The cryptocurrency Bitcoin (CRYPTO: BTC) has had an interesting week, to say the least. After 3 months of trading sideways at around US$55,000 a coin (with some of that trademark volatility in between of course), the Bitcoin price plummeted this week. On Thursday morning, the cryptocurrency fell as hard as 15% to as low as US$46,600 in just the course of a few hours. The price has recovered somewhat since but is still out of that range that it occupied for so long.

The catalyst for this drop? Elon Musk, of course. The Tesla Inc (NASDAQ: TSLA) boss came out and said that Tesla wouldn’t be buying any more Bitcoin. It will no longer accept it as a form of payment from buyers of its products either. Musk cited the massive energy required for mining Bitcoin, especially that generated from fossil fuels, as the reason behind this surprising move. Musk had previously been an advocate for Bitcoin. At least before he discovered Dogecoin (CRYPTO: DOGE) in his social media outings. Tesla still owns more than US$1 billion worth of the currency, which Musk has committed not to sell.

This latest chapter in the Bitcoin story is a timely reminder of the cryptocurrency’s utility. Or in this case, lack of it. And it also highlights the difference between Bitcoin and gold, which are often compared against one another.

Gold vs Bitcoin

Bitcoin is often called ‘digital gold’, the millennial’s answer to the traditional gold bug. It’s described as such because the cryptocurrency shares many of the attributes of gold, and thus attracts a similar class of investors. It’s scarce for once. With a finite supply of 21 million coins, Bitcoin is often touted as ‘inflation-proof’. The same logic is sometimes used for gold. the yellow metal has often (although not always) been a historically effective asset in inflationary periods as well. And since gold is globally priced and valued in a similar manner around the world, it has some of the same cross-border, globalist appeals that Bitcoin does as well.

During the heydays of bitcoin’s climb, many investors were predicting that Bitcoin would even replace gold for that traditional ‘hedge’ role it plays in some investors; portfolios.

But this week has thrown some of the weaknesses of this argument into the light. For one, can you imagine a scenario where one man could release a statement of ethical opinion about gold that could cause it to lose 15% in a matter of a few hours? I doubt it.

The gold price is no stranger to volatility either, although not nearly as much as Bitcoin. But over the past 2 months or so, gold has climbed a respectable 6% or so. Bitcoin has fallen close to 5% over the same period. These two assets may be rivals in many ways. But over recent months, gold seems to be giving its investors more joy than Bitcoin’s fans.

More reading

• Tesla stops taking Bitcoin payments over fossil fuel concerns
• Could Dogecoin and Bitcoin be getting an extra push?
• Ethereum climbs even higher… but why? Dogecoin might be the answer
• 3 unstoppable growth trends to invest in today
• 1 simple (and safer) way to invest in cryptocurrency

Sebastian Bowen owns shares of Bitcoin and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Bitcoin and Tesla. 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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Australia’s top brokers have been busy adjusting their estimates and recommendations once again. This has led to the release of a number of broker notes.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Newcrest Mining Ltd (ASX: NCM)

According to a note out of Morgans, its analysts have retained their add rating and $30.95 price target on this gold miner’s shares. The broker has been looking through the gold sector and likes what it sees with Newcrest. This is due to its reasonable valuation and its exposure to copper and silver. It expects the latter to help offset softer gold prices. The Newcrest share price is trading at $27.93 on Friday morning.

Qantas Airways Limited (ASX: QAN)

Analysts at Ord Minnett have retained their buy rating but trimmed their price target on this airline operator’s shares to $5.50. This follows news that the airline is pushing back the restart of its international service by two months. While the delay is slightly disappointing, Ord Minnett remains positive on the company given that its Domestic and Loyalty businesses are the main contributors of its earnings. The Qantas share price is fetching $4.45 at the time of writing.

Xero Limited (ASX: XRO)

A note out of Morgan Stanley reveals that its analysts have retained their overweight rating and $140.00 price target on this cloud accounting platform provider’s shares. This follows the release of the company’s full year results this week. While the broker acknowledges that Xero fell well short of expectations for its earnings, it remains positive on the future. Morgan Stanley believes the company’s investment strategy is the correct one to create long term value for shareholders. The Xero share price is trading at $111.51 this morning.

More reading

• Top broker gives its verdict on the Xero (ASX:XRO) share price
• 5 things to watch on the ASX 200 on Friday
• ASX 200 sinks alongside largest US inflation rise in 12 years
• ASX 200 falls below 7,000, Xero sinks, Afterpay falls
• 3 reasons why the Xero (ASX:XRO) share price selloff could be an opportunity

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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The Afterpay Ltd (ASX: APT) share price is up more than 2% in morning trading today. Is the buy now, pay later company an opportunity after the sell-off?

It has been many months since Afterpay was this low. But it’s processing even more underlying sales than it was last year.

Less than a month ago investors got a very good look at Afterpay’s FY21 third quarter numbers which showed continued growth despite COVID-19 impacts.

Afterpay’s FY21 third quarter

Global underlying sales doubled from $2.6 billion to $5.2 billion. Growth in Australia and New Zealand has slowed, with 48% growth to $2.1 billion. North American underlying sales rose 167% to $2.6 billion. UK underlying sales jumped 246% to $0.5 billion.

March 2021 exceeded December 2020 and delivered the second highest monthly underlying sales ever recorded, with the US becoming the first region to record more than $1 billion of underlying sales in a single month.

Overall customer growth was strong, but there was a varied performance between regions. North American customers grew 112% to 9.3 million and UK customers went up 34% to 1.8 million, however ANZ customers only rose 9% to 3.5 million. Total customers grew 75% to 14.6 million.

Total active merchants grew 77% to 85,800. ANZ merchants grew 49% to 57,700, UK merchants went up 672% to 5,000 and North American merchants rose 154% to 23,200.

There were a number of other positives. Repeat usage is rising – the top 10% of global customers, on average, now transact 33 times per year. ANZ in-store volumes continue to recover and are tracking near to pre-COVID-19 levels at approximately a quarter of ANZ’s underlying sales.

The EU is the next frontier for Afterpay’s potential growth. Merchants with over $1.5 billion of total addressable online sales are live, integrating or signed in the EU following the completion of the Pagantis acquisition and launch of Clearpay across Spain, France and Italy in March 2021.

Gross losses continue to remain below historical rates in all regions. Net transaction losses as a percentage of underlying sales also remained low. 

Is the Afterpay share price an opportunity?

Plenty of brokers seem to think so.

Morgan Stanley rates the Afterpay share price as a buy, with a price target of $149. That suggests an upside of around 75% over the next 12 months.

Afterpay’s app downloads during April 2021 was much stronger than the prior corresponding period and stronger than the starting months of 2021. The broker is confident about the US growth potential.

Credit Suisse also rates Afterpay as a buy, with a price target of $145.

But not every broker rates the buy now, pay later business as a buy. UBS rates Afterpay as a sell with a price target of $36. That’s still a long way from where the Afterpay share price is today.

More reading

• ASX 200 sinks alongside largest US inflation rise in 12 years
• ASX 200 falls below 7,000, Xero sinks, Afterpay falls
• Should you buy Afterpay (ASX:APT) and this ASX tech share following the selloff?
• What’s driving the Afterpay (ASX:APT) share price to 8-month lows?
• Why are ASX tech shares like Afterpay (ASX:APT) crashing today?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T 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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Exchange traded funds (ETFs) continue to grow in popularity with investors and it isn’t hard to see why.

Through just a single investment, investors are now able to put their hard-earned money into areas of the global share market that were previously beyond reach.

One of those areas is China, and the Chinese technology sector to be more precise. This is achieved through the BetaShares Asia Technology Tigers ETF (ASX: ASIA).

Why is the BetaShares Asia Technology Tigers ETF a good option?

The BetaShares Asia Technology Tigers ETF could be worth considering if you’re interested in growth shares.

This is because the fund gives investors exposure to 50 of the most exciting tech shares in the Asia market (excluding Japan).

BetaShares notes that due to its younger, tech-savvy population, Asia is surpassing the West in terms of technological adoption. As a result, the sector is anticipated to remain a growth sector for some time to come.

Which companies will you be buying a slice of?

Among the fund’s holdings you will find the likes of Alibaba, Baidu, JD.com, Meituan Dianping, Pinduoduo, Samsung, and Tencent.

In respect to Baidu, it is often referred to as China’s version of Google. As Google is not able to operate in China, this has allowed Baidu to become the dominant search engine in the country by some margin. It also operates the iQIYI video streaming service, which is China’s equivalent of Netflix, and is aiming to become a self-driving powerhouse.

Another quality company in the fund is Pinduoduo. It is an e-commerce platform that offers a wide range of products from daily groceries to home appliances. Its platform connects distributors with consumers directly through an interactive shopping experience. This allows shoppers to team up to buy items at lower prices. In March, the company surpassed Alibaba with the most active customers – 788 million.

A final company to know about in the fund is Tencent. It is a multinational technology conglomerate and one of the largest companies in the world. Its communication and social platforms, Weixin (WeChat) and QQ, connect over a billion users with each other and with digital content and services.

More reading

• 2 compelling ASX shares to buy in May 2021
• 2 outstanding ETFs for ASX investors to buy
• 2 quality ETFs for ASX investors in May
• 2 outstanding ETFs for ASX growth investors to buy
• 2 outstanding tech ETFs for ASX investors to buy this month

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. 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 a volatile morning for the Creso Pharma Ltd (ASX: CPH) share price after returning from a trading halt.

After being up as much as 5.5% to 19 cents, the cannabis and psychedelics company’s shares are now down 9% to 16.3 cents.

Why was the Creso Pharma share price in a trading halt?

Creso Pharma requested a trading halt on Wednesday pending the release of a “material operational update” in relation to its proposed acquisition target, Halucenex Life Sciences.

This morning the company revealed that the material development that required a two-day trading halt was that Halucenex Life Sciences has secured an additional 10 grams of synthetic psilocybin from its manufacturing partner. Combined with its existing inventory, Halucenex Life Sciences now has total pharmaceutical grade psilocybin of 22.3 grams.

As small as this sounds, this still makes it one of the largest holders of single batch GMP grade synthetic psilocybin in Canada. According to the release, the psilocybin will be used in research and development initiatives and future clinical trials.

Management commentary

Judging by the weakness in the Creso Pharma share price, investors appear underwhelmed by this announcement.

Nevertheless, Creso Pharma’s Non-Executive Chairman, Adam Blumenthal, believes it is an important development.

He commented: “Halucenex is now one of the largest holders of single batch GMP grade synthetic psilocybin in Canada. This is a major development and opens a number of doors for Halucenex in medium and long term.”

“Once it secures its licence from Health Canada, Halucenex will have the capacity to progress a number of R&D initiatives, which have the potential to unlock new drug delivery methods and combinations, potentially leading to a higher level of care through alternative treatment methods. We look forward to working with Halucenex and its existing partners to progress these research initiatives.”

“Halucenex and the Creso group more broadly continues to make steps forward. We have achieved a number of regulatory hurdles in regards to the proposed US OTC listing and anticipate DTC eligibility shortly. This will unlock considerable benefit for shareholders. We are very excited to share some of the developments the Company has been working on in the coming months,” he concluded.

More reading

• Why the Resolute Mining (ASX:RSG) share price is edging higher today
• Why the AVITA (ASX:AVH) share price is charging higher today
• Is the Carsales (ASX:CAR) share price in the buy zone after its acquisition?
• The Crown (ASX:CWN) share price is in focus today. Here’s why
• Is the Pro Medicus (ASX:PME) share price a buy after its contract win?

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 Resolute Mining Limited (ASX: RSG) share price is edging higher during morning trade following two leadership changes.

At the time of writing, the Resolute share price is swapping hands for 59.2 cents, up 1.2%.

New appointment

Investors have been buying Resolute shares following the announcement of a reshape in its management team.

According to this morning’s release, Resolute advised it has appointed Mr Stuart Gale as its new managing director and CEO.

Since joining Resolute in January 2020, Mr Gale took up the role of chief financial officer, focusing on operational performance. However, from October that year, Mr Gale held the position of interim CEO following the departure of Mr John Welborn.

In Mr Gale’s time as acting CEO, he has implemented and overseen a number of key initiatives. This includes a review of business operations, management appointments, and strengthening internal systems while managing the finance division.

Resolute chair, Martin Botha welcomed Mr Gale’s permanent appointment, saying:

It gives me great pleasure to confirm Stuart’s appointment as MD and CEO of Resolute. Over the past six months the Board retained a leading global search advisor who undertook a comprehensive CEO candidate search process. Throughout this period, Stuart has provided excellent leadership as Interim CEO, and clearly proven himself as the leading candidate for the role. Achieving this while retaining his CFO duties is also testament to his professionalism and capability.

Mr Gale will take over the company reins effective from today. A new search will be conducted to find a new chief financial officer that Mr Gale leaves behind.

What else did Resolute announce?

In further news boosting Resolute shares, the company also welcomed Mr Terry Holohan as its new chief operating officer (COO).

Mr Holohan brings a wealth of experience, holding various executive and technical positions in Africa for over 30 years. In addition, Mr Holohan spent the last 10 years in Asia working for PT Archi Indonesia. His role involved developing and expanding a multi-open pit gold mine, transitioning from an exploration project to an operational mine.

New Resolute managing director and CEO, Mr Gale commented:

It’s great to have someone of Terry’s calibre join Resolute. He brings a proven track-record together with detailed and wide-ranging technical knowledge and experience. Terry has demonstrated his experience and innovation through successfully developing and operating several particularly complicated mining and processing projects and we are looking forward to capitalising on this at Resolute.

The company’s current COO, Mr David Kelly will oversee the smooth transition, and remain on the executive team.

Mr Holohan will assume the newly appointed COO role from 17 May 2021.

Resolute share price snapshot

Resolute shares have lost more than 40% of their value in the past 12 months. Year to date, the company’s shares have not fared much better, down roughly 25% on the back of the falling gold spot price.

Based on the current share price, Resolute commands a market capitalisation of about $645 million, with 1.1 billion shares outstanding.

More reading

• 5 things to watch on the ASX 200 on Thursday
• These are the 10 most shorted shares on the ASX
• ASX 200 Weekly Wrap: Bank shares push ASX 200 towards all-time high
• These were the best performing ASX 200 shares last week
• 5 things to watch on the ASX 200 on Thursday

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 AVITA Medical Inc (ASX: AVH) share price is on the move on Friday morning.

At the time of writing, the regenerative medicine company’s shares are up 4% to $5.35.

Why is the AVITA share price charging higher?

Investors have been buying the company’s shares this morning following the release of its third quarter update.

According to the release, demand for the company’s Recell system rebounded strongly during the quarter.

This led to AVITA recording revenue of US$8.8 million for the three months ended 31 March, which was a 126% increase over the prior corresponding period. Positively, this was also a 72.5% increase on its second quarter revenue.

Supporting this growth was an increase in procedural volumes. For the quarter, volumes reached 492. This compares to 408 in the prior corresponding period and 487 in the second quarter.

AVITA also advised that it added 6 new burn centre accounts during the three months, lifting its total to 99. This represents a penetration rate of 73% of the 136 total U.S. burn centres.

Furthermore, of the approximate 300 total U.S. burn surgeons, 244 have now been trained and certified with Recell. And 147 of these surgeons used Recell during the quarter.

Margins

AVITA’s gross margin has softened over the last 12 months from 84% to 76%. This reflects a lower Recell price point for units that were purchased under contract with BARDA. The company’s contract with BARDA was negotiated prior to the establishment of a higher price point achieved in the Recell commercialisation in the United States.

Positively, the company offset this with a reduction in its operating expenses. They came in at US$13.2 million for the third quarter, which is down from US$19.7 million a year earlier. Management advised that this was primarily attributable to lower stock-based compensation along with lower sales and marketing expenses.

Nevertheless, this wasn’t enough to stop AVITA from recording a quarterly net loss of US$6 million. Though, this is a big improvement on last year’s third quarter loss of US$15 million.

This left the company with cash of US$114.9 million at the end of the period.

Q4 guidance

Management advised that total revenue is expected to be in the range of US$8.2 million to US$8.6 million in the fourth quarter.

This comprises US$5 million to US$5.3 million of commercial Recell revenue and US$3.2 million to US$3.3 million of Recell revenue associated with BARDA.

AVITA’s Chief Executive Officer, Dr. Mike Perry, said: “We made steady progress over the last quarter as we continued to drive RECELL usage in our established hospital burn center base with an increasing focus on smaller burns, and we continued to expand our physician training and outreach programs. As pandemic headwinds abate, we plan to leverage our highly experienced burns sales force and strong relationships built to date with the burn practitioner community to increase hospital access and to penetrate deeper into our existing accounts, resulting in additional procedures and engaging more burn practitioners.”

“Our three pivotal clinical trials in vitiligo, trauma, and pediatric burns are continuing on schedule and we expect to see expanded indications for RECELL coming online, allowing us to serve an ever-growing population of patients,” he added.

More reading

• Is the Carsales (ASX:CAR) share price in the buy zone after its acquisition?
• The Crown (ASX:CWN) share price is in focus today. Here’s why
• Is the Pro Medicus (ASX:PME) share price a buy after its contract win?
• Top broker gives its verdict on the Xero (ASX:XRO) share price
• 2 buy-rated ASX bank shares with huge dividend yields

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 Avita Medical Limited. The Motley Fool Australia has recommended Avita Medical 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 Carsales.Com Ltd (ASX: CAR) share price remains in a trading halt on Friday.

This follows a request on Wednesday by the auto listings company to halt its shares while it raises funds for a major new acquisition.

What is Carsales acquiring?

Carsales has signed an agreement to acquire a 49% stake in United States-based business Trader Interactive for approximately US$624 million (A$800 million). The company also has a call option to acquire the remaining interest on specified terms in the future.

Management believes the acquisition represents a strategically compelling opportunity to further build out its international scale and industry diversification. Furthermore, it gives it exposure to attractive verticals in the massive United States market.

The deal is expected to be earnings per share positive on a pro-forma basis, with mid-single digit earnings per share accretion from year one.

To fund the acquisition, Carsales is looking to raise $600 million via a pro rata accelerated renounceable entitlement offer with retail rights trading. The entitlement offer will be conducted at $17.00 per new share, which represents a 12.9% discount to its last close price.

Is the Carsales share price a buy when it returns?

According to a note out of the Macquarie Group Ltd (ASX: MQG) equities desk, its analysts believe the Carsales share price is fully valued. As a result, it isn’t in a rush to recommend it as an investment at this point.

In response to the acquisition announcement, the broker has retained its neutral rating and cut its price target on its shares to $20.80.

Macquarie believes the acquisition makes strategic sense and feels the deal is fairly price. However, it also believes that the timeframe and scale of future revenue growth is unclear and notes that it has increased the company’s overall risk.

Based on the current Carsales share price, Macquarie’s target price implies potential upside of approximately 6.5%.

More reading

• 5 things to watch on the ASX 200 on Friday
• Brokers name 3 ASX shares to buy now
• ASX 200 drops again, Pushpay rises, CSR climbs
• Carsales (ASX:CAR) share price halted to raise funds for major US acquisition

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. 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.

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Shares in Crown Resorts Ltd (ASX: CWN) are in focus after news the company could potentially open its $2.2 billion casino in Sydney by the end of 2021. The Crown share price closed yesterday’s session trading at $12.75.

Crown was deemed unfit to run Sydney’s Barangaroo casino in February following a yearlong inquiry by Commissioner Patricia Bergin. The inquiry uncovered allegations of money laundering.

Now, Crown is working with the Independent Liquor and Gaming Authority (ILGA) to receive approval for a casino licence in the state of New South Wales. 

Yesterday, ILGA chair Philip Crawford told media the verification of Crown’s suitability to run the casino could potentially be completed by the end of the year.

The Crown share price didn’t noticeably react to the news early yesterday afternoon when it was covered by a number of media outlets. Crown provided its own update regarding the matter to the ASX after market close on Thursday. 

Commitments

Both Crown and Crawford said the company has committed to a number of measures in a bid to open the casino with the ILGA’s approval, which it could possibly receive in the third quarter of this year.

The commitments include paying $12.5 million towards the costs of the Bergin Inquiry and working towards banning smoking indoors.

Crown must also “evaluate the necessary steps towards the introduction of cashless gaming alternatives” and link all money gambled to recognised financial institutions.

It has already ceased dealings with international junket operations and agreed to pay a yearly $5 million Casino Supervisory Levy for this year and next, as advised by ILGA.

In yesterday’s press conference, Crawford said Crown was on the right path, but not out of the regulatory woods yet. He said:

If we continued to meet [the resistance Crown showed the ILGA during the Bergin inquiry], it was my own thought that, it would be very hard to get them to suitability. It’s just too hard to regulate someone who doesn’t want to be regulated… we needed to see some good will on their part, and the ability to work with us. I must say that I’ve been pleasantly surprised…

I’m not here today to tell you that they’re suitable, there is work to be done… first of all, there is an audit being done of their bank accounts — one of the primary focuses there is to make sure organised crime has not infiltrated the bank accounts of the Crown group…

Until we get sign-off that those accounts haven’t been infiltrated then that’s a key issue for us about suitability.

How long these audits will take? I don’t know. It could be, probably ambitious to say, the end of June but probably it’ll go just into the third quarter of the year. But, if you look back to February, there’s no doubt that Crown working with us has achieved a lot.

Commentary from management 

Crown’s executive chair Helen Coonan commented on ILGA’s confidence in Crown’s potential suitability, saying it was welcome. Coonan said:

It’s important to know we are well on track but I have assured the regulator there will be no complacency as we continue to embed the changes to improve our governance and compliance processes across the organisation.

Crown share price snapshot

Despite Crown’s difficulties this year, its share price has performed well so far.

Currently, the Crown share price is up 32% year to date. It’s also gained more than 40% over the last 12 months.

The entertainment company has a market capitalisation of around $8.63 billion, with approximately 677 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 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 Pro Medicus Limited (ASX: PME) share price overcame weakness in the tech sector on Thursday and pushed higher.

The health imaging software provider’s shares rose 1.5% to $41.15.

This latest gain means the Pro Medicus share price is now up 17% since the start of the year.

Why did the Pro Medicus share price avoid the selloff?

Investors were buying Pro Medicus’ shares yesterday after it announced another major new contract win.

According to the release, Pro Medicus has signed an 8-year deal with The University of Vermont Health Network worth $14 million.

The deal will see Pro Medicus deploy its Visage 7 Enterprise Imaging Platform across six hospitals operated by the University. Once the system is fully functional, a unified diagnostic imaging platform will run across the network. This will replace the multiple legacy PACS platforms that are currently being used.

What was the reaction?

According to a note out of Goldman Sachs, it was pleased but unsurprised by the contract win.

The broker notes that the contract is the seventh the company has won in the last 11 months, of which four have been fully cloud based.

The latter is important to note, as the broker believes customers are increasingly seeking cloud-deployment and the Visage solution is the only one currently available that can be fully cloud-deployed at scale.

However, one slight concern that Goldman Sachs has is the slow progress being made in the mass-market channel.

It commented: “Whilst we have clearly seen an increased cadence of contract wins through recent periods, the quid pro quo is a potentially shorter runway from here. Visage 7 now operates in 5 of the Top 10 hospitals in US, and has so far shown relatively slower progress in the more price-sensitive, mass-market channel.”

“Whilst we see little reason why Visage 7 can’t penetrate this market more effectively over time, we expect uncertainties around capital budgets to persist across this channel for longer than in the leading academic institutions. Although PME’s larger customers argue that Visage’s price premium is repaid in efficiency gains, the value proposition is likely less compelling for the lower volume facilities, and so we will wait to see evidence of this dynamic playing out before formally accommodating it into our forecasts.”

“Nevertheless, the nature of the recent wins suggests a broadening of interest across different types of customer, which we believe is underpinned by PME’s current technology advantage over peers, and will remain important to the longer-term trajectory,” it added.

Is the Pro Medicus share price good value?

While Goldman hasn’t made any adjustments to its recommendation and forecasts yet, as things stand, it has a buy rating and $53.80 price target on the company’s shares.

Based on the current Pro Medicus share price, this represents potential upside of 31% over the next 12 months.

More reading

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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 and recommends Pro Medicus Ltd. The Motley Fool Australia has recommended Pro Medicus 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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