The buy now, pay later (BNPL) revolution has certainly taken off in Australia and the ASX.

Investors blew the share prices of many BNPL companies out of the water last year as the payment providers gained popularity through COVID-dominated 2020.

It hasn’t all been just a sweet ride to the top, however. Most ASX-listed BNPL shares were caught up in the US-driven tech sell-off earlier this year. Some are still actively recovering. 

If you’re looking to invest in ASX-listed BNPL companies, but you’re not sure what makes each one different from the last, this guide is for you.

Here, we look at the recent financial performance and business models of ASX BNPL shares with market capitalisations of more than $250 million.

We note that the Commonwealth Bank of Australia (ASX: CBA) has a relatively new BNPL service, but as most of its business is in other endeavours, it isn’t included in this list.

Afterpay Limited (ASX: APT)

First off, the industry-leader and arguably most well-known ASX BNPL share, Afterpay.

Business model

Afterpay uses the tried and tested 4-instalment payments plan. The first instalment is paid upon purchase, then once every 2 weeks thereafter over a total period of 6 weeks.

It has no lengthy application process and is accepted in hundreds of stores and online shops Australia-wide. The BNPL provider charges a $10 fee if a customer misses a payment and another $7 if the payment still hasn’t been received after 7 days.

Afterpay is also set to add a money management service to its offerings in the first quarter of the 2022 financial year. 

Recent financial performance

In its third-quarter results last week, Afterpay’s underlying sales increased a whopping 123% compared to the previous comparable period. March was its second-highest monthly underlying sales ever, as it raked in $1 billion over the month.

These improvements are comparable to those in Afterpay’s 2021 half year and 2020 financial year results, suggesting sustainability of growth. Although past growth never guarantees future growth. 

Afterpay’s quarterly report mentioned a possible US listing. While companies can list on more than one exchange, it’s made some investors wary that Afterpay might be gearing up to leave the ASX. 

Recent share price performance

The Afterpay share price was hit hard through the tech sell-off, dropping by 22% over the last week of February and the first week of March. However, it didn’t reach its lowest closing price until 30 March. 

This dip accounts for the Afterpay share price’s lazy year-to-date growth – it has increased just 3% in 2021. Having said that, the Afterpay share price has ballooned by 342% over the last 12 months.

Afterpay has a market capitalisation of around $35 billion, with approximately 290 million shares outstanding.

Zip Co Ltd (ASX: Z1P)

Introducing the second-largest BNPL company on the ASX: Zip, which offers both Zip Money and Zip Pay.

Business model

Zip Money is similar to a credit card, while Zip Pay is a BNPL service. 

Zip Money has low minimum monthly payments ($40 for balances under $1000) and charges a $6 fee if a user is left with unpaid credit at the end of each month. It also charges interest.

Zip Pay is accepted at many stores and online shops, and even offers users the option to pay their bills through the platform. Users can link Zip to their Apple Wallet or Google Pay to ‘Tap and Zip’ payments.

Zip Pay charges $5 per missed payment and performs credit checks on users.

Zip also purchased Quadpay in August 2020, accelerating its growth into the US market.

Recent financial performance

In Zip’s third-quarter results for FY21, the company announced record revenue of $144.4 million – up 80% on the previous corresponding period (pcp).

It also recorded its largest number of transactions, with customers using the platform for 12.4 million purchases. This represents a 195% increase since the pcp.     

Recent share price performance

The Zip share price was not hit as badly as others in the tech sell-off, coming out the other side with a year-to-date gain of 53%. It’s also up 309% over the last 12 months.

Zip has a market capitalisation of $4.9 billion, with approximately 552 million shares outstanding.

Sezzle Inc (ASX: SZL)

Business model

Sezzle’s BNPL service is similar to the Afterpay model, where a quarter of a purchase is paid upfront, and the other three quarters are paid at two-week intervals thereafter.

If a Sezzle user is more than 2 days late on a payment, their account is deactivated and unusable until they reactivate it and pay a $10 fee. Users have the ability to reschedule the payment once on any order they make.

Sezzle doesn’t conduct credit checks on users, although it reserves the right to.

Recent financial performance

The latest results we have for Sezzle are from its 2020 annual results. Within them was an income increase that many companies can only dream of. 

Sezzle reported a net income increase of 250% over 2020, reaching $74.3 million. In addition, its active consumers and merchants also rose by 143.9% and 166.6%, respectively. 

Recent share price performance

The Sezzle share price had a massive February before 2021 fell on its head. It spent the first 10 days of March falling and the rest of the month coasting. It has recovered slightly in April.

Currently, the Sezzle share price is up 37% year to date and lifted 462% over the last 12 months. 

Sezzle has a market capitalisation of around $881 million, with approximately 199 million shares outstanding.

Humm Group Limited (ASX: HUM)

Business model

Humm is a one-of-a-kind ASX BNPL share. In fact, its got 2 BNPL services.

First is its Little Things service, which can be used for purchases under $2,000. There is no interest in Humm’s offerings, although a late payment for a Little Things purchase will result in a $6 fee. Users can choose between paying their purchase back in 5 or 10 fortnightly installations.

Humm’s Big Things service can be used for purchases worth between $2,000 and $30,000. Humm still doesn’t charge interest on Big Things purchases, but it does charge an $8 monthly fee. Users have between 6 and 60 months to pay off Big Things. New users will also have to pay between $35 and $90 to initiate a Big Things BNPL service while existing users will be charged $22. Once again, a late payment fee of $6 applies.

Recent financial performance

Humm released its half-year financial report in February, and within it was a solid performance. 

It generated a net profit after tax (NPAT) of $43.4 million, up 25.8% from the previous corresponding period. Its statutory NPAT also increased, up 15.9% to $38.6 million.

While Humm’s profit this financial half looks impressive, some of it can be attributed to its 12.7 reduction in operating expenses due to lower employee expenses from JobKeeper and reduced employee numbers. 

Recent share price performance

The Humm share price started strong in 2021, but come March, it all came undone. 

Currently, its share price is down 16% year to date. It’s still up 36% over the last 12 months, though. 

Humm has a market capitalisation of around $480 million, with approximately 495 million shares outstanding.

Splitit Payment Ltd (ASX: SPT)

Business model

Splitit is a unique ASX BNPL share in that it pre-authorises a user’s credit card for the entirety of the purchase then simply splits a payment into instalments.

For instance, if you were to use Splitit to purchase a $200 toaster in 4 payments, Spiltit would hold the $200 over your credit limit but only charge you $50 per instalment.  

To make its bucks, Splitit charges merchants a fee for their customers’ use of the service.  

Recent financial performance

Splitit released its results for the quarter ended 31 March last week.

The company recorded merchant sales volume (MSV) of US$82 million. This is an increase of 247% compared to the prior comparable quarter, but 5% less than the previous quarter.

It was a similar story for its revenue. Splitit recorded gross revenue of US$2.7 million through the first quarter, 292% more than the prior corresponding period. But, it was down from the fourth quarter’s gross revenue of US$2.9 million. 

The company states this drop is due to its risk reduction tactic of disallowing customers to use the service with their debit card. 

Recent share price performance

The Splitit share price really suffered from the tech sell-off, and it has barely started to recover. 

Year to date, the Splitit share price is down by 41%. But, it’s up 45% since this time last year. 

Splitit has a market capitalisation of around $361 million, with approximately 457 million shares outstanding.

More reading

• ASX 200 down 0.5%: Bingo & Tabcorp takeovers, BlueScope upgrades guidance
• Is it time to sell Afterpay (ASX:APT) shares?
• 2 highly rated ASX growth shares for May
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 dips, NIB soars, Perenti rises

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. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Humm Group Limited and Sezzle 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 PPK Group Limited (ASX: PPK) share price is gaining traction in mid-morning trade after hitting an all-time high. The surge in the boron nitride nanotubes (BNNT) producer’s shares comes after the company announced two new appointments through its partly-owned subsidiary.

Boron nitride nanotubes are used in parts for high-temperature equipment such as underground vehicles and mining equipment.

During market open, PPK shares reached a record high of $7.43. However, after some profit-taking, the company’s shares have slightly lowered to $7.38, up 1.1%.

New appointments

Investors are pushing PPK shares into new territory today after digesting the company’s latest update.

According to this morning’s release, PPK advised that its subsidiary, Li-S Energy Limited, has appointed a non-executive director and CEO.

PPK holds a 48.5% interest in Li-S Energy, which aims to revolutionise high-performance lithium sulphur battery technology.

The new addition of Ms. Hedy Cray as a non-executive director will see her bring significant experience to the board. Ms. Cray has an extensive background in industrial and employment law, equal opportunity, and workplace health and safety issues. Currently, she is a partner with Australian top-tier law firm, Clayton Utz, and is in charge of the Brisbane Workplace Relations Employment and Safety practice.

Hedy Cray also has experience in commercial and corporate strategy, risk management, corporate governance, acquisitions, company restructuring other fields.

Furthermore, Dr. Lee Finniear will head up the role of CEO for Li-S Energy. Finniear has more than 25 years of experience as a senior executive within the industry. This also includes 5 years at the helm as CEO and managing director of a NASDAQ and ASX-listed company.

Dr. Finniear is recognised for delivering innovative IoT products to business and consumer markets. He served as vice president for an Asian Pacific telecommunications operator focused on automotive manufacturers and enterprise IoT solutions.

PPK executive chair, Robin Levison welcomed the new inclusions, saying:

I am very pleased with both appointments as Hedy brings Li-S Energy very broad commercial and corporate experience while Lee is a proven Chief Executive Officer with talent and qualifications well suited to growing the Li-S Energy business.

About the PPK share price

The PPK share price has increased over the last year, moving around 135% higher for shareholders. Year-to-date performance currently stands at a gain of around 26%. 

PPK has a market capitalisation of roughly $650 million, with just a tad over 89 million shares on issue.

More reading

• The Los Cerros (ASX:LCL) share price is charging. Here’s why.
• Why the Reliance Worldwide (ASX:RWC) share price is down this morning
• Chalice Mining (ASX:CHM) share price surges to new record high
• Netflix’s pandemic boost is over — but here’s why I’m not worried
• The South32 (ASX:S32) share price is up this morning. Here’s why

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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The Los Cerros Ltd (ASX: LCL) share price is charging higher this morning after a pre-market update from the Aussie mining group.

Why is the Los Cerros share price climbing?

Los Cerros this morning announced the first drilling is now underway at its newly identified porphyry target, Ceibal.  The new drilling site is 1 kilometre south-west of its Tesorito South porphyry discovery. It comes after Los Cerros reported a significant intercept at the Tesorito South site earlier this month.

Ceibal forms part of Los Cerros’ 100% owned, 10,500 hectare Quinchia Gold Project in Colombia. The Project comprises a cluster of porphyry targets surrounding the Miraflores Gold Deposit. 

According to the release, Ceibal has a “substantial 800 metre x 600 metre gold, copper and molybdenum, surface soil and rock chip geochemistry anomaly”.

The Los Cerros share price has charged higher this morning following the drilling update. Shares in the Aussie gold miner are now up 32.1% since March 31 in an eventful month for investors.

The company’s dominant position in Colombia’s Mid-Cauca Gold Belt has allowed it to progress quickly in recent times. Trenching results from the new target have found significant surface gold in three channels. Those include:

• 90 metres at 1.4 grams per tonne of gold
• 75 metres at 1.2 grams per tonne of gold
• 25 metres at 1.2 grams per tonne of gold

Managing Director Jason Stirbinskis said, “The emergence of Ceibal and Tesorito West, the new deep intercept encountered while drilling south-west and below the Tesorito porphyry, is further argument that the Quinchia Gold Project is another significant hot spot on the mid-Cauca gold belt”.

The Los Cerros share price has had another strong start to a trading day in what has become a successful month.

Foolish takeaway

The Los Cerros share price has surged higher following this morning’s drilling update. Shares in the Aussie gold miner have pared back some gains but remain up more than 2% at the time of writing.

More reading

• Here’s why the Los Cerros (ASX:LCL) share price is soaring 8% today
• Why the Los Cerros (ASX:LCL) share price is rocketing 20% today

Motley Fool contributor Ken Hall 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 Reliance Worldwide Corporation Limited (ASX: RWC) share price is falling this morning. This comes after a quarterly trading update from the Aussie plumbing supplies group. Despite a positive update, the company’s shares are down.

At the time of writing, the Reliance share price is trading for $4.85, down 0.72%.

Why is the Reliance Worldwide share price down?

Reliance Worldwide this morning provided an update for the three months ended 31 March 2021 (Q3 2021). A 14% increase in consolidated net sales, which climbed to $359.4 million, was a key highlight of the update. Excluding the negative USD-AUD currency impact, net sales climbed 27% higher compared to Q3 2020 figures.

Reliance Worldwide saw strong sales increases for the quarter in all key regions. The Americas (+39%), Asia Pacific (+11%) and Europe, Middle East, and Africa (+13%) all contributed to the sales growth.

Reliance Worldwide said this reflected “buoyant demand” for plumbing products. That was on the back of increased spending on residential repairs and remodelling. A significant weather freeze in the US in February also boosted demand for the quarter. In fact, Reliance Worldwide estimates that contributed ~50% of the quarterly sales increase.

A strong domestic housing market helped boost Asia Pacific sales while strong UK plumbing supplies demand boosted the EMEA result. Reliance Worldwide said April sales are substantially ahead of the coronavirus-impacted April 2020 sales figures.

The group continues to push ahead with cost mitigation measures by passing on higher input costs on impacted products. Brass products in particular have been hit by surging copper and zinc costs in recent months.

CEO Heath Sharp said:

Pricing discussions with other channel partners are progressing and we remain confident of achieving acceptable cost recovery outcomes.

Shares in the Aussie plumbing group were up 16.5% year to date prior to the open and are outpacing the S&P/ASX 200 Index (ASX: XJO).

More reading

• Why the Viva Energy (ASX:VEA) share price is in focus
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 dips, NIB soars, Perenti rises
• ASX 200 flat: NIB update impresses, Altium upgraded
• 5 things to watch on the ASX 200 on Monday

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Reliance Worldwide Limited. The Motley Fool Australia has recommended Reliance Worldwide Limited. 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 Chalice Mining Ltd (ASX: CHN) share price has hit a new record high this morning. Shares in the Aussie gold miner jumped more than 10 per cent at the open after a pre-market announcement.

Why is the Chalice Mining share price rocketing higher?

Chalice Mining has started a program of ground electromagnetic (EM) surveying on the South West Nickel-Copper-Platinum Group Element (Ni-Cu-PGE) Project. Venture Minerals Limited (ASX: VMS) owns the site with Chalice working as a joint venture partner.

Chalice has commenced the surveying over selected areas of the “Julimar lookalike” magnetic anomaly (Thor Target) and other interpreted mafic-ultramafic intrusions.

The Chalice Mining share price shot higher in August after announcing the Julimar Ni-Cu-PGE Project discovery. Chalice announced that it had struck a significant sulphide zone, the first in the region.

Chalice is planning a total of ~42 line kilometres of moving loop EM in the initial stage. Any anomalies will be infilled to define targets for follow-up surface geochemical sampling or drilling.

The Chalice Mining share price is soaring on the back of this morning’s news. Similarly, the Venture Minerals share price is up more than 13% in early trade.

The program is expected to be completed within 4 to 6 weeks, subject to weather constraints. It represents the first stage of the joint venture earn-in with Chalice earnings up to 70% by spending $3.7 million on exploration over 4 years.

The two main prospects within Venture Minerals’ project are Thor and Odin with both containing areas of potential Ni-Cu-PGE prospectivity. 

Today’s announcement has investors hoping for more strong discoveries in the region. It comes after the success of the Julimar discovery which has propelled Chalice shares 153.7% higher in the last 6 months.

Foolish takeaway

The Chalice Mining share price is surging this morning after the Venture Minerals update. It comes as the Aussie miner begins ground EM surveying over a “Julimar lookalike” area in the South West Ni-Cu-PGE Project.

More reading

• Why the Chalice (ASX:CHN) share price hit an all-time high
• Why has the Lithium Australia (ASX:LIT) share price plunged 7% today?
• Chalice (ASX:CHN) share price rises after latest update
• Why the Chalice Mining (ASX:CHN) share price has grown 51% in a month

Motley Fool contributor Ken Hall 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.

Netflix (NASDAQ: NFLX) reported first-quarter 2021 results last week and disappointed many analysts and investors with its subscriber numbers. After adding an incredible 37 million members last year, the streaming giant only managed to sign up 4 million in the first three months of this year. 

This missed estimates by management (6 million) and Wall Street (6.2 million), causing the stock price to fall about 8% since Tuesday’s market close. To make matters worse, the company is forecasting just 1 million subscriber additions in the current quarter. 

The coronavirus pandemic led to a surge in Netflix’s business in 2020, but now investors are concerned that growth going forward will slow as people spend more time away from home and competition in the space heats up. 

If we take a step back for a second, though, we’ll see that Netflix is doing just fine. Here’s a tip for investors regarding this latest news: don’t worry. 

Still the leader in streaming entertainment 

Revenue in the quarter still increased 24% year over year as a result of pricing increases in the U.S. late last year. And average revenue per user (ARPU), a key metric for any subscription-based business, rose 6%. Netflix claimed higher engagement as well as lower member churn in the quarter compared to last year, further calming investor fears. These are still very healthy numbers. 

Operating income nearly doubled from Q1 2020 due to lower content spend. But normal production schedules are now up and running in all regions except Brazil and India. And the company expects to spend $17 billion on content this year, more than the $12.5 billion it spent in 2020. 

This will pressure profits and cash flow, but it will help drive subscriber growth in the second half of the year as a heavier slate of new releases comes out. Furthermore, none of the other competing services spends anywhere close to what Netflix does, cementing its first-mover advantage in the industry as it spreads those costs out over a massive subscriber base. 

To add to the discussion on competition, in the most recent earnings call, co-founder and co-CEO Reed Hastings highlighted that other, newer services entering the market were not to blame for the subpar quarter. “Our largest competitor for TV viewing time is linear TV, our second largest is [Alphabet‘s] YouTube, which is considerably larger than Netflix in viewing time and [Walt] Disney is considerably smaller,” he said. 

I tend to agree with him. And if newcomers streaming services like Disney+ and AT&T‘s HBO Max give you pause, then consider this: About 90% of customers to these two services also subscribe to Netflix, while only 20% and 50% of Netflix subscribers are also customers of HBO Max and Disney+, respectively. This demonstrates the value proposition Netflix offers. 

The final word 

Netflix is still the leader in streaming. As it continues to spend billions on award-winning content, membership will keep rising over time, particularly overseas. Even if the company only adds 9 million total customers during the rest of the year, that would still equate to 50 million over the last two years. Investors should take this pessimism surrounding the stock (and the short-term price drop) as an opportunity to buy shares. 

Additionally, the company is on the verge of being sustainably cash-flow-positive, with planned share repurchases supporting shareholder returns. Although the pandemic boost has faded, investors don’t need to worry. 

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Neil Patel has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Netflix, and Walt Disney. The Motley Fool has a disclosure policy.

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

More reading

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• Netflix doubled profits, but it can’t keep paying this price
• Broker weighs in on the Redbubble (ASX:RBL) share price after its 20% dive
• Are Netflix’s woes a warning for ASX tech shares?
• Analyst sees Netflix falling 38% after earnings

Neil Patel has no position in any of the stocks mentioned. Suzanne Frey, an executive at Alphabet, 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 Alphabet (A shares), Alphabet (C shares), Netflix, and Walt Disney. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Netflix, and Walt Disney. 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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South32 Ltd (ASX: S32) shares are edging higher this morning after the company released its results for the quarter ended 31 March.

At the time of writing, the South32 share price is swapping hands for $2.89, up 0.7% from yesterday’s close of $2.87. 

Let’s take a close look at what the company has been up to over the last quarter.

The quarter that’s been for South32

The South32 share price is in the green today after the mining company reported a good quarter for its cash position.

This was bolstered by increased commodity prices, strong operating performance and a reduction in working capital. South32’s cash balance increased by US$242 million over the quarter, leaving it with US$517 million in its coffers. 

South32 received US$46 million of net distributions from its manganese equity-accounted investments. As well, US$40 million in cash and US$15 million in shares flowed in from selling assets to Elemental Royalties Corp.

The company executed an on-market buy-back of 42 million of its own shares for an average of $2.78 apiece during the quarter. It also paid US$66 million worth of fully franked dividends.

In further news impacting the South32 share price, the company advised its operating costs are continuing according to plan and capital expenditure guidance of US$515 million is unchanged.

South32 paid US$28 million towards exploration programs and development options in the nine months ended March 2021.

The company further advised US$23 million of expenditure is to be incurred by the company’s Dendrobium Next Domain (DND) life extension project over the coming quarter. Expenditure guidance for the project was previously withdrawn after South32’s DND plan was rejected by the Independent Planning Commission.

This quarter, South32 has continued its pre-feasibility study for the Taylor Deposit with work expected to be finished next quarter. It’s also conducting a scoping study at the Clark Deposit which is expected to be finished in the first half of the 2022 financial year.

The company is also continuing its divestment of South Africa Energy Coal. It will no longer be providing capital expenditure guidance for the project. The miner has continued to pay for the project this quarter to underpin its sustainability.

While the risk of COVID-19 is ongoing across most of South32’s explorations, drilling and fieldwork continued this quarter.

Commentary from management

South32 CEO Graham Kerr commented on the quarter that’s been for the company, saying:

We continue to reshape our portfolio, moving closer to the divestment of South Africa Energy Coal while progressing studies for our base metals development options.

Looking ahead, we expect the global economic recovery combined with fiscal stimulus to continue, driving a rebound in metal demand and sustaining higher prices for many of our key commodities.

South32 share price snapshot

South32 shares have been performing well on the ASX so far this year.

Currently, the South32 share price is up 15.4% year to date. It’s also up almost 52% over the last 12 months.

The company has a market capitalisation of $13.6 billion, with approximately 4.7 billion shares outstanding.

More reading

• History is on the side of the battered AMP (ASX:AMP) share price as it plans its demerger
• Top broker picks ASX shares next in line for a profit upgrade
• South32 (ASX:S32) share price on watch after being added to conviction buy list
• 5 things to watch on the ASX 200 on Thursday
• Acquisitions and spin-offs put these 3 ASX shares on brokers’ “buy” list

Motley Fool contributor Brooke Cooper 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 I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below. Here’s why these brokers are bearish on these ASX shares:

Commonwealth Bank of Australia (ASX: CBA)

According to a note out of Morgan Stanley, its analysts have retained their underweight rating but lifted their price target on this banking giant’s shares to $83.00. The broker is very positive on the banking sector and suspects that the earnings upgrade cycle will continue. This is expected to support a dividend recovery, much to the delight of income investors. Nevertheless, it believes the Commonwealth Bank share price is overvalued at the current level and sees more value in some of its peers. The Commonwealth Bank share price is trading $88.55 today.

Iluka Resources Limited (ASX: ILU)

A note out of Credit Suisse reveals that its analysts have retained their underperform rating and $5.70 price target on this mineral sands producer’s shares. This follows the recent release of Iluka’s quarterly update. While Credit Suisse notes that zircon and rutile sales were strong, it was disappointed by the performance of the Sierra Rutile operation. Unfortunately, it is expecting the operation to continue to struggle and weigh on its performance. The Iluka share price is fetching $7.49 on Tuesday.

OZ Minerals Limited (ASX: OZL)

Another note out of Credit Suisse reveals that its analysts have retained their underperform rating and $16.15 price target on this copper producer’s shares. This follows the release of its quarterly update last week. It notes that OZ Minerals’ production during the quarter was softer than expected due to issues at the Carrapateena mine. And while it is expecting a stronger performance in the current quarter, it isn’t enough for a change in rating. Credit Suisse continues to believe its shares are expensive at the current level. The OZ Minerals share price is trading notably higher than this price target at $24.62 today.

More reading

• What’s behind the rising BHP (ASX:BHP) share price today?
• What could APRA’s climate guidance mean for ASX bank shares?
• Is the Commonwealth Bank (ASX:CBA) share price a buy at $90?
• CommBank (ASX:CBA) share price hits new 52-week high
• Is the CBA (ASX:CBA) share price a buy for a recovery of dividends?

Motley Fool contributor James Mickleboro 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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Starpharma Holdings Limited (ASX: SPL) shares are having a mixed morning after the Aussie healthcare group’s latest quarterly update. The Starpharma share price opened today’s session 5.88% higher at $1.80.

However, since then, the company’s shares have been swinging between red and green. Currently, Starpharma shares are trading at $1.715, up 0.88% for the day so far.

Let’s take a look at how the company has been performing.

What’s impacting the Starpharma share price?

Starpharma today reported its quarterly cash flow and activities report for the period ended 31 March 2021.

The company reported net operating cash outflows of $5.8 million which included significant investment in DEP/VIRALEZE clinical trials. VIRALEZE product manufacturing and launch costs also contributed to the result.

In February, Starpharma reported a new research agreement with Merck & Co. Inc using its proprietary DEP technology for dendrimer-based antibody drug conjugates (ADCs). The Starpharma share price shot 15.7% higher on 12 February following the announcement.

The company also signed an exclusive arrangement for its VIRALEZE product on 25 March with LloydsPharmacy/McKesson UK. VIRALEZE was the fastest-selling product on record on LloydsPharmacy.com in its first week following the 29 March launch. 

The Starpharma share price is gradually edging higher today following the company’s update on its DEP trials. Phase 2 DEP irinotecan trials “continue to progress well” with 40 patients now recruited. Starpharma also reported “encouraging efficacy signals observed” in its DEP docetaxel clinical trials.

Starpharma CEO Dr Jackie Fairley said, “It has been an important quarter for Starpharma with multiple value-adding milestones achieved in the DEP portfolio, in addition to the commercialisation and launch of VIRALEZE”.

AstraZeneca significantly expanded its clinical program for DEP AZD0466 during the quarter. That will now include a “multi-centre global phase 1 study with a focus on haematological tumours” aimed at rapid development and approval of the anti-cancer drug.

Foolish takeaway

The Starpharma share price is edging higher on the back of this morning’s quarterly update. Shares in the Aussie pharma group jumped almost 6% at the open before retreating to their current levels.

More reading

• Why the Starpharma (ASX:SPL) share price is up 27% in 2021
• Why the Starpharma (ASX:SPL) share price is tumbling lower today

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Starpharma Holdings Limited. The Motley Fool Australia has recommended Starpharma Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Starpharma (ASX:SPL) share price edges higher on update appeared first on The Motley Fool Australia.

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The A2 Milk Company Limited (ASX: A2M) share price continued its demise yesterday, hitting a fresh, 3-year low. Shares in the infant formula producer are down 37% year-to-date as the company battles multiple headwinds.

So, what is fuelling the fall of the A2 Milk share price and when will it recover?

At the time of writing, the A2 Milk share price is down 2.45%, trading at $6.98. 

China souring A2 Milk share price

Despite being a perennial market darling, a2 Milk has struggled to absorb the full impact of the COVID-19 pandemic. With a large portion of the company’s sales relying on Chinese consumers, border closures and trade regulations have hampered the company.

Multiple earnings downgrades served as a catalyst for the A2 Milk share price to tank. The company attributed the poor performance to weakness in the daigou and cross-border e-commerce (CBEC) channels. With no tourism and international students coming into Australia, both the retail and corporate daigou markets have struggled.

This was reflected in the company’s half-year results which were released earlier this year. For the six months ended 31 December, the company reported a 16% decline in revenue to NZ$677.4 million. In addition, A2 Milk posted a 32.2% decline in earnings before interest, tax, depreciation and amortisation (EBITDA) to NZ$178.5 million.

Recently, analysts at broker Morgan’s painted a dour outlook for a2 Milk. Despite being supporters of the company, analysts downgraded a2 Milk’s shares to a hold rating and issued a  revised price target of $8.34.

Outlook for the share price

Although Morgans have a negative outlook for A2 Milk, analysts at broker UBS expect the contrary. Recently, analysts from the broker issued a buy rating on A2 Milk citing a meaningful recovery in indirect infant formula sales over the next 2 years. Analysts also noted that the company could make substantial gains in market share in China through offline roll-outs and expansion of a free trade zone.

Currently, A2 Milk is one of the most shorted companies on the ASX, with a 5.9% short holding. As long as international borders remain closed, A2 Milk will be dealt with a difficult trading environment. Therefore, the obvious catalyst for the company’s share price would be a re-opening of international borders. However, there is also the notion of demand as Chinese consumers could have shifted to domestic products during the pandemic. Another hurdle for A2 Milk is whether the Chinese government will impose tariffs or other restraints on its products.

More reading

• Why these ASX shares just hit 52-week lows or worse
• Bubs (ASX:BUB) share price hits multi-year low but could keep sinking
• This broker thinks you should buy the Kogan (ASX:KGN) share price dip
• Top brokers name 3 ASX shares to sell next week
• Why a2 Milk, Centaurus Metals, Kogan, & Youfoodz are sinking today

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post The A2 Milk (ASX: A2M) share price is at a 3-year low appeared first on The Motley Fool Australia.

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