This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA) have been close rivals in the COVID-19 vaccine race ever since they announced the starts of their phase 3 vaccine trials — on the very same day back in July. But Pfizer edged ahead en route to the finish line. The big pharmaceutical company scored the first FDA emergency use authorization (EUA) for a coronavirus vaccine in December.

Still, Moderna wasn’t far behind — the smaller biotech company’s vaccine earned its EUA only seven days later.

Since then, the two companies have continued the competition largely in tandem. So far, 49 million Americans have gotten both doses of the Pfizer vaccine — developed under the code name BNT162b2, but now called Comirnaty — while 40 million have completed their regimens of Moderna’s vaccine, still called mRNA-1273. Both companies also are working on booster shots, and conducting the necessary clinical studies that will allow them to start inoculating kids and teens, too. But Comirnaty has one big weakness. And that weakness plus Moderna’s latest news may help mRNA-1273 jump ahead.

A key difference between the two mRNA vaccines

Pfizer and Moderna both developed mRNA vaccines for COVID-19. They use messenger RNA to induce the body to produce a key protein found on the surface of the coronavirus. Then, the immune system creates antibodies that recognize that protein, thus preparing the body to fight off the coronavirus. But their vaccines are not identical. One of the big differences from the start has been their storage temperature requirements. And that’s where Pfizer’s weakness lies.

For longer periods, Comirnaty must be stored at ultra-cold temperatures — between minus 112 degrees Fahrenheit and minus 76 degrees Fahrenheit. The vaccine may be kept at standard refrigerator temperatures for five days.

As Pfizer has collected more data, it has been able to loosen some guidelines for shorter-term storage. For instance, the company earlier this year said its vaccine may be stored at relatively higher temperatures (minus 13 degrees Fahrenheit to 5 degrees Fahrenheit) for two weeks. These are temperatures that standard pharmaceutical freezers can maintain. The Food and Drug Administration approved those new storage guidelines.

So, pharmacies and healthcare facilities can easily store the Pfizer vaccine for 19 days. I’m counting the refrigerated temperature period and the pharmacy freezer temperature period.

Easier from the start

Moderna’s mRNA-1273 has offered an easier storage profile from the start. Right now, the guidelines say it can be kept at standard refrigerator temperatures (35.6 degrees Fahrenheit to 46.4 degrees Fahrenheit) for as long as one month. It can be stored for as long as seven months in a standard freezer. But this week, Moderna said further research showed that mRNA-1273 can be safely maintained at refrigerator temperatures for up to three months. The FDA still must approve those new guidelines.

Moderna also is studying new formulations of its coronavirus vaccine that would further improve its storage profile.

The possibility that Moderna’s COVID-19 vaccine could be stored for as long as three months in a standard refrigerator could give it an even bigger leg up in the marketplace. Pfizer ensures the safe transport of its vaccine with special thermal containers. But in smaller healthcare settings, the problem is on-site storage. Many doctors’ offices or pharmacies may prefer to stock up on a vaccine that can be kept in a refrigerator for a long period of time. They may have limited freezer space — or no freezer space at all.

And in some countries, temperature requirements could be decisive when it comes to which vaccine governments and healthcare providers choose. Nigeria, for instance, said earlier this year it would favor vaccines that require less cooling.

An evolving vaccination situation

When COVID-19 vaccines first began to roll out, countries were aiming simply to vaccinate as many people as possible, as rapidly as possible. So, they ordered what was available. But as various vaccine makers continue to ramp up production and refine their offerings, countries will have more choices — and a bit more time to consider those options. This is when Moderna could take the lead.

Will this mean major market dominance for Moderna and a big loss of revenue for Pfizer? No. True, mRNA-1273 could move into the top spot due to its easier storage requirements. But if that happens, Pfizer’s Comirnaty will remain close behind it. No single company can make enough doses to vaccinate the more than 7.8 billion people in the world with the necessary speed. Moderna and Pfizer each aim to produce 3 billion doses of their coronavirus vaccines next year, and each requires a person to get two doses. So even if a country prefers Moderna’s vaccine, for example, it likely will still have to order some doses from another vaccine maker to cover all its citizens.

The Moderna vaccine’s easier-to-manage temperature requirements won’t upend Pfizer’s prospects for billions in dollars of sales of Comirnaty. But this latest news is likely to lead to a boost in orders for mRNA-1273, and may significantly increase Moderna’s product sales over the long term.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Only 40% of Australians want the AstraZeneca vaccine. What could this mean for CSL (ASX:CSL)?
• 4 healthcare share tips from a fundie with a health PhD
• Why the CSL (ASX:CSL) share price has rebounded 13% since March
• Wesfarmers’ (ASX:WES) Bunnings open to hosting COVID vaccine hubs

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Moderna Inc. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Westpac Banking Corp (ASX: WBC) share price has been a particularly positive performer on Monday.

At the time of writing, the banking giant’s shares are up over 4% to a 52-week high of $26.08.

Why is the Westpac share price charging higher?

The catalyst for the strong rise in the Westpac share price on Monday has been the release of its half year results.

In case you missed it, for the six months ended 31 March, Westpac reported a statutory net profit after tax of $3,443 million and cash earnings of $3,537 million.

The latter was a 256% increase over the prior corresponding period and a 119% lift over the second half of FY 2020.

This allowed the Westpac board to declare a fully franked interim dividend of 58 cents per share, which represents a payout ratio of ~60%.

Goldman Sachs was forecasting cash earnings of $3,400 million, which means Westpac outperformed expectations. This goes some way to explaining the rise in the Westpac share price today.

Expert opinion

The Senior Portfolio Manager from Plato Investment Management, Dr Peter Gardner, has been looking over the result and gave his opinion.

He said: “The half year results from Westpac support the notion that Australian banks have navigated the COVID-19 crisis exceptionally well and now we think their Australian investors, particularly the mums, dads and retirees, can breathe a sigh of relief.”

Dr Gardner believes the result points to a major turning point for bank dividends, which could bode well for the Westpac share price.

He explained: “Westpac’s results and the imminent results from its banking peers should signal a major turning point for dividends. The significant write back of provisions by Westpac is something investors should see repeated across the board and while the massive cash earnings growth comes from a low base, it’s certainly encouraging for the sector as a whole.”

“The reinstated interim dividend comes in significantly above that paid in 2020 and importantly puts it on a 6.6% annualised gross yield, with a payout ratio that is conservative at 60%,“ Dr Gardner added.

Capital returns to come?

The portfolio manager also suspects that Westpac’s margins and capital position could allow it to return additional funds to shareholders in the future.

“We are also encouraged by Westpac’s increase in net interest margin and strong CET1 capital ratio of 12.3% well above APRA’s 10.5% unquestionably strong level, giving it scope to return capital to investors in the future.”

Another positive that the portfolio manager picked up on was its cost reduction plans. He notes that the banking giant is aiming to reduce its cost base by 21% by FY 2024 compared to FY 2020 levels.

Overall, Dr Gardner believes that things are looking very positive for income investors.

He concluded: “The outlook for income investors looks remarkably bright, especially when you consider how things were looking just six months ago. While income from cash-backed assets continues to languish fortunately we are in the midst of a major turning point for dividend income, buoyed by the strong recovery of financials and also the continued strength of our major miners. We project the ASX200 is on track to return around 5% gross yield in the coming 12 months.”

The Westpac share price is now up an incredible 32.5% since the start of the year. 

More reading

• This is the best of the big ASX banks: fundie
• ASX 200 Weekly Wrap: Shares have average week but a great month
• Westpac (ASX:WBC) share price on watch after posting $3.5 billion cash profit
• 5 things to watch on the ASX 200 on Monday
• 7 ASX 200 shares with emission reduction strategies

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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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Andromeda Metals Ltd (ASX: ADN) shares are falling today despite the company updating the market on its carbon capture initiatives. At the time of writing, the Andromeda share price is trading 2.22% lower at 22 cents.

It should be noted that the South Australian miner also released its quarterly activities and cash flow report after market close on Friday. 

Let’s take a closer look at today’s sustainability update from the ASX resource share.

What update did Andromeda Metals report?

The Andromeda Metals share price is edging lower today after the company’s latest market updates.

The ASX resource share, which aims to be a leader in sustainable industrial minerals production, is the joint owner of Natural Nanotech Pty Ltd, along with its partner Minotaur Exploration Ltd (ASX: MEP).

In this morning’s announcement, Andromeda reported it has signed a $4 million research partnership with the University of Newcastle’s Global Innovative Centre for Advanced Nanomaterials (GICAN). The partnership will fund research into carbon dioxide capture through the use of halloysite nanotubes.

According to the release, “The research will investigate the conversion of halloysite nanotubes into advanced nanomaterials that can be utilised as novel adsorbent systems and catalysts for CO2 capture and conversion processes.”

The captured carbon dioxide can then either be stored or potentially converted into low-carbon fuels and chemicals.

On 16 April, Professor Ajayan Vinu, Director of GICAN, commented on the carbon capture research, saying:

GICAN team is actively working on increasing the specific surface area of the activated nanocarbon with the aim of reaching the target of 2 tonnes of CO2 per tonne of the adsorbent.

In addition to the CO2 adsorption, our team in collaboration with Andromeda, Minotaur and Natural Nanotech, is currently investigating the conversion of the adsorbed CO2 into fine chemicals, which is quite exciting and will make a huge impact in the field of CO2 chemistry.

Andromeda Metals share price snapshot

Notwithstanding today’s falls, Andromeda Metals has posted a stellar year, with shares up 340% over the past 12 months. This more than handily beats the 36% gains posted by the All Ordinaries Index (ASX: XAO) over the same timeframe.

Year to date, the Andromeda Metals share price has been struggling, with shares down 29% so far in 2021.

More reading

• Why is the Andromeda (ASX:ADN) share price on a rollercoaster today?

Motley Fool contributor Bernd Struben 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 Archtis Ltd (ASX: AR9) share price is jumping today after the company confirmed a $296,000 contract with the Australian Department of Defence.

Archtis shares are 3.57% higher at the time of writing today, trading at 29 cents per share.

Archtis is a Canberra-based company that consults and develops cybersecurity and secure information sharing solutions for government agencies in Australia. Let’s take a look at what this contract involves.

Archtis’ new defence contract

Archtis’ new contract with the Australian government is for software support services for the expanded deployment and broader architectural scope of NC Protect.

NC Protect is a cloud and hybrid-based software package produced by a company called Nucleus Cyber, which allows organisations to automatically discover, classify and secure unprotected or breached data on its servers. One of its valuable assets is it works with mainstream applications, such as Microsoft 365 and Dropbox.

Archtis recently merged with Nucleus Cyber, positioning the company to benefit from both the installation and then management of NC Protect long-term. The contract is effective immediately for a fixed term ending 30 June 2021.

Archtis management pleased with ‘defence ecosystem footprint’

Archtis managing director Daniel Lai welcomed the continued partnership with the Australian government.

I am pleased that our footprint within the Australian Defence ecosystem for NC Protect is quickly expanding. The need to securely share sensitive and classified information is paramount for defence. Archtis portfolio solutions are uniquely able to deliver secure policy-based access and sharing to safeguard even the most sensitive information.

This project provides further validation of our merger with Nucleus Cyber and the synergy between our products.

More about Archtis’ services

Given the huge amount of investor interest around fellow ASX defence-linked share Nuix Ltd (ASX: NXL), Archtis has historically traded a little more under the radar. The company produces security solutions for supply chain, enterprises and regulated industries through attribute-based access and control (ABAC) policies.

Its main product is Kojensi, a multi government-certified platform for the secure access, sharing and collaboration of sensitive and classified information. As mentioned, it now has control of NC Protect for enhanced information protection for file access and sharing, messaging and emailing of sensitive and classified content across Microsoft 365 apps, Dropbox, Nutanix Files and Windows file shares. 

Archtis share price snapshot

The Archtis share price has risen 11% in the past week alone and is up 286% over the past 12 months.

More reading

• Could a record breaking quarter bring the Archtis (ASX:AR9) share price back?

Motley Fool contributor Lucas Radbourne-Pugh 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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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Jumbo Interactive Ltd (ASX: JIN)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $15.20 price target on this online lottery ticket seller’s shares. The broker believes that Jumbo is well-placed to benefit from a favourable run of jackpots, underpinning higher than normal ticket sales. Morgan Stanley also suspects that COVID-19 has been supportive of a shift to online lottery ticket purchasing, which bodes well for the future. The Jumbo share price is fetching $14.03 this morning.

PointsBet Holdings Ltd (ASX: PBH)

A note out of Credit Suisse reveals that its analysts have upgraded this sports betting company’s shares to an outperform rating with an improved price target of $16.15. The broker made the move following the release of PointsBet’s third quarter update. It believes its update demonstrates the company’s ability to grow its market share in the United States. Credit Suisse also notes that PointsBet is aiming to be active in 18 US states by the end of 2022. This will be supportive of growth in the lucrative market, where the broker believes it is currently the number four player. The PointsBet share price is trading at $14.37 on Monday.

ResMed Inc (ASX: RMD)

Analysts at Morgans have retained their add rating but trimmed their price target on this medical device company’s shares to $29.14. This follows the release of a third quarter result last week which the broker felt was mixed. However, Morgans believes the headwinds the company is facing are cyclical and not structural. As a result, it believes the future remains positive for ResMed. Particularly given the upcoming launch of the next generation sleep apnoea platform, AirSense 11. The ResMed share price is fetching $25.06 on Monday morning.

More reading

• Leading broker tips PointsBet (ASX:PBH) share price to shoot higher
• Is the ResMed (ASX:RMD) share price good value after its Q3 update?
• 5 things to watch on the ASX 200 on Monday
• ASX 200 drops 0.8%, Pointsbet jumps, Beach sinks
• Why Beach Energy, Bigtincan, Pointerra, & ResMed are sinking today

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 recommends Jumbo Interactive Limited and Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Jumbo Interactive Limited, Pointsbet Holdings Ltd, and ResMed Inc. 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 Imricor Medical Systems Inc (ASX: IMR) share price is edging higher today. As of writing, shares in the medical device company are trading for $2.10, up 2.94%. By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is 0.4% higher.

Today’s positive price movement comes as the company advised another hospital has purchased one of its products.

Let’s take a closer look at the announcement and what it means for the Imricor share price.

Imricor company profile

Imricor is a medical device company that addresses issues with traditional x-ray-guided tissue removal procedures by developing MRI-guided technology. The company’s products include Advantage-MR EP recorder/stimulator, Vision-MR dispersive electrode, and its premier product, the Vision-MR ablation catheter.

According to the company, the ablation catheter is specifically designed to work under real-time MRI guidance to achieve “faster and safer treatment” than x-ray guidance.

What’s affecting the Imricor share price

In a statement to the ASX, Imricor announced Helios Hospital in Berlin, Germany, had signed a purchase agreement for an interventional cardiac magnetic resonance imaging (iCMR) lab to perform ablations with Imricor’s products. It is the 10th such hospital to sign an agreement with the company.

The medical imaging company did not disclose how much the deal was worth, or if there are any conditions to it. Despite this, investors are responding well to the news today, judging by the Imricor share price.

Imricor chair and CEO Steve Wedan said:

We are very pleased to add a second Helios hospital to our installed base, as Berlin-Buch joins the Helios Leipzig Heart Centre in adopting iCMR guided ablations.

While Europe continues a gradual recovery into a post COVID-19 era, we are very happy to be able to continue growing the number of centers [sic] enabled with Imricor’s solution for the future of cardiac electrophysiology.

The company expects operations with its products to begin at the hospital within a short period of time.

Imricor share price snapshot

Over the last 12 months, the Imricor share price appreciated 104.9%. However, it has fallen 22.4% over the last 6 months and 11.5% since February.

Imricor Medical Imaging has a market capitalisation of $240.2 million.

More reading

• Deterra (ASX:DRR) share price outperforms on royalty update
• Up 760% in a year, the Rumble Resources (ASX:RTR) share price is falling today
• Why is the Santos (ASX:STO) share price edging lower today?
• Why Facebook reported the most impressive earnings of 2021 so far
• What’s with the Digital Wine (ASX:DW8) share price today?

Motley Fool contributor Marc Sidarous 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 Deterra Royalties Ltd (ASX: DRR) share price is outperforming this morning after it announced a big jump in quarterly royalties.

The Deterra share price jumped 0.5% to $4.39 at the time of writing. While that’s in-line with the S&P/ASX 200 Index (Index:^AXJO), it’s still a win for Deterra as the sector is wallowing in red.

The BHP Group Ltd (ASX: BHP) share price slipped 0.6% and the Rio Tinto Limited (ASX: RIO) share price is flat.

Deterra share price jumps on royalty boost

Deterra’s main royalty earner is from Mining Area C (MAC). BHP operates the mine and pays Deterra a royalty, which surged 49% to $36.3 million in the March quarter versus the December quarter.

The increase is even more pronounced when compared to the same period in 2020. Royalities increased by 70.4% against this measure.

The big step-up in royalty payments is due to higher sales volumes and stronger iron ore prices. As reported this morning, the premiums paid for the immediate delivery of a range of commodities have jumped to a more than 14-year high.

Biggest income driver for Deterra

MAC is the largest contributor to Deterra’s royalty income. It also received around $100,000 from a mineral sands operations in Western Australia.

While that payment halved in the March quarter compared to the previous quarter, investors aren’t perturbed as it’s literally a rounding error for the group.

What’s more important is the MAC royalties have been increasing in each quarter over the past year.

Is the Deterra share price a good investment?

Deterra pays most of the royalties it receives back to shareholders as dividends. It paid a 2.45-cents a share fully franked interim dividend in March.

Some might consider the group to be a better way to get exposure to strong iron ore prices. This is because it doesn’t carry operating risks that are associated with other pure mid-tier iron ore miners.

The Deterra share price may also be regarded as a value play. Since it was spun-out of mineral sands miner Iluka Resources Limited (ASX: ILU) in October last year, the Deterra share price has lagged.

Deterra could be poised to outperform from here

The ASX royalties company has dipped around 4% when the BHP share price and Rio Tinto share price are up around 30%. Even its parent, the Iluka share price has surged by 51% since cutting the apron string.

However, history has shown that child entities have a habit of outperforming around six months after finding independence.

That’s around now. The Deterra share price could be on the cusp of a turnaround if history repeats.

More reading

• ASX miners set for tough start even as commodity premiums hit a 14-year high
• ASX 200 Weekly Wrap: Shares have average week but a great month
• 5 things to watch on the ASX 200 on Monday
• These were the worst performing ASX 200 shares in April
• These were the best performing ASX 200 shares in April

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Rumble Resources Ltd (ASX: RTR) shares have had a bumper 12 months but are edging lower today. At the time of writing, the Rumble Resources share price is trading 0.81% lower at 61 cents. 

This comes after the ASX resource company’s latest activities report for the quarter ending 31 March. Let’s take a look at how it’s been performing.

Quarterly highlights

The Rumble Resources share price is slumping today after the company updated investors on its continuing program to advance its projects across Western Australia.

Rumble Resources highlighted the major zinc-lead discovery it reported to the market on 19 April. The confirmed discovery at its Earaheedy Project in Wiluna followed 3,593 metres of reverse circulation (RC) drilling. The Rumble Resources share price leapt 90% during intraday trading on the day of the announcement as ASX investors digested the news.

The company also reported that 18,776 metres of phase 3 resource drilling have been completed at its Western Queen Gold Project in Mt Magnet. Assays for the maiden gold resources are pending.

Meanwhile, an airborne electromagnetic (EM) survey is planned at the company’s Warroo Cu-Zn-Pb-Ag-Au-U-Pt Project in East Pilbara in the June quarter. Rumble is targeting large scale Cu-Zn-Pb-Ag volcanogenic massive sulfide (VMS) ore deposits. It stated the area has the potential to become a new VMC province.

Also in the pipeline for the June quarter are exploration programs at Rumble’s Fraser Range Ni-Cu-Au JV Project. Drilling at the Thunderstorm Au-Cu Project will be targeting ‘tier 1’ gold deposits. Drilling at the Thunderdome Ni-Cu Project will target large scale nickel-copper deposits.

The company ended the quarter with $3.3 million of cash and $266,000 in listed investments.

During the quarter, on 28 April, Rumble Resources also raised $40 million at 50 cents per share, supported by new institutional and sophisticated investors. That’s 11 cents per share less than the current Rumble Resources share price.

The company plans to use the proceeds to advance its projects across the board, with a focus on accelerating its exploration program at the Earaheedy Project.

Rumble Resources share price snapshot

It’s been a great year for Rumble Resources shareholders, with shares up 757% over 12 months. By comparison, the All Ordinaries Index (ASX: XAO) gained 36% over that same time.

Year to date, the Rumble Resources share price has continued to rocket, with shares having gained 400% so far in 2021.

More reading

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Motley Fool contributor Bernd Struben 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 Santos Ltd (ASX: STO) share price is slightly in the red today following the announcement of a collaboration agreement.

At the time of writing, the energy producer’s shares are swapping hands for $6.95 apiece, down 0.4%.

Unlocking new wealth opportunities

Investors are eyeballing the Santos share price this morning following the company’s efforts in unlocking future regional gas resources.

In this morning’s release, Santos advised it has entered into a memorandum of understanding (MOU) with Eni.

Established in 1953, Eni is an Italian multinational oil and gas company specialising in developing new energy solutions. Activities range from the exploration and production of hydrocarbons, as well as refining and marketing oil products and biofuels.

The group operates across 68 countries, with more than 30,000 employees worldwide.

Under the MoU, Santos and Eni will collaborate on developing potential opportunities in northern Australia and Timor-Leste. This includes the possibility of sharing infrastructures in gas field developments around Barossa and Evans Shoal, and pipeline to Darwin. In addition, onshore gas processing leading to LNG expansion are also on offer.

Santos stated that the framework will look at options to re-purpose the Bayu-Undan facilities in extending project life. This of course is subject to approval from the Timor-Leste government.

Other areas of cooperation include the development of Petrel and Tern through Blacktip/Yelcherr gas plant facilities.

Management commentary

Santos managing director and CEO Kevin Gallagher welcomed the agreement, saying:

Eni are already a highly valued partner in the Bayu-Undan project and this MoU strengthens our collaboration and cooperation.

CCS opportunities at Bayu-Undan are extremely exciting for Santos and Eni.

A CCS project at Bayu-Undan could provide a new job-creating and revenue-generating industry for Timor-Leste with quality carbon credits increasing in both demand and value internationally.

Santos share price snapshot

The Santos share price has accelerated more than 50% over the past 12 months and is up around 10% year-to-date. The company’s shares reached a 52-week high of $7.80 last month, nearing pre-COVID levels of the $8.50 mark.

Santos commands a market capitalisation of roughly $14.5 billion, with close to 2.1 billion shares outstanding.

More reading

• 5 things to watch on the ASX 200 on Monday
• Santos (ASX:STO) share price dips despite completed sale
• 5 things to watch on the ASX 200 on Friday
• Why ASX 200 oil shares are eyeing US$80 per barrel Brent crude prices
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Aaron Teboneras 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

There was an embarrassment of riches for FAANG stock investors this earnings season. While it may be too simple to say investors should only own these stocks, it appears the advantages of the big techs’ platforms were only enhanced and strengthened by the pandemic. Having welcomed a more highly-engaged audience, and now that the economy is recovering rapidly, revenue is going through the roof at these tech giants.

You couldn’t really have gone wrong with any of the large-cap household names in the first quarter, but the company that impressed me the most was Facebook (NASDAQ: FB).

Revenue was through the roof, despite perceived headwinds

In the first quarter of 2021, Facebook grew revenue by a stunning 48%, with ad revenue up 46% and “other” revenue up 146%. Total costs and expenses only grew 29%, with most of that going to servers, data centers, and research and development — all of which could be considered investment in growth. In fact, marketing and general and administrative expenses were only up a paltry 2%! The end result was operating-income growth of a whopping 93%.

Yes, Facebook was helped by foreign currency this time around, which boosted the growth rate by 4 percentage points. And yes, it was lapping the first quarter of 2020, which had one month affected by the pandemic. Still, the company was able to grow 44% in constant currency, on top of still-respectable 18% growth in the first quarter of last year.

That’s really, really impressive. Facebook did increase daily active users (DAUs) by 8%, due to increased engagement from the pandemic, and delivered 12% more ads, but the real surprise was a 30% increase in the price per ad. This was fueled by bigger-than-expected demand as the economy strengthened, and as businesses were eager to reach customers in a targeted way.

Some investors think this may be as good as it gets, however, as the new iOS 14.5 update just hit iPhones. The new operating system will enable customers to turn off the ability for Facebook to track their behavior across other apps and websites. Some fear that may limit its targeting capabilities, which are why Facebook is such a big hit with small businesses specifically and advertisers in general.

Still, if iOS limits digital-ad targeting (including Facebook but also its competitors), Facebook should still retain a relative advantage over other platforms. After all, it knows a lot about you, even within the app. CFO David Wehner said:

That said, the impact [of iOS 14.5] on our own business, we think, will be manageable. We continue to expect it will be a headwind for the remainder of the year, but we’re making encouraging progress, as Sheryl [Sandberg, chief operating officer] mentioned, on our own solutions to help advertisers navigate these changes. And that includes helping advertisers work with the Apple [application programming interface] as well as our own approach to using aggregated data for targeting and measurement that we call Aggregated Events Management. So the goal there is really to maintain it in the long run, even improve performance with less data.

While the iOS 14.5 rollout could be a headwind, I’d expect it to be mild, and for the smart people at Facebook to continue to innovate in selling relevant ads to the right people.

New tech takes center stage

With the core business firing on all cylinders, CEO Mark Zuckerberg actually focused a lot of his opening remarks on new technologies. New initiatives, described in the “other revenue” category, only made up 2.8% of revenue in the quarter, but were up 146% to $732 million, and are starting to become a little bit more meaningful.

New sources of revenue include commerce, creator services, and the augmented reality and virtual reality (AR/VR) computing platform.

On AR/VR, Zuckerberg was very enthusiastic about the Oculus Quest 2, which was just updated to enable wireless streaming. This could be a big deal and a breakthrough for AR/VR. Previous headsets need to have all sorts of wires running from them, which Zuckerberg believes diminished the experience, saying on the conference call with analysts, “The technology to deliver a great experience wirelessly is very advanced, and most companies aren’t going to be able to deliver this, but we believe that it is the minimum bar for a high-quality experience.”

Another potential moneymaker, which really kicked into gear during the pandemic, is Facebook’s participation in commerce beyond mere advertising. Last year, the company started Facebook Shops, allowing small businesses to set up shops in Facebook and Instagram. This initiative has already reached 1 million Shops, attracting 250 million visitors per month. And Facebook Marketplace is more like a modern Craigslist, attracting 1 billion visitors each month. In addition, WhatsApp business messaging and WhatsApp payments in India are also growing.

But management said the company could do much more, further “down the funnel,” with investments in payments, customer service and support, and other products. Taking more charge of commerce could lead to further monetization opportunities. Sandberg said: 

Can we move people down the funnel? We think we can. But that’s going to take work, and it’s also going to take some time for people to get used to that. But in terms of the long-run competitive advantage, we have a lot of people looking for a lot of things, sharing a lot of things, and continuing to find things they really like. And so I’m very optimistic about our opportunity here, but it’s going to take real work.

Finally, more monetization could be coming via new creator tools. Right now, many creators and influencers are paid through product recommendations, but Zuckerberg sees Facebook giving creators a wider range of audio and video tools, with other potential monetization options, including tipping or perhaps subscriptions.

That perhaps puts the company on track to compete with upstart site OnlyFans, a subscription/tipping site that is known for R-rated (and X-rated) content creators, but which is also drawing more mainstream creators looking to give fans a more intimate look into their lives. According to a recent profile by Bloomberg, OnlyFans brought in $2 billion in gross revenue in 2020, of which it takes a 20% commission at very high margins.

Higher growth yet a cheaper valuation than peers

Remarkably, while Facebook reported the highest revenue growth of any FAANG stock this earnings season, it’s also the cheapest on a P/E basis, at around 28 times trailing earnings. That skepticism may have been warranted, given its greater concentration and reliance on advertising than the others. 

However, that ad reliance was tested during the pandemic, and Facebook did just fine — in fact, more than fine. If the company can bring more compelling technology to market such as AR/VR, and continue to monetize its 2.85 billion monthly users in new and different ways, its stock could still be very cheap, even after the recent post-earnings bump.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Billy Duberstein owns shares of Facebook. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook. The Motley Fool Australia has recommended Facebook. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why Facebook reported the most impressive earnings of 2021 so far appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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