There are a few S&P/ASX 200 Index (ASX: XJO) shares that are seeing a lot of growth despite, or because of, the COVID-19 pandemic.

However, the below two global businesses have been generating long-term growth and expect growth after the pandemic subsides:

Sonic Healthcare Ltd (ASX: SHL)

Sonic is one of the biggest healthcare shares on the ASX. It is a major pathology business with laboratories all around the world.

It’s currently operating in Australia, Belgium, Switzerland, the UK, Germany, the USA, Ireland and New Zealand.

Sonic’s COVID testing capability continues to play an important part in controlling the control. How important? At the time of its FY21 half-year result release, it had done over 18 million COVID PCR tests across the world.

Whilst the global business revenue (excluding COVID testing) half-year revenue was down 1%, it was hurt significantly less than the initial COVID lockdowns. But the COVID-19 testing revenue contributed significantly. HY21 revenue grew 33% to $4.4 billion, earnings before interest, tax, depreciation and amortisation (EBITDA) rose 89% to $1.3 billion and net profit rose 166% to $678 million.  

The ASX 200 COVID-19 ASX share saw margin accretion in both laboratory and imaging operations because the company was able to utilise its existing infrastructure. That includes specimen collections facilities, courier networks, laboratories and other facilities, equipment, IT, management, staff and supply chains.

Sonic is now focusing on further growth opportunities, including acquisitions, contracts and joint ventures, supported by its “very strong” balance sheet. Management revealed the business is bidding on significant opportunities in Australia, the UK, the USA and Canada.

According to Commsec, the Sonic share price is valued at 24x FY22’s estimated earnings.

Ansell Limited (ASX: ANN)

Ansell is one of the largest global makers of protective gear, specialising in gloves. It has customers in over 100 countries.

It has two main segments – industrial and healthcare. As you can imagine, the healthcare division has seen strong growth over the last year.

Ansell has successfully managed COVID-19 risks at its manufacturing locations, resulting in limited downtime. It has managed to implement price increases to offset raw materials and outsourced supplier costs.

Its non-COVID units have seen a faster and stronger comeback than previously foreseen.

The ASX 200 COVID-19 share has managed to continue to supply customers with product despite the tight raw material supply and freight constraints. Lower travel and marketing costs are also helping profitability.

Ansell is investing in key capacity expansion to meet the increased demand. These expansions are on track.

Over the longer-term, Ansell is expecting more growth even after a high level of vaccinations because of enhanced safety practices at plants and hospitals, better protection awareness leading to increased glove use per capita (particularly in emerging markets), elevated research and testing activities worldwide, improving industrial activity and the potential need for annual COVID-19 vaccinations.

Ansell is expecting the FY21 second half sales growth to be strong despite the solid performance of the prior corresponding period. It’s expecting earnings per share (EPS) to be in the range of US$1.92 to US$2.02.

More reading

• ASX 200 up 1.1%: A2 Milk crashes, Crown-Star $12bn merger, Woolworths update
• ASX 200 Weekly Wrap: Bank shares push ASX 200 towards all-time high
• 5 things to watch on the ASX 200 on Monday
• 2 ASX 200 shares to buy for dividends
• These were the best performing ASX 200 shares last week

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell Ltd. and Sonic Healthcare 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 Digital Wine Ventures Ltd (ASX: DW8) share price is having a rough day at trading. At the time of writing, shares in the online wine company are trading for 12 cents each – down 12.0%.

The precipitous fall comes after the company provided an update on its trading during April.

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

Digital Wine share price crashes on lower sales

In a statement to the ASX, Digital Wines says it sold just over 23,000 cases of wine in April. The company was at pains to point out that this figure is up 580% on the same time last year. However, sales are down 9.1% over March. Back in March, sales increased 540% month on month (MoM). However, orders processed in April are up 350% MoM compared to 504% MoM in March. From March to April, orders processed also fell 22.5% to around 9,500 orders.

Digital Wine largely attributed the fall in sales and orders processed in April to “the extended vintage preoccupying many winemakers.”

Investors did not seem to be buying this, however, judging by the Digital Wine share price.

Other announcements

Along with the sales figure, Digital Wine also had another few announcements in today’s update.

Firstly, 19 additional suppliers have signed with the company since its last update in March. This includes 14 producers and 5 importers/wholesalers.

Digital Wine also reports it has “soft launched” its direct-to-trade marketplace on its Wine Depot platform. First orders were delivered in Sydney and Melbourne last week. Over the next few weeks, the company will progressively roll out access to the trading floor in Sydney before making the platform available in Melbourne.

Finally, the company received a liquor licence allowing Wine Depot to sell alcohol to the general public. With the licence secured, Digital Wine will launch an invitation-only membership program called Insider Trading. Shareholders, staff, and suppliers will be able to purchase wine directly from the business at discounted rates.

Digital Wine share price snapshot

Over the past 12 months, the Digital Wine share price has increased an astonishing 1,733.33%. In mid-April, shares reached an all-time high of 21 cents each.

Digital Wine Ventures has a market capitalisation of $176.3 million.

More reading

• What’s with the Digital Wine (ASX:DW8) share price today?
• Why is the Digital Wine (ASX:DW8) share price tumbling despite strong results?

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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Facebook, Inc. (NASDAQ: FB) is investing $15 million into Australia’s regional and digital newsrooms in its latest grant funding.

Facebook told The Motley Fool Australia it expects the funding will help Australian publishers and independent journalists to produce news of public interest.

The grants will also be available to regional, rural and diverse news publications to help them develop new products and strategies to boost their reach and revenue.

$15 million for regional newsrooms

Facebook will partner with The Walkley Foundation to distribute the grants among Australian newsrooms.  

Facebook Australia’s head of news partnerships, Andrew Hunter, commented on the value of funding smaller Australian newsrooms, saying:

Facebook will invest these funds where they are needed most. It will go to the newsrooms that are doing the important work of telling stories that matter to local, regional and rural communities. It will also help diverse newsrooms and independent journalists producing news of public interest value across Australia. We want to help smaller publishers develop new products and strategies to expand reach and revenue, ultimately creating a sustainable path for the news industry.

The Walkley Foundation’s CEO Louisa Graham, also commented on the funding:

We are currently in discussions with Facebook to partner on a public interest journalism fund that will help smaller publishers and independent journalists produce news of public interest value across Australia.

Facebook said it hopes the $15 million investment will help to build its partnership with The Walkley Foundation over the next 3 years.

The social media platform stated it will continue to back best practice and ethical journalism through its support of the Walkley Foundation’s awards program this year.

The Walkley Foundation will be releasing more information on Facebook’s latest investment in Australian news media over the coming weeks.

Facebook’s funding of Aussie news

Facebook’s soon-to-be-announced grant project will be the largest the social media giant has entered into in Australia.  

The $15 million worth of grants follow multiple, smaller, investments from Facebook into Australian news publications over recent years.

Last year, Facebook invested $2 million into journalism in the Asia Pacific region as a part of its Journalism Project’s COVID-19 News Relief Fund Program. 17 Australian news publications were involved in the funding, each receiving grants worth between US$10,000 and US$60,000.

Michael Waite, founder of the Naracoorte News, which received a COVID-19 News Relief Fund Program grant, was quoted by Facebook’s Journalism Project. Waite said:  

The grant funds… provided an incredibly important independence strength to our newspaper. The funds enabled us to focus on local stories and serve the community with local council coverage, without the concern of needing council advertising.

At the request of the communities in the surrounding areas, this paper expanded to report on more local councils… Our paper and the community are seeing the benefits each week.

Facebook also invested $5 million into Australian news producers when it brought its Journalism Project News Accelerator to Australia in 2019.

Facebook’s still making deals with Australian newsrooms

Following the short-lived removal of Australian news from Facebook in February 2021, Facebook has been making deals with Australian news producers in an effort to work within the Australian government’s new media code.

Soon after the Australian government extended the negotiation period of its world-first News Media Bargaining Code, Facebook and Seven West Media Ltd (ASX: SWM) struck a deal to see Seven’s news appear on the social media platform.

Following in Seven’s footsteps, News Corporation (ASX: NWS) and Nine Entertainment Co Holdings Ltd (ASX: NEC) signed deals with Facebook in mid-March.

Since then, Australian Community Media, Solstice Media, Private Media, and Schwartz Media have each entered into agreements with Facebook to see their content published on the platform.

According to the AFR, Facebook and the Guardian Australia are still working towards an agreement. Discussions between the two bodies previously stalled due to financial issues.

More reading

• Why Adore Beauty, Appen, HUB24, & News Corp shares are charging higher
• ASX 200 up 0.45%: Macquarie full year results & REA Group Q3 update
• News Corp (ASX:NWS) share price rises on latest results
• This ASX tech ETF might be in the buy zone today. Here’s why
• Brokers point to these ASX 200 shares to beat the market in May

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. 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.

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The Regional Express Holdings Ltd (ASX: REX) share price is soaring. At the time of writing, the regional airline operator’s shares are swapping hands for $1.34 apiece, up 4.2%.

This comes after the company provided a business update on its operations for the FY21 period.

How is Regional Express performing so far?

Investors appear upbeat on the company’s progress, sending Regional Express shares on the rebound from its 6-month low.

In its announcement, Regional Express advised that overall demand across its business is sitting at 60% from pre-COVID levels. However, some states in Australia are performing better than others, with Queensland and Western Australia taking the lead.

The company noted that it’s carefully expanding its regional network with capacity growth roughly 5% ahead of forecasted demand. As a result, total capacity stands around 35% of what was it was before the pandemic hit the aviation industry.

In a bid to invigorate demand, Regional Express has added new regional routes in competition with rival company, Qantas Airways Limited (ASX: QAN). Operations such as the Coffs Harbour and Port Macquarie route commenced in late March this year. Interestingly, these two regional centres account for around 40% of the total number of passengers in Regional Express’ entire network.

Furthermore, the company revealed it is looking at entering new domestic markets that are monopolised by Qantas. Recently, Regional Express introduced new $39 fares between Sydney and Melbourne to challenge its bigger opponent, Qantas.

Moving on to the financial side, Regional Express stated its currently operating at a slight loss on current demand levels. This is due to the closing of the JobKeeper program as well as a significant drop in federal government assistance.

The company said that it is hopeful that demand will increase in the short-term, enabling operations to return to profitability.

Although Regional Express didn’t specify, it revealed that its cash position has increased over 1,000% when compared to March 2020. This is attributed to strong advanced bookings on 5 new domestic routes and two regional routes.

FY21 is projected to be breakeven for the company, despite the aviation sector still navigating through the pandemic.

About the Regional Express share price

In the last 12 months, Regional Express shares have climbed close to a 50% gain. However, year-to-date performance sits almost 40% below.

On valuation grounds, Regional Express has a market capitalisation of roughly $144 million, with approximately 110.1 million shares on issue.

More reading

• Alliance (ASX:AQZ) share price edges lower despite positive update
• Qantas (ASX:QAN) share price lower on ACCC update
• Could the grounded Qantas (ASX:QAN) share price take off in May?
• This ASX airline you never heard of could see 40% earnings boost
• Are ASX travel shares about to go through a big recovery?

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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It has been another bitterly disappointing day of trade for the A2 Milk Company Ltd (ASX: A2M) share price on Monday.

At one stage today, the fresh milk and infant formula company’s shares were down 15.5% to a multi-year low of $5.93.

The a2 Milk share price has recovered a touch since then but remains 9% lower at $6.40 at the time of writing.

Why is the a2 Milk share price crashing lower?

Investors have been heading to the exits in their droves on Monday after a2 Milk downgraded its FY 2021 guidance for the fourth time.

Management made the move due to sustained weakness in the daigou channel and significant inventory issues.

How a2 Milk’s FY 2021 guidance unravelled

Back in August 2020, the company first announced its guidance for FY 2021. Management revealed that it expected “strong revenue growth” and an earnings before interest, depreciation and amortisation (EBITDA) margin of 30% to 31% in FY 2021.

This would be up from revenue of NZ$1.73 billion and EBITDA of NZ$549.7 million in FY 2020.

The first signs of trouble

This guidance was reaffirmed on 9 September, only to be downgraded a little under three weeks later on 28 September.

At that point, management revealed that it was starting to observe emerging additional disruption to the corporate daigou market.

As a result, instead of “strong revenue growth”, it was now expecting revenue of NZ$1.8 billion to NZ$1.9 billion, representing growth of 4% to 10% year on year. Its EBITDA margin was still expected to be ~31%, representing EBITDA of NZ$558 million to NZ$589 million.

Things get worse

On 18 December, the a2 Milk share price sank after management made a further downgrade to its guidance due to sustained weakness in the daigou channel.

As a result, it reduced its guidance to revenue of NZ$1.4 billion to $1.55 billion with an EBITDA margin of between 26% and 29%. This implies EBITDA between NZ$364 million to NZ$450 million.

The third downgrade

On 25 February, a2 Milk released its half year results and once again downgraded its FY 2021 guidance.

At this point, management advised that it was now expecting revenue of NZ$1.4 billion with an EBITDA margin of 24% to 26% (excluding acquisition costs). The latter represents EBITDA of NZ$336 million to NZ$364 million.

The fourth (and surely final?) downgrade

This brings us to today, which has seen the company downgrade its guidance materially once again, putting significant pressure on the a2 Milk share price.

The company now expects revenue of NZ$1.2 billion to NZ$1.25 billion for FY 2021 with an EBITDA margin of 11% to 12% (excluding acquisition costs).

This implies EBITDA of just NZ$132 million to NZ$150 million, which will be down 73% to 76% year on year.

This guidance includes an inventory provision of approximately NZ$80 million to NZ$90 million, in addition to the NZ$23 million provision recognised in the first half.

Insider selling

Following today’s decline, the a2 Milk share price is now down 65% over the last 12 months.

Management certainly will be relieved that they were able to offload millions of dollars worth of shares in August last year just before the downgrade cycle began.

More reading

• ASX 200 up 1.1%: A2 Milk crashes, Crown-Star $12bn merger, Woolworths update
• A2 Milk (ASX:A2M) share price in danger after downgrading guidance again
• A2 Milk (ASX:A2M) share price falls as China suspends dialogue
• Top brokers name 3 ASX shares to buy today
• Is it time to give the A2 Milk (ASX:A2M) share price another chance?

Motley Fool contributor James Mickleboro 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.

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The Tyro Payments Ltd (ASX: TYR) share price is lifting after the company announced 2 positive updates today.

At the time of writing, the Tyro share price is trading 5.26% higher at $3.60. 

What’s driving the Tyro share price today? 

COVID-19 trading update 

Tyro has remained committed to providing weekly transaction value updates for greater transparency regarding the impact of COVID-19 on its business. 

In today’s update, the company revealed a 102% date-on-date increase in transaction values between 1 May and 7 May from $0.263 billion to $0.531 billion. From a year-to-date perspective, transaction values have increased 21% from $17.45 billion to $21.12 billion. 

May’s doubling of transaction values likely reflects the cycling of weak COVID-19 driven comparables from a year ago. 

Tyro acquires Medipass 

Alongside the regular COVID-19 trading update, Tyro announced its acquisition of health fintech, Medipass, for $22.5 million. The acquisition’s total consideration is expected to comprise 60% cash and 40% Tyro shares, with the completion set to occur this month. 

Medipass has created a digital health payment platform allowing healthcare providers to accept healthcare payments without the need for a terminal. Its multi-sided platform links healthcare funders, healthcare providers and patients to streamline the claims approval and payment acceptance process. 

Medipass currently integrates with 17 cloud-based practice management and bookings systems, with approximately 4,400 active healthcare providers working with it. 

Tyro believes Medipass’ functionality and clientele complement its existing health vertical and integrated practice management systems. The company will integrate Medipass’s digital health payments platform with Tyro’s card-present health solution to create a unified health payments offering. This solution will deliver both card-present and non-card present transactions. 

Both the COVID-19 trading update and telehealth acquisition appear to be well received by the market, with the Tyro share price making up for lost ground after falling almost 10% last week. 

Management commentary 

Commenting on the acquisition, Tyro CEO and managing director Robbie Cooke said: 

Our combination with Medipass is a significant step in building out Tyro’s core health vertical and is consistent with our strategy to build our offering through acquisition where there is a distinct opportunity to gain scale and to enhance our position in a key vertical.

Making a comeback

Just when things started to get better for the Tyro share price after the initial COVID-19 selloff last year, its business was hit with a significant terminal outage. This, in turn, instigated a scathing short-seller attack from Viceroy Research in January this year. 

Its shares have only recently managed to recoup the losses from those negative events. 

More reading

• Why is the Tyro Payments (ASX:TYR) share price dropping today?
• Why Bubs, IDP Education, ResMed, & Tyro shares are dropping today
• The Tyro Payments (ASX:TYR) share price has gained 30% in 12 months
• Why Bubs, Carbon Revolution, Paradigm, & Tyro shares are sinking
• Tyro (ASX:TYR) share price drops despite April transaction values surging 155%

Kerry Sun 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 Tyro Payments. 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 REA Group Ltd (ASX: REA) share price is climbing higher today, up 2.13% to $159.38 at lunchtime on Monday. 

This follows a fairly positive reaction after releasing its third quarter results last Friday, with REA Group shares finishing the week in the green, up 1.4% for the session.

Alongside Goldman Sach’s review of REA shares, here’s what other big brokers are thinking. 

Big brokers weigh in on the REA share price 

Credit Suisse 

REA’s third quarter results came in slightly ahead of Credit Suisse’s estimates, largely driven by better-than-expected growth in residential listings. 

More recently, the Australian property market has experienced a significant deficit in listing volumes. CoreLogic reports that total listings have remained tight in April due to the strong absorption from sales, leaving listings volume 26% below the 5-year average. 

Credit Suisse expects a rebound in residential listing volumes, forecasting a 20% year-on-year increase in volume in the second half. The broker expects the company’s earnings to continue to benefit from a cyclical recovery in residential listings and developer volumes. 

Credit Suisse increased its REA share price target from $136.70 to $148 with a neutral rating. 

UBS 

UBS was another broker that was surprised by REA’s 13% increase in revenues and 10% increase in earnings for the March quarter. Looking ahead, the broker expects the June quarter to cycle a significant jump in year-on-year listings. 

The broker retained its neutral rating for the REA share price but provided the most upbeat target price of $160. 

Morgans 

It was a mixed reaction from Morgans as the strong rebound in domestic listings was offset by slightly increased cost growth and lower depth penetration.

The broker was hold rated on REA shares, citing that its current valuation adequately balances both short and long term growth. The broker increased its target price from $131 to $139.4. However, this represents a downside of more than 10% compared to the current REA share price. 

More reading

• Top broker tips REA Group (ASX:REA) share price to rise 20%
• ASX 200 rises, Macquarie falls, Magellan declines
• How shares with massive PE ratios can be cheap
• ASX 200 up 0.45%: Macquarie full year results & REA Group Q3 update
• REA (ASX:REA) share price on watch after third quarter results

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group 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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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.

Cryptocurrency has been making waves in the investing world, and many investors may be wondering whether it’s time to jump on the crypto bandwagon.

While it’s true that some cryptocurrencies, such as Bitcoin (CRYPTO: BTC), have experienced phenomenal returns over the past few months, that doesn’t necessarily mean they’re a safe investment.

Cryptocurrency is highly speculative at this point, and nobody knows what kind of staying power it has. Although it could change the world, it could just as easily crash and burn. Right now, it’s too soon to tell what the future has in store for cryptocurrency.

In addition, crypto is famous for its volatility. Bitcoin lost roughly 80% of its value at one point, and since the beginning of the year, it has experienced a roller coaster of ups and downs. Not all investors have the stomach for that type of turbulence.

However, if you’re eager to invest in cryptocurrency but want to limit your risk, there’s another option: crypto stocks.

Cryptocurrency vs. crypto stocks

When most people think of investing in cryptocurrency, they think of investing directly in the currency itself. But it’s possible to invest in crypto without actually investing in crypto.

A crypto stock is a company that is involved in cryptocurrency in some way. That could mean the company offers crypto as a form of payment, it may have invested in crypto, or maybe it builds the technology behind digital currencies.

Take Tesla, for example. The company announced this year that it made a $1.5 billion investment in Bitcoin, and it also accepts Bitcoin as a form of payment. 

NVIDIA is another example of a crypto stock. The tech company designs and builds graphics processing units (GPUs), which are often used in the creation of cryptocurrency.

If you were to invest in Tesla or NVIDIA, you wouldn’t be investing in cryptocurrency directly. However, if crypto does become mainstream and is adopted as a standard form of currency, these companies could benefit from it. As a result, your investments could thrive.

Crypto stocks are generally safer than investing in cryptocurrency directly. This is because crypto is only a portion of these companies’ businesses. If digital currencies fail to see long-term success, the companies themselves likely won’t crash along with them.

Should you invest in crypto stocks?

Although crypto stocks may be less risky than investing in cryptocurrency itself, there are still a couple of things to consider before investing.

First, look at the company as a whole to decide whether it’s a solid investment. In other words, don’t invest in a stock only because of the cryptocurrency factor. The best investments are the companies that have solid fundamentals and are likely to remain strong over the long term. If they happen to be invested in crypto as well, that’s an added bonus.

Also, make sure you have a well-diversified portfolio if you decide to invest in crypto stocks. Building a diversified portfolio is a smart move regardless of where you choose to invest, but it can help limit your risk even further if your crypto stocks don’t perform well.

Investing in crypto stocks can be a smart way to diversify into cryptocurrency while limiting your risk. Just be sure you’re choosing your investments wisely and opting for stocks that have strong underlying fundamentals. By investing for the long term, you’re more likely to see success with crypto stocks.

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

More reading

• Dogecoin price drops by a third after Elon Musk calls it a “hustle” on comedy show
• ASX 200 Weekly Wrap: Bank shares push ASX 200 towards all-time high
• Ethereum breaks new record highs as Bitcoin slips…which one to buy?
• Move over Bitcoin! Ethereum prices are rising fast
• It’s not just Bitcoin (CRYPTO:BTC) driving ASX investor interest

Katie Brockman 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 Bitcoin, NVIDIA, and Tesla. The Motley Fool Australia has recommended NVIDIA. 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 Pendal Group Ltd (ASX: PDL) share price is frozen today at the company’s request.

This comes as the ASX-listed global investment manager announced a major acquisition before market opening today.

We take a look at the details, and Pendal’s newly released half year results, below.

What acquisition did Pendal announce this morning?

The Pendal share price is in a trading halt after the company reported it had entered into an agreement to acquire 100% of Thompson, Siegel & Walmsley LLC (TSW) for US$320 million (AU$413 million).

TSW is based in the United States and has US$23.6 billion of funds under management (FUM), mostly long-only equity.

Pendal believes the acquisition will be double-digit EPS accretive in the first full year following completion of the deal. Its consolidated FUM will increase to AU$132 billion (up 30%), with US client FUM increasing 112%.

TSW’s CEO, John Reifsnider, will be appointed CEO of Pendal’s merged US business.

Commenting on the acquisition, Pendal Group CEO, Nick Good said:

TSW is a natural strategic and cultural fit with Pendal and expands our successful diversified business model in the largest equity market in the world. TSW is highly complementary to Pendal’s US business, with almost no overlap of investment strategies and clients.

The acquisition will be funded with equity, debt and existing capital.

$190 million of equity will be raised through a fully underwritten Placement along with a Share Purchase Plan which will allow retail shareholders to participate. New shares will be issued at AU$6.80. That’s 7.4% below the current (frozen) $7.34 per share.

Highlights from the half year results

This morning Pendal also released its results for the half year ending 31 March.

The company reported a 64% increased in Statutory Net Profit After Tax (Statutory NPAT) from the prior corresponding period, with NPAT coming in at AU$89.9 million. Underlying Profit After Tax (UPAT) also increased, up 8% from the previous period to $82.6 million.

CEO Nick Good noted:

There was a notable improvement in investment performance with 83 per cent of Pendal’s FUM outperforming their benchmarks over the last 12 months, and J O Hambro Capital Management (JOHCM) performance fees were $41.1 million, up from $0.6 million in the prior year.

With our improving investment performance, increasingly positive investor sentiment, and the implementation of our multi-year strategic investment program, we are well placed to take advantage of the growth opportunities we see ahead.

Pendal share price snapshot

Shares remain in a trading halt at the time of writing but have gained 21% over the past 12 months. By comparison, the S&P/ASX 200 Index (ASX: XJO) is up 31% in that same time.

Year-to-date, the Pendal share price is up 12%.

More reading

• ASX 200 Weekly Wrap: ASX 200 hits new post-COVID high
• These were the best performing ASX 200 shares last week
• The Pendal (ASX:PDL) share price lifts on funds update

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 Nearmap Ltd (ASX: NEA) share price was well and truly out of form last week. But thankfully, this week has started much more positively.

At the time of writing, the aerial imagery technology and location data company’s shares are up 7% to $1.84.

Why is the Nearmap share price charging higher?

There appear to be a few potential catalysts for the strong gain by the Nearmap share price on Monday.

The first is bargain hunters. With the Nearmap share price crashing 19% lower last week, some investors appear to believe it has been oversold and are taking advantage today.

Another potential catalyst is some significant insider buying. This morning it was revealed that Nearmap’s Chairman, Ross Norgard, has added to his considerable holding.

A change of director’s interests notice reveals that Mr Norgard purchased 500,000 shares via an on-market trade on Friday 7 May.

The chairman paid a total consideration of $928,496, which averages out to be $1.857 per share. This is still higher than where it trades right now.

Top broker remains positive

A third and final potential catalyst for the rise in the Nearmap share price today is a broker note out of Morgan Stanley.

According to the note, the broker has held firm with its overweight rating and $3.20 price target despite the legal proceedings that were announced last week.

Based on the current Nearmap share price, this price target implies potential upside of 74% over the next 12 months.

Morgan Stanley believes the legal proceedings pose a greater risk for near-term liquidity rather than its earnings power. As a result, it remains positive on the company and believes the market is undervaluing its businesses.

This is particularly the case for the North American business according to Morgan Stanley. It is bullish on this side of the company and expects it to be a key driver of growth in the future. This is due to its larger opportunity and superior economics.

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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 Nearmap Ltd. The Motley Fool Australia has recommended Nearmap Ltd. 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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