The Strike Energy Ltd (ASX: STX) share price is moving higher, up 3% in morning trade.

Below we take a look at the ASX energy share’s latest field results.

What update did Strike Energy provide on its operations?

Strike Energy’s share price is moving higher after the company updated the market on its West Erregulla Appraisal Campaign on behalf of its EP469 Joint Venture.

Strike Energy and Warrego Energy Ltd (ASX: WGO) each hold a 50% joint venture interest in EP469. The gas project is situated in the North Perth Basin in Western Australia.

Reporting on its appraisal well operations, Strike said WE5 has “landed and cemented the surface casing string”. The well is now drilling ahead at a depth of around 2,785 metres measured depth (MD).

Production testing continues at WE4. Strike said the well is in the clean-up phase, reporting it has encountered pressure conditions similar to WE2 on initial flows.

According to the update:

The high reservoir quality seen at WE4 has been confirmed by core results from the laboratory, which show permeability up to 430mD (unconfined) and porosity of up to 19.9% in the Kingia Sandstones.

The company said it will gain additional data from the extended flowing of WE4, helping prepare for potential production operations at its West Erregulla Phase 1 development.

Looking ahead, Shrike plans to continue its WE4 flow test program “until the well is sufficiently cleaned up”. At that stage, expected to take several more days, the company will perform a full production test.

Work also continues apace at WE5, where Strike said it will continue drilling “the 12-1/4” intermediate hole section down to a nominal depth of ~3,750mMD, at which time wireline logs will be acquired.”

Running of the casing and cementing in place is expected to take place at WE5 after that.

Strike Energy share price snapshot

Strike Energy shareholders have enjoyed a banner year, with shares up 125% over the past 12 months. By comparison, the All Ordinaries Index (ASX: XAO) has gained 31% over that same time.

The Strike Energy share price has continued to outperform in 2021, with shares up 40% year-to-date.

More reading

• ASX 200 up 0.45%: Carsales sinks 10%, Aristocrat Leisure jumps
• Why the Chorus (ASX:CNU) share price is moving higher
• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• 5 things to watch on the ASX 200 on Monday
• 2 high-quality ASX 200 shares to buy

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.

The post Why the Strike Energy (ASX:STX) share price is charging higher appeared first on The Motley Fool Australia.

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At lunch on Monday, the S&P/ASX 200 Index (ASX: XJO) has followed the lead of US markets and is charging higher. The benchmark index is currently up 0.45% to 7,046.6 points.

Here’s what has been happening on the market today:

Carsales shares tumble

The Carsales.Com Ltd (ASX: CAR) share price has returned from its trading halt and is tumbling lower. This morning the auto listings company announced the successful completion of the institutional component of its $600 million pro rata accelerated renounceable entitlement offer with retail rights trading. Carsales raised $428 million at a 12.9% discount of $17.00. It will now seek to raise $172 million from retail shareholders. These funds are being used to acquire a 49% stake in United States-based business Trader Interactive.

Aristocrat Leisure earnings update

The Aristocrat Leisure Limited (ASX: ALL) share price is storming higher today after providing a first half update. For the six months ended 31 March, Aristocrat Leisure expects to report a 12% increase in normalised net profit after tax and before amortisation of acquired intangibles (NPATA) to $412 million. This has been driven by stronger than expected performances from both its Gaming and Digital businesses.

Incitec Pivot result disappoints

The Incitec Pivot Ltd (ASX: IPL) share price is sinking today after releasing a weaker than expected half year result. The industrial chemicals company reported a 6.7% decline in revenue to $1,724.1 million and a 30.8% decline in earnings before interest and tax (EBIT) to $110 million. According to a note out of Goldman Sachs, its analysts were expecting revenue of $1,825 million and EBIT of $171 million.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Monday has been the De Grey Mining Limited (ASX: DEG) share price with an 8% gain. This reverses a sudden and sharp decline on Friday on no news. The worst performer has been the Carsales share price with a 10% decline following its equity raising.

More reading

• Why the Strike Energy (ASX:STX) share price is charging higher
• Why the Chorus (ASX:CNU) share price is moving higher
• Carsales (ASX:CAR) share price down 7% after raising $428 million
• Incitec Pivot (ASX:IPL) share price sinks 5% on half year update
• Aristocrat Leisure (ASX:ALL) share price jumps 9% on profit update

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended carsales.com Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post ASX 200 up 0.45%: Carsales sinks 10%, Aristocrat Leisure jumps appeared first on The Motley Fool Australia.

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The Ardent Leisure Group Ltd (ASX: ALG) share price is on the move today following a trading performance update.

During late morning trade, the entertainment company’s shares are swapping hands for 86.5 cents, up 4.85%. In earlier trade, the Ardent Leisure share price climbed as high as 90 cents before retreating to its current level.

Let’s take a closer look at what the company announced.

Strong revenue momentum

Investors are fighting to get a hold of Ardent Leisure shares after the company revealed robust trading conditions.

According to its release, Ardent Leisure’s recent trading performance for Main Event Entertainment is continuing to recover.

For the first week of May (fiscal week ending 11 May), constant revenue increased by around 8%. The lift was attributed to strong, ongoing walk-in revenue, which partly offset the soft end-of-year school event business. The latter represented roughly 25% of the revenue mix from Ardent Leisure in the prior corresponding period.

Contributing to the strong result, 42 of the 44 centres operated by Ardent Leisure have re-opened. The remaining 2 locations are set to re-open their doors this month and in June, subject to COVID-19 restrictions.

Pleasingly, Main Event has generated positive earnings before interest, tax, depreciation and amortisation (EBITDA) throughout the second half of FY21. Ardent Leisure highlighted that the outcome is due to its efficient cost management policies within its centres and head office.

Segmented EBITDA (excluding specific items) for March and April recorded US$23.7 million. In comparison, this is 79% higher than the same time period in FY19 (US$13.2 million). However, when including the months of January and February, the variance between the two time periods diminishes. FY21 for the four months ending April, achieved EBITDA of US$29.4 million as opposed to US$26.2 million for FY19.

Ardent Leisure stated that the business has a high EBITDA cash conversation rate. Significant operating cash flows are generated before new centre capital spend and repayment of debt. New centre net capital spend came to US$4.1 million during the current second-half.

Available cash to its United States business stood at US$80.8 million, with outstanding debt totalling US$163.5 million.

About the Ardent Leisure share price

Over the last 12 months, the Ardent Leisure share price has accelerated to post a gain of close to 170%. This is a stark contrast from when the company’s shares nosedived to an all-time low in February last year.

Based on today’s prices, Ardent Leisure presides a market capitalisation of about $426 million, with approximately 479 million shares outstanding.

More reading

• Ardent Leisure (ASX:ALG) share price slides on development plans
• Why the Ardent Leisure (ASX:ALG) share price is surging 7%

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.

The post Why the Ardent Leisure (ASX:ALG) share price is climbing 5% appeared first on The Motley Fool Australia.

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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.

Let’s say you stumble across a stock you’ve never heard of before that has generated amazing annual returns of 20% or more year after year. Would you immediately add it to your portfolio? If you’re smart, you’d answer no. What if Warren Buffett recommended it? Your answer should still be no.

The reasoning is simple: If you’ve never heard of the company before, you probably don’t have any idea how it makes its money. You might be thinking, “Big deal. Look at those returns!” But I promise you, it is a big deal, and below, we’ll look at why.

Why you need to know how a company makes its money

When you purchase a stock, you’re investing in a company and betting on its future success. But if you don’t know how it makes its money, you won’t be able to tell when it’s headed for a fall. 

Understanding a company’s business model can help you better predict how its leadership’s decisions and industry trends could affect the company’s stock price. For example, let’s say in a bizarre parallel universe, Netflix (NASDAQ: NFLX) decides to go back to its old way of doing things, foregoing the streaming service we’ve all come to know and love and instead shipping old-fashioned DVDs to your door. 

As someone who presumably understands how Netflix works and why it’s so successful, you would be able to tell that that move is going to be bad for business and that Netflix’s stock price is probably going to drop. But if you had never heard of Netflix and weren’t able to guess what it does from the company name, you might not realize its leaders have just made a terrible mistake. If you buy its stock just to hop on the bandwagon with everyone else, you could find yourself facing huge losses in this scenario. 

Understanding how a company makes its money can also help you identify when it’s doing well and when it might be time to buy even more of its stock. If Apple releases the iPhone 13 later this year to rave reviews, that could clue you in to the fact that the company is doing a great job at producing products people want — and that could be a good time to invest more in its stock.

How to choose the best stocks for you

Investing only in companies you know well is what Warren Buffett refers to as investing in your “circle of competence.” If you’re new to investing, you may not think that’s very large, but it’s probably bigger than you think. You don’t need to understand every business decision a company has ever made. You just need to have a general idea of how it makes money.

If you’ve ever used Netflix — or even if you’re just familiar with what it does — that falls into your circle of competence. Same goes for the manufacturers of the groceries and household items you buy every day. You probably also know how airlines, auto makers, and retail stores make their money, so they’re potentially good investments for you too.

Your job might also open up more companies you can add to your circle of competence. For example, if you work in the tech industry, you might know about some more obscure tech stocks that an outsider may not be familiar with. These are all good places to start when deciding what you’d like to invest in.

What if I want to invest in a company I don’t understand?

To return to our fictional company stock with the 20% annual returns, let’s say you’re interested in possibly investing in it but you’re not familiar with what the company does. That doesn’t mean you can’t add it to your portfolio. It just means you shouldn’t do so right away. 

You need to do your research first to familiarize yourself with how the company operates, why it’s been so successful to date, and whether its stock has the potential to continue providing these outstanding returns in years to come. 

There’s no magic stat that can tell you whether a company’s worth investing in. There are many factors to consider, including a stock’s price-to-earnings (P/E) ratio, its debt-to-earnings ratio, its management team, and industry trends. As you become a more experienced investor, you’ll learn how all these factors play into one another and how to identify the truly valuable stocks from the ones that aren’t worth the hype. 

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

More reading

• Nasdaq slump: will ASX tech shares face selling pressure today?
• This ASX tech ETF might be in the buy zone today. Here’s why
• Netflix’s downbeat earnings explained
• Netflix’s pandemic boost is over — but here’s why I’m not worried
• Netflix wins big at the Oscars

Kailey Hagen 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 Apple and Netflix and recommends the following options: short March 2023 $130 calls on Apple and long March 2023 $120 calls on Apple. The Motley Fool Australia has recommended Apple and Netflix. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post This is a surefire sign you shouldn’t invest in a stock appeared first on The Motley Fool Australia.

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

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The Chorus Ltd (ASX: CNU) share price is moving higher, up 2% in morning trade.

Below we take a look at the New Zealand based telecommunications infrastructure company’s latest revenue proposal.

What revenue did Chorus submit?

Chorus’ share price is gaining after the company tendered its maximum allowable revenue submission (MAR) to New Zealand’s Commerce Commission for the 2022–2024 regulatory period.

The submission is based on the starting Regulated Asset Base of NZ$5.5 billion (AU$5.9 billion) submitted to the Commission in March. Chorus stated this is conservative and doesn’t properly reflect the costs of building its ultra-fast broadband (UFB) network.

The submission is forecast to deliver NZ$720–$820 million in revenue during the period. Chorus’ CEO JB Rousselot said this was consistent with the company’s forecast fibre revenues during the first regulatory period.

Rousselot added:

We want to encourage fibre uptake, investment and innovation, consistent with the goals of our public-private partnership with government and our desire to help more New Zealanders realise the benefits of fibre broadband.

The MAR proposal includes the use of tilted depreciation to ensure a smooth transition into the new regulatory regime and properly reflect the commercial risks we face.

Chorus said it remains in talks with the Commission on various aspects of the new regulatory framework in New Zealand. It is strongly advocating that the Regulated Asset Base “reflect the true costs” of its UFB public-private partnership requirements. Chorus believes this would see Regulated Asset Base outcomes of up to $6 billion.

Chorus share price snapshot

It’s been a challenging year for Chorus shareholders, with shares down 15% over the past 12 months. By comparison, the S&P/ASX 200 Index (ASX: XJO) is up 29% at that same time.

Chorus has continued to struggle in 2021, with shares down 20% year-to-date.

At the current share price of $5.82, Chorus pays an annual dividend yield of 4%, unfranked.

More reading

• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• 5 things to watch on the ASX 200 on Monday
• 2 high-quality ASX 200 shares to buy
• These were the worst performing ASX 200 shares last week
• These were the best performing ASX 200 shares last week

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.

The post Why the Chorus (ASX:CNU) share price is moving higher appeared first on The Motley Fool Australia.

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The Elders Ltd (ASX: ELD) share price is in the red today. The agribusiness comes into focus after releasing its half-year results for the six months to 31 March 2021.

At the time of writing, shares in the company are trading for $11.87 – down 2.95%. By comparison, the S&P/ASX 200 Index is 0.54% higher.

Let’s take a closer look at the results and what they mean for the Elders share price.

Elders half-year results

In today’s release, Elders reports underlying profit after tax is up 31% on the prior corresponding period (pcp) to $68.2 million. Total sales for the six-month period are $1.1 billion, which is 22% higher than the first half of FY20.

Underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) increased 28% to equal $94.3 million. Underlying earnings per share (EPS) are up 38% on the pcp to 42.9 cents. The company will pay a 20-cent interim dividend per share to shareholders, 20% franked. In the first half of FY20, the company paid a 9-cent dividend, fully franked.

The biggest drivers of the growing profit were an $18 million increase in the margin of retail products and $11.9 million for wholesale products. Costs were up $16.5 million on the pcp. Elders attributed this to “acquisitions, higher insurance costs, investment in strategic areas and systems modernisation expenses”.

Despite these positive figures, the Elders share price is heading south today.

In a separate statement to the ASX, Elders said the results were due to a variety of factors, including a backward integration strategy that boosted retail sales, encouraging weather conditions (which it expects to continue in the short term), and favourable commodity prices.

The Australian Bureau of Statistics (ABS) supports this view of favourable growing conditions when compared to the previous financial year.

In FY20, the total value of crops produced decreased by 5% compared to the previous year. This was driven largely by a 20% drop in the value of wheat production and a 78% fall in the value of cotton production. Operating cash flow was down 13% on the pcp to $23.9 million. Total cash flow for the period was a $21.2 million outflow. In the pcp, it was a total inflow of $55.4 million. Elders says the drop in operating cash flow is due to increased working capital in rural production. Financing cash flows fell 115% into the red (-$19.8 billion) to drive the total cash flow loss.

Elders share price snapshot

Over the past 12 months, the Elders share price has increased 23.7%. Only last week, Goldman Sachs put a buy-rating on Elders shares, with a target price of $15.00.

Elders has a market capitalisation of $1.8 billion.

More reading

• Leading broker names 5 emerging ASX shares to buy today
• Nufarm (ASX:NUF) share price rises ahead of next month’s profit results
• Looming grocery price shock to impact on these ASX shares

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Elders 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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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

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

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

According to a note out of Macquarie, its analysts have retained their outperform rating and $30.50 price target on this banking giant’s shares. The broker has been looking at the banking sector following recent results releases. It believes ANZ’s shares offer investors the best value over the medium term. This is despite Macquarie not expecting ANZ’s second half performance to be as strong as the first due to increasing costs. The ANZ share price is fetching $27.39 on Monday morning.

TPG Telecom Ltd (ASX: TPG)

A note out of Ord Minnett reveals that its analysts have upgraded this telco’s shares to a buy rating but cut the price target on them to $6.45. The broker made the move largely on valuation grounds following a sharp pullback since announcing changes in its leadership. And while it notes that COVID-19 headwinds won’t be going away any time soon, it expects this to be offset by merger synergies. The TPG Telecom share price is trading at $5.20 this morning.

Xero Limited (ASX: XRO)

Analysts at Morgan Stanley have retained their overweight rating but trimmed their price target on this cloud accounting platform provider’s shares to $135.00. This follows the release of Xero’s full year results last week. According to the note, the broker feels the market has overreacted to Xero’s investment plans. It believes the strategy of reinvesting is the right thing to do and will help it maintain a leadership position over the long term. It points out that this strategy helped it unseat previous market leader MYOB in the past. The Xero share price is fetching $116.25 on Monday.

More reading

• US market bounces back, ASX 200 tech shares on watch
• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• 3 great ASX tech shares to buy
• These were the worst performing ASX 200 shares last week
• ASX 200 rebounds, Treasury rises, Xero falls

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 Xero. 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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Tyro Payments Ltd (ASX: TYR) shares are edging higher on Monday after the company announced another solid transaction value update. At the time of writing, the Tyro share price is trading 0.27% higher at $3.69.

Tyro is Australia’s fifth largest merchant-acquiring bank by number of terminals in the market, behind the four major banks. Tyro derives a majority of its revenues from payment services via its EFTPOS terminals. The weekly updates provide key insights into how the business is performing. 

Solid transaction values 

The Tyro share price is in the green today after the company reported a 96% increase in transaction values between 1 to 14 May, compared to a year ago. This follows a 147% increase in the month of April. 

The strong transaction value increases throughout April and May are likely driven by easy comparables against a year ago, at the height of COVID-19 lockdowns. This was during a period when a majority of Tyro’s merchant base across hospitality, retail and health sectors were forced to operate at a limited capacity. 

However, from a year-to-date perspective, the company’s transaction values are up a solid 22% from $17.740 billion to $21.662 billion. 

Tyro share price outperforms ASX 200 tech index

The Tyro share price has surprisingly emerged as one of the top-performing tech shares this year. 

The S&P/ASX 200 Info Tech Index (ASX: XIJ) has slipped to an 8-month low and is down by 18.5% year to date. This follows significant share price weakness in tech heavyweights including Afterpay Ltd (ASX: APT), WiseTech Global Ltd (ASX: WTC) and Xero Limited (ASX: XRO). 

Despite the pressures facing the tech index, the Tyro share price has pushed around 15% higher year to date. Its share price has emerged stronger after its crippling EFTPOS terminal outages and scathing short-seller attack earlier this year.

According to Tyro, it continues to innovate in the payments landscape, with a number of strategic investments announced in its presentation at the Macquarie Australia Conference 2021 and a recent move to acquire Aussie health fintech, Medipass. 

More reading

• Why Crown, Fortescue, Nearmap, & Tyro shares are charging higher
• The Tyro (ASX: TYR) share price jumps 5% on 2 positive updates
• 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

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’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, WiseTech Global, and Xero. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Tyro (ASX:TYR) share price edges higher on solid trading update appeared first on The Motley Fool Australia.

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The Bitcoin (CRYPTO: BTC) hype train has taken a sharp turn away from destination moon and is hurtling back to earth.

The all-father cryptocurrency has experienced a ~30% selloff since its all-time high of US$64,899 on 14 April. This marks its largest correction since the March 2020 COVID-19 selloff where prices halved from US$8,000 to as low as US$3,800 within two days. 

Why is Bitcoin sliding?

Last week, Tesla Inc (NASDAQ: TSLA) CEO Elon Musk (aka the “Technoking of Tesla”) announced that the company would no longer offer Bitcoin as a payment option.

Musk’s tweet said at the time: 

We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. 

He also tweeted the recent surge in energy usage over the past few months with regards to bitcoin electricity consumption.

On a slightly positive note, the tweet said that: 

Telsa will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. 

Within two hours of the tweet, bitcoin crashed from approximately ~US$54,500 to as low as ~US$48,500. 

Tesla exiting bitcoin speculation 

More recently, there has been speculation that Tesla may have planned or already sold its bitcoin holding. A Twitter user who goes by the handle @CryptoWhale said: 

Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their #Bitcoin holdings.

With the amount of hate @elonmusk is getting, I wouldn’t blame him…

To which Musk replied, “Indeed.”

A new cryptocurrency in town 

Musk appears to have turned his back on Bitcoin in favour of meme-inspired, dogecoin. Dogecoin has suffered a similar ~30% correction from 8 May highs of US$0.739 to US$0.506 at the time of writing.  

On 14 May, Musk tweeted: 

Working with Doge devs to improve system transaction efficiency. Potentially promising.

Which again, witnessed a significant surge in dogecoin prices. 

More reading

• Why I’m loving this ASX bank share at the moment: fundie
• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• Elon Musk cancels Bitcoin! Is it gold’s gain?
• Tesla stops taking Bitcoin payments over fossil fuel concerns
• Could Dogecoin and Bitcoin be getting an extra push?

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 Bitcoin. 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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Shares in mid-cap ASX biopharmaceuticals company Starpharma Holdings Limited (ASX: SPL) have endured a volatile start to 2021. After surging to an all-time high of $2.52 by mid-February, the company’s shares have now plunged more than 35% to just $1.62 as at the time of writing.

While this still means they have risen close to 70% over the last 12 months, it’s a disappointing result for shareholders who may have thought 2021 would be a breakout year for Starpharma.

Company background

Before we look at the reasons behind the volatility, it’s probably worth taking some time to explain what Starpharma actually does – particularly since this is a junior healthcare company that may be flying under the radar for many investors.

Starpharma is an Australian healthcare company specialising in dendrimer-based nanotechnologies. Dendrimers are essentially man-made synthetic compounds: well-defined collections of molecules that have been created in a lab to serve a particular purpose. Because scientists can precisely select the molecules included in the dendrimer, they can be developed to address specific needs in medicine and life sciences.

Starpharma’s flagship product is called Viraleze, a nasal spray that has been shown to provide strong protection against a range of respiratory viruses, including the virus that causes COVID-19. Viraleze works by targeting areas in the nasal cavity where viruses typically multiply, providing a physical barrier against infection and preventing the virus from spreading to the lungs.

The company also develops a number of other products, including dendrimer drug delivery systems. Dendrimer technology can also be used to enhance the properties of other drugs by ensuring that they target the right areas of the body. The company’s dendrimer drug delivery products are currently being trialled with cancer patients.

What’s been going on with the Starpharma share price?

The February surge in the Starpharma share price came on the back of a flurry of company announcements.

First, Starpharma released its activities report for the quarter ended 31 December 2020. The report provided a number of positive updates, including that Viraleze was on track to be registered for use in Europe, and clinical trials of its other dendrimer-based products were also progressing. 

Shortly afterwards, Starpharma announced that a clinical trial of one of its drug delivery products was progressing to a global phase 1 clinical study. The trial was being run in partnership with international pharmaceutical company AstraZeneca (LSE: AZN) and was investigating the efficacy of Starpharma’s products for patients with forms of acute leukaemia.

Starpharma also announced it had signed a research agreement with US-based pharmaceutical company Merck & Co Inc (NYSE: MRK). Under the agreement, Merck & Co will seek to evaluate whether Starpharma’s dendrimer technology provides advantages for oncological medicine.

Despite these positive announcements – and a number of others since, including the news that Starpharma is set to partner with LloydsPharmacy for the UK launch of Viraleze – the Starpharma share price has continued to slide lower.

Although this might leave some loyal shareholders frustrated, it’s worth noting that Starpharma is still a young biotech. It is yet to book any meaningful sales revenue, and many of its products are still progressing through trial phases. This makes it a very speculative investment, and ups and downs in its share price are to be expected.

However, if the company can successfully launch Viraleze in Europe, the Starpharma share price could be worth watching over the next few months.

More reading

• The ASX shares poised to benefit from new spending in the 2021 federal budget
• Starpharma (ASX:SPL) share price slides despite COVID spray rugby deal
• Why Eclipx, Emeco, SeaLink, & Starpharma shares are storming higher today
• Starpharma (ASX:SPL) share price surges higher on COVID product update
• Why Dubber, PointsBet, Starpharma, & Westpac shares are storming higher

Rhys Brock 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 The Starpharma (ASX:SPL) share price is 35% below its 52-week high appeared first on The Motley Fool Australia.

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