is the outlook for the NAB (ASX:NAB) share price?
• 5 things to watch on the ASX 200 on Tuesday
• Why now could be the time to buy the Transurban (ASX:TCL) share price
• CBA (ASX:CBA) share price up amid $15b MySuper deal
• Here are the top 10 ASX shares today

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The good news for income investors in this low interest rate environment, is that there are countless dividend shares for investors to choose from on the Australian share market.

But with so many to choose from, it can be hard to decide which ones to buy.

To narrow things down, I have picked out two ASX dividend shares that are rated as buys by analysts. They are as follows:

Adairs Ltd (ASX: ADH)

The first dividend share to look at is Adairs. It is a leading retailer of furniture, homewares, and home furnishings in Australia and New Zealand. Thanks to its strong market position and omni-channel footprint, which gives it exposure to both online and in-store growth, Adairs has been tipped to grow at a solid rate over the 2020s.

This is expected to lead to the payout of generous dividends in the coming years. For example, Morgans is forecasting fully franked dividends per share of 22 cents in FY 2022 and then 27 cents in FY 2023. Based on the current Adairs share price of $3.81, this will mean yield of 5.8% and 7%, respectively.

Morgans has an add rating and $4.20 price target on the retailer’s shares.

DEXUS Property Group (ASX: DXS)

Another ASX dividend share to look at is Dexus. It is an Australian real estate company focused on owning, managing, and developing office, industrial, and retail properties.

DEXUS has a high quality portfolio of assets and has just added to this through the acquisition of $1.5 billion worth of industrial assets. These assets include Jandakot Airport in Perth and a logistics centre leased to Australia Post. All in all, they bring DEXUS’ industrial portfolio to $11.3 billion in value and 4.6 million square metres in size.

The team at Macquarie were pleased with the deal. In response, the broker has retained its outperform rating and lifted its price target to $11.90. The broker is also forecasting dividends per share of 53.7 cents in FY 2022 and then 58.1 cents in FY 2023.

Based on the current DEXUS share price of $10.64, this will mean 5% and 5.45% yields, respectively.

The post 2 excellent ASX dividend shares to buy now appeared first on The Motley Fool Australia.

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

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What is the outlook for the National Australia Bank Ltd (ASX: NAB) share price?

Over the past year, the NAB shares have gone up 48%. That compares to the return of the S&P/ASX 200 Index (ASX: XJO) which has only risen by around 18%. NAB has outperformed the ASX 200 by around 30% over the last 12 months.

But that’s the past. What about the future?

Broker ratings on the NAB share price

Last year, many brokers said that the it was worth buying NAB shares. The big four ASX bank has certainly been a performer during 2020 and the first half of 2021.

But the buy ratings are less numerous now. For example, Credit Suisse recently downgraded its rating on NAB shares from a buy to a hold.

Credit Suisse thinks that NAB has turned its performance around, however it thinks that the valuation now fully reflects that optimism. At the time of its rating change, the broker also noted that NAB was no longer valued at discount compared to the other big banks like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ).

On Credit Suisse’s numbers, the NAB share price is valued at under 15x FY21’s estimated earnings.

Morgan Stanley is another broker that doesn’t have a buy rating on NAB. The broker also noted the positive signs at NAB, but it thinks that revenue isn’t going perform strongly.

The broker thinks that NAB is valued at 14x FY21’s estimated earnings.

However, there are a handful of analysts that have buy ratings on the big bank. For example, Ord Minnett has a buy rating with a price target of $29.50. One of the reasons for that positive outlook is the fact that things are looking up for the small business sector.

What are the bank’s thoughts?

The latest update from the bank came after it announced its FY21 third quarter when it said it generated $1.7 billion in the three months – an increase of 10.3% year on year.

The NAB share price has risen by more than 5% after the release of this quarterly update.

Management described the quarter as encouraging, supported by significantly better credit impairment outcomes.

NAB said it was particularly pleasing to see the “strong momentum” across the business. In Australia, whilst housing lending rose 2%, the small and medium enterprise (SME) lending increased by 4.3%.

The NAB CEO Ross McEwan said:

We have a clear focus on where and how we will continue to grow. The exit of MLC Wealth is now complete, and the acquisitions of 86 400 and Citigroup’s Australian consumer business will help accelerate our growth strategy.

We remain optimistic about the long-term outlook for Australia and New Zealand. The strong economic momentum leading into this period, ongoing government support and customers’ relatively healthy starting positions give us confidence that once restrictions are eased, the economy will again bounce back.

NAB share price snapshot

After the strong run of NAB shares since the bottom of COVID-19, the big bank now has a market capitalisation of $93.4 billion according to the ASX.

The post What is the outlook for the NAB (ASX:NAB) share price? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
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• CBA (ASX:CBA) share price up amid $15b MySuper deal
• Here are the top 10 ASX shares today
• The Westpac (ASX:WBC) share price is up 30% so far in 2021. Here’s why

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 Bruce Jackson.

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On Monday the S&P/ASX 200 Index (ASX: XJO) started the week on a positive note. The benchmark index rose 0.25% to 7,381.1 points.

Will the market be able to build on this on Tuesday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to give back the majority of yesterday’s gains on Tuesday. According to the latest SPI futures, the ASX 200 is expected to open the day 22 points or 0.3% lower this morning. This follows a mixed night on Wall Street which in late trades sees the Dow Jones down 0.2%, the S&P 500 up 0.3%, and the Nasdaq trading 0.8% higher.

CSL R&D day

The CSL Limited (ASX: CSL) share price will be one to watch this morning when it holds its annual research and development (R&D) day. At the event, the biotherapeutics giant will provide the market with an update on the progress it is making with its current developments and is likely to unveil some new products that it is working on.

Oil prices mixed

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) will be on watch following a mixed night for oil prices. According to Bloomberg, the WTI crude oil price is up 0.2% to US$82.43 a barrel, whereas the Brent crude oil price has fallen 0.7% to US$84.25 a barrel.

Gold price softens

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could trade lower today after the gold price edged lower. According to CNBC, the spot gold price is down 0.1% to US$1,766 ounce. The safe haven asset dropped amid rising US Treasury yields.

IDP Education’s AGM

The IDP Education Ltd (ASX: IEL) share price could be on the move on Tuesday. This morning the language testing company is holding its annual general meeting and is expected to provide an update on its performance so far in FY 2022. The IDP Education share price hit a record high on Monday, so expectations are high for this update.

The post 5 things to watch on the ASX 200 on Tuesday appeared first on The Motley Fool Australia.

More reading

• Why now could be the time to buy the Transurban (ASX:TCL) share price
• CBA (ASX:CBA) share price up amid $15b MySuper deal
• Here are the top 10 ASX shares today
• The Westpac (ASX:WBC) share price is up 30% so far in 2021. Here’s why
• Own Woodside (ASX:WPL) shares? Here’s what the World Energy Outlook could signal

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 shares of and has recommended CSL Ltd. and Idp Education Pty 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 Bruce Jackson.

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Those looking for an excuse to buy the underperforming Transurban Group (ASX: TCL) share price may get their wish.

Morgans believes now is a good time to be buying the toll road operator and has upgraded its shares to “add” from “hold”.

The upgrade couldn’t come at a better time as the Transurban share price has barely budged this calendar year.

Transurban share price stuck in the slow lane

In contrast, the S&P/ASX 200 Index (Index:^AXJO) has gained more than 10% while other ASX infrastructure shares have zoomed ahead.

For instance, the Sydney Airport (ASX: SYD) share price and Spark Infrastructure Group (ASX: SKI) have surged over 30% each in 2021. It helps that both ASX shares received takeover interest.

Changing gears triggers upgrade

But coming back to the Transurban share price, Morgans believes value can be unlocked by changing the way the market looks at the company’s debt.

The broker previously applied a constant 0.7 equity beta to its cost of equity estimate. This was only applied to the DCF valuation of Transurban’s assets.

The equity beta reflects the sensitivity of geared cashflows to broader macroeconomic and market conditions. A value greater than 1 implying a higher risk than the market and below 1 as less risky than the market.

Since toll roads are defensive assets, Morgans estimates Transurban’s risk is 30% below the broader market.

Valuation increase for the Transurban share price

But when the broker adjusted the beta to account for the differences in NPV gearing across assets or time, Transurban’s share price valuation jumped.

“Our change is to adjust the equity beta for an asset’s NPV gearing, by assuming a constant asset beta (0.47 based on delevering our estimate of TCL’s historical statistical beta) and relevering this based on the NPV gearing of each road concession,” explained Morgans.

“Hence, this captures differences in the cost of equity due to gearing.

“For instance, we estimate debt vs NPV for Transurban Qld at 38% and thus 7.6% pa cost of equity (assuming 3% pa risk free rate and 6% pa market risk premium). The Hills M2 has 13% NPV gearing and we apply a 6.3% pa cost of equity.”

What is the Transurban share price worth?

Previously, the broker applied a consistent 7.2% per annum cost of equity to both assets.

The adjustments led Morgan’s to increase its price target on the Transurban share price to $14.82. This compares to its previous target of $13.99 a share.

The post Why now could be the time to buy the Transurban (ASX:TCL) share price appeared first on The Motley Fool Australia.

More reading

• CBA (ASX:CBA) share price up amid $15b MySuper deal
• Here are the top 10 ASX shares today
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Motley Fool contributor Brendon Lau 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.

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May it be possible that the AMP Limited (ASX: AMP) share price can rise more than 10% and reach $1.25 by Christmas?

It may be useful to know that a price target is where the broker estimates that the business will be valued in 12 months from now. So, whilst the AMP share price could reach that target by Christmas, the broker is only estimating where AMP will be in a year from now.

Which broker thinks the AMP share price will reach $1.25?

It’s Citi that thinks that AMP shares can rise by 10%.

However, the broker doesn’t rate the financial business as a buy, just rating it as a hold.

Citi believes that AMP can go through a large transformation and become more profitable as the business changes.

What is the financial company doing?

A couple of months ago it reported its FY21 half-year result.

It said that there was an improved performance, with a recovery in economic and market conditions, as well as the ongoing transformation strategy, resulting in a 57% increase in underlying earnings.

Half-year underlying net profit increased from $115 million to $181 million. This reflected higher investment income, a “strong” cost performance and increased earnings in AMP Bank, which benefited from the release of credit loss provisions.

In terms of restructuring the business, it said that it has made a “significant” step forward in the reshaping of the implementation of a new service model for aligned advice and conclusion of the ‘buyer of last resort’ arrangements from the end of 2021.

AMP also said that demerger plans are on track. The sale of the Global Equities and Fixed Income (GEFI) business has been agreed and the Multi Asset Group transfer is underway. The internal operational separation is targeted by the end of FY21, with the demerger to complete in the first half of FY22.

The valuation on the AMP share price

According to Citi, currently the AMP shares are valued at under 11x FY21’s estimated earnings.

It’s then expecting profit to increase in FY22. So, that puts the AMP shares at under 10x FY23’s estimated earnings.

The broker also thinks that AMP could pay a dividend in FY22 of $0.05 per share. That would translate to a forward dividend yield of 4.5%.

However, there are also some brokers that don’t believe AMP shares are going to move much over the next year. UBS is one of those brokers, with a price target of $1.14. That’s almost the same price that it’s at right now. UBS notes the ongoing outflows that AMP is experiencing.

UBS doesn’t think these problems are going to be resolved in the rest of the 2021 financial year, though it’s monitoring what could happen with/after the demerger.

The post Can the AMP (ASX:AMP) share price hit $1.25 by Christmas? appeared first on The Motley Fool Australia.

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• How has the AMP (ASX:AMP) share price beaten the market over the past week?
• Why did the AMP (ASX:AMP) share price have such a terrible September?

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 Bruce Jackson.

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