The Cleanspace Holdings Ltd (ASX: CSX) share price halved in value yesterday from $4.430 to $1.985 after its sales update significantly missed expectations. At the time of writing, the Cleanspace share price has fallen further to $1.91, down 4.03%. 

Why the share price got chopped in half

The market was quick to judge and also punish the Cleanspace share price. This comes after the company announced that it had experienced lower sales over the current quarter. In addition, Cleanspace is expecting Q3 FY21 sales to be approximately $7 million. 

While the initial outbreak of COVID-19 may have created tailwinds for the respiratory protection equipment (RPE) manufacturer, the opposite is now unfolding as the global vaccine rollout gains momentum. Additionally, customer and government spending constraints, and stockpiling of low-tech disposable masks have seen sales slow in the second half.

CleanSpace made its ASX debut on 23 October with a listing price of $4.41 per share. Its shares closed at $7.420 on its first day or a return of 68% for those that managed to participate in the initial public offering (IPO). 

Yesterday’s selloff would have sent IPO investors from break-even to losing half their investment at open. 

Is the CleanSpace share price on sale?

Bell Potter released an update for Cleanspace shares after the disappointing sales update. The broker retained a hold recommendation with a 12-month target price of $2.28, down from $6.75. 

The magnitude of sales weakness was significantly greater than Bell Potter and consensus expectations. The broker was forecasting $15 million in sales for Q3 FY21, compared to the announced $7 million. 

The broker’s commentary notes a high level of uncertainty in the short term as hospitals have diverted resources to vaccine rollout programs and away from new equipment purchases. As a result, Bell Potter anticipates “ongoing and longer-term sales weakness in the Hospital segment”. 

While the near-term may be bleak for the CleanSpace business, Bell Potter still views the company as a “quality business, with a differentiated product, and are positive on management’s expansion of the sales and marketing teams to drive improved sales”. In the long run, the broker expects a solid recovery and growth compared to current levels. 

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia has recommended CleanSpace Holdings 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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Warren Buffett has a long and successful track record when it comes to generating high returns from investing in the stock market.

One of the key reasons for his success could be his focus on buying companies with wide economic moats. In fact, this is one of his key tenets of investing and forms a large part of his investment strategy.

By adopting a similar approach, it may be possible to reduce risk and generate high returns over the long run.

Warren Buffett’s focus on economic moats

When buying a company, Warren Buffett has historically looked for businesses with a competitive advantage over their peers. He terms this an ‘economic moat’.

An economic moat is clearly very subjective. One investor may have a different viewpoint than another on whether a specific company enjoys a competitive advantage over its peers.

However, it often includes those companies which enjoy strong brand loyalty that means their customer base is more likely to stick with their products. Or, it could be a business that has a unique product that sets it apart from rivals.

Similarly, a business with a lower cost base than its rivals may be able to generate higher profitability in the long run.

Of course, Warren Buffett has many years of experience in identifying companies with wide economic moats.

However, by comparing the financial performance of companies, their track records in a variety of operating conditions and contrasting their business models, an investor may gain an insight into whether they have a competitive advantage over peers.

Economic moats and risk/reward opportunities

Warren Buffett’s focus on economic moats could increase his return potential. For example, a business with a loyal customer base may be able to charge higher prices for its goods.

Similarly, lower costs or a unique product may equate to higher margins. Over time, they can allow a company to command a higher valuation and rising share price.

Meanwhile, companies with economic moats may also offer less risk than their peers. For example, they may enjoy more robust demand during periods of weaker operating conditions. This may help to support their bottom lines and could make them more financially sound than their peers.

This point may be especially relevant amidst current economic difficulties that may persist beyond the short run.

Buying stocks with competitive advantages today

Due to the uncertain economic outlook, it may be more difficult than usual to follow Warren Buffett’s strategy of focusing on companies with economic moats. It remains unclear which sectors and companies will prosper in what could be a very different economy post-coronavirus.

As such, building a diverse portfolio could be more important than ever. In doing so, an investor can maximise their returns and limit risk over the coming years.

More reading

• Amazon and ABB partner to help push EV adoption
• Where next for the Treasury Wine (ASX:TWE) share price?
• Here’s why the Spirit (ASX: ST1) share price is up 5% this morning
• What is going on with the Rhythm (ASX:RHY) share price today?
• The FINEOS (ASX:FCL) share price is now 30% off its August highs

Motley Fool contributor Peter Stephens 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.

A collaboration between diversified industrial AbbVie Inc (NYSE: ABBV) and Amazon.com, Inc. (NASDAQ: AMZN) is likely to increase electric vehicle (EV) adoption among transportation companies and fleet operators.

That’s the key takeaway from the recently announced collaboration between ABB and Amazon’s cloud computing business, Amazon Web Services (AWS). ABB will bring its know-how in energy management and charging technology to AWS’ cloud technology, software, and analytics capability to create “a cloud-based digital solution for the real-time fleet management of EVs,” according to the press release.

The new solution will roll out in the back half of 2021 and use advanced data analytics and machine learning to optimize EV fleet performance. For example, it will enable fleet operators to manage the charging of their fleet in accord with optimizing routes for EVs.

Given the reality that an all-EV fleet will probably contain a range of vehicles, it’s likely that fleet operators will be looking for software to help them centrally manage a diverse set of EVs with different charging characteristics.

The ABB and AWS solution is intended to give fleet owners greater confidence in making the switch. For examples of how transportation companies are warming to EVs, consider that UPS has ordered 10,000 purpose-built EVs. Meanwhile, FedEx is committed to only buying EVs for its FedEx Express parcel pickup and delivery fleet by 2030. Management plans to have its entire parcel pickup and delivery fleet running on zero-emission EVs by 2040.

All told, the transition to EVs is real among fleet operators, and the ABB and AWS solution is likely to help accelerate it.

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

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Lee Samaha 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 Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon. 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 Treasury Wine Estates Ltd (ASX: TWE) share price is pushing higher on Wednesday.

In morning trade, the wine company’s shares are up over 1% to $10.48.

Despite this gain, the Treasury Wine share price is still down over 20% from its 52-week high.

Is the Treasury Wine share price good value now?

While the Treasury Wine share price may be trading well off its highs, one broker that doesn’t believe it is good value is Goldman Sachs.

According to a note released this morning, the broker has retained its neutral rating and $9.30 price target.

This price target implies potential downside of 11% over the next 12 months.

What did Goldman say?

Goldman Sachs notes that China’s Ministry of Commerce (MOFCOM) has put tariffs on Australian wine for the next five years.

In response to this, the broker has now revised its earnings forecasts to factor in the five-year tariff impact.

Goldman commented: “We revise EBITS forecasts by -6.6% and -9.1% respectively over FY22 and FY23 translating to a -8.1% and -10.9% impact at the NPAT level. We expect the group to maintain dividend payout at c. 65% in the short term.”

Based on this, it currently estimates that the company’s shares are changing hands at 26x estimated FY 2022 earnings. Which it appears to see as a bit rich given its uncertain outlook.

Why did its price target remain the same?

Although the earnings revisions have resulted in a reduction in its fundamental valuation, this has been offset by an increase in Goldman’s M&A rank. This is essentially the likelihood of the company being taken over.

It explained: “These earnings revisions result in a fundamental valuation revision to A$8.65 vs. A$9.30 previously. However, we raise our M&A rank on the stock to 2, and introduce a 15% weighted M&A valuation to our TP. Overall, our 12 month TP remains unchanged at A$9.30. We maintain our Neutral rating on TWE.”

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• Treasury Wine (ASX: TWE) share price sinks lower on China update

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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 Spirit Technology Solutions Ltd (ASX: ST1) share price is up this morning, after news of the company’s biggest acquisition to date. The telecom company has acquired software company Nextgen, saying it expected the acquisition to generate $36 million of revenue.

At the time of writing, the Spirit share price is up 5.7%, trading at 37 cents. 

Let’s look closer at Spirit’s new acquisition.

Acquisition of Nextgen

Spirit ended a two-day trading halt this morning with news of its latest acquisition.

According to the company’s release, its purchase of Nextgen has doubled its business to business (B2B) customer base and brought 100 new salespeople to Spirit. Those salespeople will continue to sell Nextgen products while cross-selling Spirit’s internet, cloud, voice, mobiles and cybersecurity products.

To purchase the B2B software company, Spirit conducted a $23.8 million placement to institutional and sophisticated investors. It also lifted its debt facility with the Commonwealth Bank of Australia (ASX: CBA) from $15 million to $25 million.

The acquisition’s total cost is capped at $50 million, with $10 million of that to be deferred. 

All vendors are to remain with Spirit for at least 18 months (on a performance-based earnout) and will take 30% of the consideration in Spirit shares and 70% in cash. The cash component will be funded from the capital raising and CBA debt facility.

According to Spirit’s announcement, Nexgen expects to record $7.2 million to $7.6 million of EBITDA through the 2021 financial year.

The acquisition news comes nearly a fortnight after Spirit announced it would shift its focus to its business market, divesting its consumer infrastructure assets.

Spirt share price snapshot

Today’s news may be the boost the Spirit share price needs to dig out of its 2021 ASX slump. It has dropped by 7.5% year to date. However, the Spirit share price is still up by 164.29% over the last 12 months.

Spirt has a market capitalisation of around $191 million, with approximately 547 million shares outstanding.

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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 SPIRIT TC FPO. The Motley Fool Australia has recommended SPIRIT TC 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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The Rhythm Biosciences Ltd (ASX: RHY) share price slid at market open today despite announcing a positive update in regards to its accreditation. In early morning trade, the medical device company’s shares are swapping hands for $1.09, down 0.9%. However, at the time of writing, the Rhythm share price has recovered slightly, trading at $1.14, up 3.18%.

What did Rhythm update the ASX with?

Investors appeared unfazed by the company’s latest update, sending the Rhythm share price lower within the first hour of trade.

According to this morning’s release, Rhythm advised that it has continued to retain its ISO13485 certification. The internationally recognised accreditation is seen as crucial to obtain regulatory approvals and gain market entry.

Furthermore, ISO13485 is seen as the quality standard for in-vitro diagnostics and medical devices. It ensures the consistent design, development, production, installation, and sale of medical devices that are safe for use.

The British Standards Institution (BSI) also conducted an annual audit of Rhythm’s ISO13485 certification, which marks the third year of accreditation.

What did the CEO say?

Rhythm CEO Glenn Gilbert touched on retaining the ISO13485 certification, saying:

Having achieved and maintained ISO certification for a number of years now is a fantastic validation for the rigour and consistency the Company has established as part of our development program for ColoSTAT.

This is also a crucial part of our market entry strategy that ensures we have robust systems and processes in place that underpin our disruptive and transformative lifesaving cancer detection technology.

About the Rhythm share price

Rhythm develops and commercialises Australian medical diagnostics technology for sale in domestic and international markets. The company’s ColoSTAT is the first proposed product-in-development, intended to accurately test and detect the early stages of colorectal cancer.

The Rhythm share price has rocketed to more than 2,300% in the past 12 months, reflecting positive investor sentiment. Additionally, the company’s shares reached an all-time high of $1.675 at the start of this month, before treading lower.

On valuation grounds, Rhythm commands a market capitalisation of roughly $221 million, with 201.5 million shares on issue.

More reading

• The Rhythm (ASX:RHY) share price surges on cancer testing milestone

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 share price of ASX insurance software company FINEOS Corporation Holdings PLC (ASX: FCL) has been on the decline recently – dropping almost 30% from its August 52-week high of $5.75 to $4.01 at the time of writing.

It joins a number of ASX technology and software companies that surged to new highs last year but have so far underperformed in 2021.

Company background

FINEOS is a Dublin-based company that develops a suite of software for the life, accident and health insurance industries.

Its platform is capable of supporting insurers in the end-to-end processing of claims, including quotes, billing and payments.  It can also provide insights through reporting and analytics.

FINEOS’ customer-centric software automates and streamlines processes for insurance providers and aims to be an all-in-one replacement for legacy insurance administration platforms.

Financials

The company’s recent financial performance has been a bit of a mixed bag. For the first-half FY21, the company reported top-line revenue growth of a touch over 30% versus the prior comparative period to €52.6 million ($81.2 million).

However, statutory earnings before interest, tax, depreciation and amortisation expenses (EBITDA) declined by 53.6% to $4.9 million and FINEOS reported a net loss after tax of $7.8 million, down from a net profit after tax of $0.15 million in first-half FY20.

The losses came due to an increase in operating expenses, which jumped 43.6% to $47.3 million. FINEOS acquired US-based insurance software company Limelight Health during the half for US$75 million. This increased personnel costs during the period due to the additional headcount brought over from Limelight.

Outlook

FINEOS reaffirmed its full-year outlook for revenue in the range of $157 million to $162 million. It will be hoping that it can keep its costs under control over the second half, or else shareholders may start to doubt the wisdom of the Limelight acquisition.

Even if the Limelight acquisition is revenue accretive, if that benefit is outweighed by ballooning personnel costs it may continue to drag on the company’s bottom line growth.

Other recent news

In its first-half results announcement, FINEOS teased that it had signed a new client in the Australia and New Zealand region – which turned out to be New Zealand-based insurer Partners Life.

Following a “comprehensive market evaluation”, Partners Life selected FINEOS’ platform to process its insurance and medical claims. The deal is for a 5-year initial term.

Where next for the FINEOS share price?

FINEOS joins a growing list of COVID-19 market darlings – mostly technology companies – that enjoyed stellar share price growth last year but have run out of gas in 2021.

Companies like Bigtincan Holdings Ltd (ASX: BTH), Megaport Ltd (ASX: MP1) and Damstra Holdings Ltd (ASX: DTC) have all followed this pattern – with recent declines spurred by major selloffs on the tech-heavy NASDAQ index in the US.

It’s hard to say where the FINEOS share price will head next. It already jumped as high as $4.75 earlier this month before dropping back down again. This level of volatility could be the new normal – at least over the short-term – as the market continues to try to work out what effect a post-COVID economic recovery might have on tech companies (like FINEOS) that actually grew during the pandemic.

Either way, all these tech companies are still worth watching closely this year – there could be some potential bargains available for opportunistic investors.

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Rhys Brock owns shares of FINEOS Holdings plc, Damstra Holdings Ltd, BIGTINCAN FPO and MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends BIGTINCAN FPO, Damstra Holdings Ltd, and MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends FINEOS Holdings plc. The Motley Fool Australia has recommended BIGTINCAN FPO, Damstra Holdings Ltd, FINEOS Holdings plc, and MEGAPORT 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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The Opthea Ltd (ASX: OPT) share price is up 8.39% to $1.55 this morning. The rise comes after receiving an initial Pediatric Study Plan (iPSP) waiver from the US Food and Drug Administration (FDA) for OPT-302. 

Opthea is committed to improving vision in patients suffering from retinal eye diseases. OPT-302 is the company’s lead product candidate. The product also has the potential to address the unmet medical need within the eye disease market. 

Another milestone for the Opthea share price 

An iPSP is a pre-requisite for a marketing application of new medicine for a biopharmaceutical company in the US. Additionally, the iPSP provides the FDA with details regarding the company’s proposed strategy. In particular, for the investigation of a new medical product in a pediatric population. 

On Wednesday, Opthea received an iPSP waiver for OPT-302. This applied to all subsets of the pediatric population (full pediatric age group from birth to <17 years) for the treatment of wet age-related macular degeneration (wet AMD), a leading cause of visual impairment in the developed world in people over the age of 50. 

Wet AMD affects approximately 1 million people in the United States and 2.5 million in Europe. Furthermore, the company believes that the global aging population will result in a significant increase in the number of wet AMD cases. The disease affects central vision and the ability to see fine detail. Wet AMD is caused by abnormal growth and leakage of blood vessels. This occurs at the back of the eye, which results in degeneration of the retina and vision loss. 

Comments from the CEO

The iPSP waver means Opthea will not have to conduct an additional study in the pediatric population. Opthea CEO, Dr. Megan Baldwin commented on the waiver: 

The agreed iPSP waiver is an important regulatory milestone in the US that is required to be completed before Opthea is able to submit a marketing application for OPT-302 to the FDA. Opthea will continue the process to further fulfilling regulatory requirements by focusing on our pivotal Phase 3 clinical trials in adult patients that are designed to support potential marketing approval of OPT-302 for the treatment of wet AMD.

 

More reading

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Motley Fool contributor Kerry Sun 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 Mesoblast limited (ASX: MSB) share price is pushing higher on Wednesday morning.

At the time of writing, the biotechnology company’s shares are up 1% to $2.19.

Why is the Mesoblast share price pushing higher?

Today’s gain could be in relation to an update the company released this morning highlighting its recent developments and upcoming milestones.

In respect to the former, Mesoblast reminded shareholders that it recently strengthened its balance sheet with a US$110 million private placement. This left it with a pro-forma cash balance of US$187.5 million at 31 December.

It also notes that this private placement was led by US investor group SurgCenter Development. It is one of the largest private operators of ambulatory surgical centres in the US, specialising in spine, orthopaedic, and total joint procedures.

Another positive recent development was its phase three trial of rexlemestrocel-L. Results in 404 patients with chronic low back pain due to degenerative disc disease showed that a single injection with hyaluronic acid carrier may provide at least two years of pain reduction, with opioid sparing activity in patients using opioids at baseline.

Finally, the company also reminded investors that it signed a license and collaboration agreement with Novartis for the development, manufacture, and commercialisation of remestemcel-L. This agreement’s initial focus is on the development of the treatment of acute respiratory distress syndrome (ARDS), including that associated with COVID-19.

However, it has warned that the agreement remains subject to certain closing conditions, including time to analyse the results from the bitterly disappointing COVID-19 ARDS trial.

What milestones lie ahead?

The next few months look set to be equally busy for Mesoblast.

Management advised that it is in discussions with potential strategic partners to develop and commercialise rexlemestrocel-L and remestemcel-L for the large market opportunities of chronic heart failure, chronic lower back pain, and respiratory diseases.

In addition, it expects to meet with the United States Food and Drug Administration (FDA) under a well-established regulatory process. This is to discuss the fastest pathway to licensure of remestemcel-L in the treatment of children with steroid-refractory acute graft versus host disease.

Also on the horizon are the clinical results from remestemcel-L trials in COVID-19 ARDS and medically refractory Crohn’s disease or ulcerative colitis.

Furthermore, Mesoblast intends to meet with FDA to discuss a potential pathway for approval of rexlemestrocel-L in patients with chronic heart failure. This is based on the observed reduction in mortality and morbidity in the chronic heart failure Phase 3 trial.

Finally, Mesoblast again intends to meet with FDA, this time to discuss a potential pathway for approval of rexlemestrocel-L in patients with chronic discogenic lower back pain. This is based on the aforementioned observed durable reduction in pain and opioid sparing activity in the Phase 3 trial.

With the Mesoblast share price down 62% from its 52-week high, shareholders will no doubt be hoping these activities are successful and help drive it higher again.

More reading

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• What’s weighing on the Mesoblast (ASX:MSB) share price lately?
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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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The Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price is on the rise this morning following a partnership agreement. At the time of writing, the biopharmaceutical company’s shares are up 1.92% to $2.66.

What did Paradigm announce?

Paradigm shares are on the move today after updating the ASX with a positive announcement.

According to this morning’s release, Paradigm advised that it has entered into a collaboration agreement with bene pharmChem (Bene). This follows a recently updated exclusive licence and supply deal between both parties in September last year.

Furthermore, the new agreement will seek to co-fund new R&D projects to unlock the potential benefits of Pentosan Polysulfate Sodium (PPS). Paradigm and Bene have also committed to work together on new intellectual (IP) property ownership to protect future innovations. This will be managed by the newly created, Joint Steering Committee. The purpose of the committee is to identify new projects, intended outcomes, and attribute IP ownership.

PPS, an injectable solution, aims to treat musculoskeletal disorders caused by injury, inflammation, aging, degenerative disease, infection or genetic predisposition. The semi-synthetic drug is packaged as Zilosul, and has shown improvements in pain reduction, joint function, and the prevention of cartilage damaging joints.

Additionally, Paradigm highlighted the importance of its longstanding relationship with Bene, the only approved manufacturer/supplier of PPS in the United States. While the new agreement establishes jointly funded activities, Paradigm will retain exclusive commercial rights to all information and developments.

Management commentary

Bene pharmaChem co-managing director Dr. Harald Benend commented on the upcoming trials for PPS:

Bene is excited by the imminent commencement of the phase 3 program for osteoarthritis and will be assisting Paradigm in any way possible to achieve the goal of successful registration and commercialisation of Zilosul for OA (osteoarthrosis).

Paradigm CEO and acting chair Paul Rennie also added:

We are eagerly awaiting the commencement of the pivotal phase 3 program for osteoarthritis; the market is eager for a safe and effective non-opioid therapy to relieve the burden of pain in osteoarthritis, PPS is showing great promise to meet this need.

About the Paradigm share price

The Paradigm share price has gained over 60% in the past 12 months, and is slightly up 2% year-to-date. The company’s share price also reached a 52-week high of $3.88 in late June of 2020.

Based on the current share price, Paradigm has a market capitalisation of around $589 million, with 225.8 million shares outstanding.

More reading

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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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