Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a large number of broker notes this week.

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:

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

According to a note out of Macquarie, its analysts have retained their outperform rating and lifted their price target on this banking giant’s shares to $30.00. Although the ANZ share price has performed strongly in recent months, the broker believes it can still go higher. This is due partly to its expectation that ANZ will deliver a better result than its big four rivals. The ANZ share price is fetching $27.89 this afternoon.

CSL Limited (ASX: CSL)

A note out of Credit Suisse reveals that its analysts have upgraded this biotherapeutics giant’s shares to an outperform rating with a slightly reduced price target of $315.00. According to the note, the broker acknowledges that trading conditions are somewhat tough and that CSL’s earnings could fall short of analyst expectations. However, it appears to believe this is understood by the market based on its share price performance. And while it sees potential threats in the global plasma market, it believes demand for CSL’s products would still be strong enough to underpin solid growth. The CSL share price is trading at $266.87 on Wednesday.

WiseTech Global Ltd (ASX: WTC)

Another note out of Macquarie reveals that its analysts have upgraded this logistics solutions company’s shares to an outperform rating with a $33.00 price target. According to the note, the broker believes the worst of the pandemic is now behind the company and has upgraded its earnings forecasts to reflect this. And while Macquarie is forecasting a moderation in its revenue growth in the coming years due partly to fewer acquisitions, it expects this to result in higher quality earnings. The WiseTech share price is trading at $28.05 this afternoon.

More reading

• The ANZ (ASX:ANZ) share price is Macquarie’s top big four bank pick
• Down 18%: Is the CSL (ASX:CSL) share price a buy?
• Why the Xero (ASX:XRO) share price is outperforming today
• Is now the time to invest into the CSL (ASX:CSL) share price?
• How to counter the ASX 200’s Achilles heel

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 CSL Ltd. and WiseTech Global. 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 Top brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2QuUM3b

Macquarie Group Ltd (ASX: MQG) has run the ruler over the big four banks and believes the Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price represents the best upside relative to its big four peers. 

Big banks lifting the ASX 200 

The resurgence of the big four banks in 2021 has helped offset the weakness in other sectors including healthcare, materials and information technology. Without the support of the big four heavyweights, the ASX 200 would find itself in negative year-to-date returns. 

A significant decline in bad debt and impairment coupled with a strong property market has helped propel banks to near pre-COVID highs. 

The Commonwealth Bank of Australia (ASX: CBA) share price has been the weakest performer among its peers, up ~3% year to date and within ~6% of its February 2020 highs. 

The National Australia Bank Ltd (ASX: NAB) share price is up ~13% year to date and also within ~6% of where it was a year ago. 

The Westpac Banking Corp (ASX: WBC) share price has surged the most, running ~23% this year, and ~7% shy of its February 2020 levels. 

The ANZ share price is the first big four bank to top its pre-COVID highs and has run ~21% higher year to date. 

The ANZ share price to outperform 

Macquarie notes that the ANZ share price has re-rated since the beginning of the year, but offers more upside than its peers on a relative basis. Moving forward, the broker expects the bank to continue to perform better than its counterparts and deliver comparably better results. 

Macquarie retained an outperform rating for ANZ shares on Wednesday and raised its target price from $28.50 to $30.00. This represents an upside of ~7.50% from the current ANZ share price of $27.90. 

What about the other banks? 

On the same day, Macquarie commented that stretched valuations and longer-term headwinds have made it difficult to be bullish on banks. The broker has pivoted its preference from major banks to regional banks with the exception of ANZ. 

It viewed the CBA share price as neutral with an $81.50 target price, or downside of ~5% from its current price of $86.00. While the Westpac share price was also neutral rated with a $25.75 target price or an upside of ~6.5%.

More reading

• Macquarie sees near-term pain for the Afterpay (ASX:APT) share price
• Westpac (ASX:WBC) share price on watch after NZ update
• 8 ASX 200 shares rated as ‘outperform’ by brokers
• Fund managers have been buying Blackmores (ASX:BKL) and this ASX share
• A2 Milk (ASX:A2M) shares and one other slapped with sell ratings

Motley Fool contributor Kerry Sun 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 has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post The ANZ (ASX:ANZ) share price is Macquarie’s top big four bank pick appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/31fnneW

It has been a frustrating few months for shareholders of ASX healthcare company Nanosonics Ltd. (ASX: NAN), with the ongoing effects of the COVID-19 pandemic continuing to drive volatility in the Nanosonics share price.

After surging to a record high price of $8.25 in early January, the Nanosonic share price has slid 25% lower to just $6.16 as at the time of writing. Even some promising first-half FY21 results haven’t been enough to pull Nanosonic shares out of their nosedive.

Company background

Nanosonics is a healthcare company specialising in hospital-grade disinfection technologies for ultrasound devices. Its technology aims to reduce the number of outbreaks of preventable infections that occur in medical institutions.

The company’s flagship product is called trophon. It is a device that works by using high-frequency sonic vibrations to create a hydrogen peroxide mist that deep-cleans ultrasound probes. This “sonically activated” mist is more effective than disinfectant wipes or other similar cleaning products. This is because the droplets in the mist are small enough to get into tiny crevices and other openings in the ultrasound probe – killing bacteria, fungi and other nasties.

What’s moving the Nanosonics share price?

Nanosonics was initially quite heavily impacted by the COVID-19 pandemic. Despite reporting a resilient result for FY20 – with revenues up 19% year-on-year to $100.1 million – the company admitted to a significant slowdown in growth during the last quarter of FY20.

Across the world, the focus of most hospitals switched to the management of COVID-19 outbreaks. Combined with bans on elective surgeries in many jurisdictions, this meant that demand for ultrasound cleaning devices dropped off significantly during the pandemic.

However, over the last few months of 2020, Nanosonics shares surged higher as the company reported early signs of a recovery from the worst impacts of the COVID-19 pandemic. In a November business update, Nanosonics stated that there had been a 16% rise in the number of trophon units installed during the first four months of FY21 versus the last four months of FY20.

After pushing the Nanosonics share price to a new high of $8.25, investors deserted the company in early January. Though without any news reported by the company at the time, it’s difficult to speculate as to why investors were so turned off.

Recent financial results

In the company’s first-half FY21 results, announced to the market in late February, the company stated that it was continuing to show signs of recovery from the worst of the pandemic. Revenues for the second quarter FY21 were up 48% over the previous quarter, driven by a 38% increase in the number of new trophon units installed.

Despite these positive signs of increasing business momentum, the overall result was predictably low when compared to the prior corresponding period. Total revenues of $43.1 million for the first-half FY21 were 11% lower than the first-half FY20, while operating profit before tax also declined significantly, from $6.7 million for the first-half FY20 to just $0.2 million for the first-half FY21.

Outlook

While not committing to a specific revenue target, Nanosonics CEO and President Michael Kavanagh stated that he was “optimistic” about market opportunities for the second half of the year. He commented that “the positive growth trend and improving market conditions experienced across the half are expected to continue, subject of course to the inherent risks and uncertainties associated with the COVID-19 pandemic.”

More reading

• 5 of the best ASX shares to buy next week
• Top brokers name 3 ASX shares to sell next week
• Here are 4 ASX shares that insiders have been buying recently
• The Nanosonics (ASX:NAN) share price is down 25% in 2021: Time to buy?
• Why Flight Centre, Life360, Nanosonics, & Universal Store are racing higher

Rhys Brock owns shares of Nanosonics Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics 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 Nanosonics (ASX:NAN) share price is down 25% this year appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2NQ6IvA

The Airtasker Limited (ASX: ART) share price is on fire again on Wednesday following its incredibly successful IPO on Tuesday.

Australia’s leading marketplace for local services saw its shares rocket a massive 86% earlier today to reach a new high of $1.95.

When the Airtasker share price hit that level, it meant it was up a whopping 200% from its IPO listing price of 65 cents.

At the time of writing, the company’s shares have eased back a touch but remain up 59% to $1.67.

What is Airtasker?

Airtasker operates Australia’s leading marketplace for local services. It also has operations in Ireland, New Zealand, Singapore, the United Kingdom, and the United States. As of its listing, there were more than 4.3 million registered users on Airtasker’s marketplace.

From its platform, consumers are able to search for relevant independent workers to handle everyday tasks. These include handyman jobs, domestic cleaning, removals, gardening, and furniture assembly.

The company estimates that the total addressable market for local services in Australia is currently $52 billion and growing. Whereas including all its international operations, its aggregated total addressable market is worth $591 billion in 2019.

As a comparison, the company is currently on course to meet or exceed its prospectus forecasts. This will mean gross marketplace volume (GMV) of $143.7 and revenue of $24.5 million in FY 2021.

Clearly, it has a long runway for growth ahead of it.

Valuation

While Airtasker looks to have a very bright future, it is worth noting that a significant amount of growth is already being built into its shares.

Based on the current Airtasker share price and its 420.6 million shares outstanding, the company has a market capitalisation of just over $700 million.

That means its shares are currently changing hands for approximately 28.5x estimated FY 2021 sales.

Given this lofty valuation, Airtasker shares are certainly a high risk commodity right now.

More reading

• How does Airtasker (ASX:ART) stack up against its peers?
• ASX 200 dips, travel shares drop, Pushpay soars
• Airtasker (ASX:ART) share price cools after explosive IPO
• Airtasker (ASX:ART) share price rockets 78% after IPO
• Airtasker’s ASX debut happens tomorrow, after 24-hour delay

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.

The post Airtasker (ASX:ART) share price surges a further 86% higher appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3tTsuOr

The Bitcoin (CRYPTO: BTC) price is down 1.3% over the past 24 hours. One Bitcoin is currently worth US$54,203 (AU$70,400). At that price, the world’s largest crypto has a market cap of US$1.01 trillion, according to data from CoinDesk.

Bitcoin is now down 12% from its record US$61,557, which it reached less than 2 weeks ago on 14 March. However, the digital token is still up more than 85% in 2021. And it’s up more than 700% over the past 12 months.

That’s great news if you bought and held onto Bitcoin over the past months.

But according to Bank of America, it’s far from great news for mother earth.

Why Bank of America is sounding the alarm on a rising Bitcoin price

You may have heard that the currency uses a good bit of energy. That’s because the Bitcoin miners, those companies using vast arrays of computers to verify transactions and “mine” new Bitcoins, obviously need to plug into a power source.

But you may not be aware of just how much power Bitcoin really uses. Or that, as Bank of America Corp (NYSE: BAC) revealed in a report, as the Bitcoin price rises, the cryptocurrency uses more power.

Commentary

As Bloomberg reports, according to Bank of America:

The level of emissions, which have risen alongside a spike in Bitcoin’s price, have grown by more than 40 million tons in the past two years. And when the digital asset is trading around $50,000 – which it’s done for much of this year – it uses about 0.4% of global energy consumption.

And as the Bitcoin price rockets, so too does the incentive to mine more of it. Not to mention the US$61 billion worth of transactions that needed blockchain verification over the past 24 hours.

Francisco Blanch is the head of commodities and derivatives research at Bank of America. Blanch said:

What I’m concerned about is the pace of growth in the demand for energy. The rate of change is enormous — nothing is growing at this pace in the energy world… Right now, this thing is taking a lot of energy and it’s possible that if everyone comes in and prices go higher, then it’s going to be way more energy.

So how much energy does Bitcoin use at the current price?

According to the Bank of America report, Bitcoin now uses more energy than the Czech Republic, Chile, or Greece. And it’s within a whisker of overtaking the energy usage of the Netherlands. And with much of the global Bitcoin mining conducted in China, which relies heavily on coal-fired power plants, the crypto’s carbon footprint is reported to equal that of American Airlines Group Inc (NASDAQ: AAL).

While Bitcoin fans point out that other financial transaction (such as printing and moving around cash) also use energy, it will be interesting to see if the Bitcoin exchange-traded funds (ETFs) come under fire from the rising trend of environmental social governance (ESG) investors.

More reading

• Warren Buffett’s share portfolio revealed!

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 Bank of America is worried about the rising Bitcoin (CRYPTO:BTC) price appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3vNeAPs

The Element 25 Ltd (ASX: E25) share price is firmly in the red this morning, down 7.8% at $2.46 at the time of writing.

This comes after the ASX resource explorer emerges from a 2-day trading halt it requested pending today’s capital raising announcement.

Below, we take a look at the details of Element 25’s capital raising.

What did Element 25 report today?

The Element 25 share price is moving lower this morning after the company reported it had received commitments from investors for a $35.5 million capital raising.

The placement of 16,136,364 shares, which Element 25 said received strong support from “a leading Swiss ESG fund”, was made at $2.20 per share. While that’s 8% above Element 25’s 30-day weighted average share price before the placement, it’s 18% below yesterday’s closing price of $2.68 per share.

As the lead broker in the capital raising, Blackwood Capital will receive a fee of 5% of the raised funds.

How will the funds be used?

Element 25 said it intends to use the new capital to fund the stage 2 expansion of manganese concentrate production at its 100% owned Butcherbird Manganese Project in Western Australia.

The company also intends to speed up its plans to produce Lithium-Ion battery-grade manganese sulphate from the project. It stated that:

Manganese is emerging as an increasingly important ingredient for EV batteries, with potential supply constraints for nickel and cobalt forcing battery manufacturers to look to high manganese cathodes to produce the vast amount of cathode material required by the EV industry in coming years.

The recent announcement by Volkswagen reinforces this transition to high manganese content on these cathode materials.

The company said the placement shares would be issued without shareholder approval.

Element 25 share price snapshot

Despite this morning’s decline, Element 25 shares are up a jaw-dropping 2,360% over the past 12 months. To put that in some perspective, the All Ordinaries Index (ASX: XAO) is up 47% over that same time.

Year-to-date, the Element 25 share price is up 57%.

More reading

• Element 25 (ASX:E25) share price takes a hit despite maiden production news

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 Up 2,360% in 1 year, why the Element 25 (ASX:E25) share price is tumbling 8% today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3f5OFg9

The REA Group Limited (ASX: REA) share price is one of the best performers on the S&P/ASX 200 Index (ASX: XJO) on Wednesday.

In afternoon trade, the property listings company’s shares are up 5% to $140.36.

Today’s gain means the REA Group share price is now up a sizeable 28% over the last six months.

Why is the REA Group share price outperforming today?

Investors have been buying the company’s shares this morning after it was the subject of a bullish broker note out of Macquarie Group Ltd (ASX: MQG).

According to the note, the broker has upgraded its shares to an outperform rating from neutral and increased the price target on them to $171.70.

Based on the current REA Group share price, this price target implies potential upside of 22% over the next 12 months. That’s even after factoring in today’s strong gain.

What did Macquarie say?

The note reveals that Macquarie made the move after its industry research pointed to a preference among real estate agents for REA Group’s platform ahead of rival Domain Holdings Australia Ltd (ASX: DHG).

It feels this bodes well for the company and suspects it will be in a position to increase listing prices due to its superior audience size. In respect to this point, when the company released its half year results last month, it revealed that it was commanding over 3 times more traffic to its site than its nearest rival.

Macquarie isn’t the only bullish broker. A note out of Morgan Stanley last month reveals that its analysts have an overweight rating and $175.00 price target.

Whereas a note out of Goldman Sachs in February shows that its analysts have a buy rating and $159.00 price target on its shares.

In light of the above, despite being up 28% over the last six months, the REA Group share price appears to have the potential to keep on climbing.

More reading

• Where to invest your BHP (ASX:BHP) dividends
• 3 unstoppable ASX shares that keep growing
• 3 ASX shares benefitting from a booming property market
• 2 fantastic blue chip ASX shares that could be strong buys
• 2 blue chip ASX shares that could be strong buys

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 REA 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 REA Group (ASX:REA) share price jumps on broker upgrade news appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3d1Fb2L

The Invictus Energy Ltd (ASX: IVZ) share price is climbing in late morning trade. This comes as the company announced that it has completed a share placement. At the time of writing, the energy producer’s shares are up 7.1% to 15 cents.

Let’s take a closer look and see what Invictus Energy updated the ASX market with.

Completed placement

The Invictus Energy share price is racing higher following a successful capital raise.

According to its release, Invictus Energy advised it has received firm commitments to raise $8 million through a private placement. The offer was presented to new and existing institutional and sophisticated investors.

Under the placement, Invictus Energy will issue 25,058,198 fully-paid ordinary shares under listing rule 7.1. This allows up to 15% of its shares to be issued without shareholder approval.

Furthermore, another 47,669,075 new shares will be allocated to eligible investors under an additional listing rule 7.1A placement capacity.

In total, 72,727,273 ordinary shares will be allotted at an issue price of 11 cents per new share. Thus, this offer represents a discount of 10% on the 15-day volume-weighted average price (VWAP).

Attached to the shares will be an unlisted option of a 1-for-2 basis, with an exercise price of 17 cents. The options will have a 3-year expiry date. A maximum of 36,363,636 new options is to be issued.

Furthermore, proceeds of the placement will be used towards a number of strategic initiatives. This includes commencing the company’s 2D seismic campaign in the Mzarabani Prospect, as well as general working capital.

Management commentary

Invictus Energy managing director Scott Macmillan commented:

We are extremely pleased with the excellent support received from new and existing shareholders and it is a strong endorsement of our Cabora Bassa project and the exciting and world class Mzarabani-1 Prospect which the Company is preparing to drill.

The Company will also use part of the proceeds from the placement to order long lead drilling equipment and undertake a rig tender exercise. In addition, the placement will provide ongoing working capital to support the development of the project as it continues to prepare for a high impact basin opening drilling campaign, anticipated in late CY21/early CY22.

About the Invictus Energy share price

The Invictus Energy share price has gained an astonishing 1,350% in the past year. It has also gained over 160% year-to-date. The company’s shares are within sights of reaching its multi-year high of 15.7 cents achieved late last week.

Invictus Energy has a market capitalisation of roughly $69 million, with around 477.4 million shares on issue.

More reading

• Why the Invictus Energy (ASX:IVZ) share price is up 100% this year

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 Invictus Energy (ASX:IVZ) share price is climbing 7% today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3siBpZ9

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.

Pfizer Inc (NYSE: PFE)‘s success in developing an effective COVID-19 vaccine in record time has given the pharmaceutical giant the confidence to invest heavily in the technology that underpins that vaccine. In an interview with The Wall Street Journal on Tuesday, CEO Albert Bourla revealed that Pfizer plans to become a leader in the development of new vaccines that rely on messenger RNA (mRNA).

Unfortunately for BioNTech (NASDAQ: BNTX), those plans don’t rely on a continuation of the collaboration agreement that brought the world its first authorized mRNA-based vaccine. According to Bourla, Pfizer doesn’t need to work with BioNTech anymore because it has the expertise to develop those new vaccines on its own.

Pfizer still has options to license two more BioNTech vaccines, one directed against cytomegalovirus (CMV) and another meant to prevent respiratory syncytial virus (RSV). Despite a great deal of effort over the past 50 years, there still aren’t any effective vaccines approved to protect against those viruses. 

If Pfizer can rapidly develop new mRNA vaccines as Bourla suggests, it’s easy to see why the company would rather strike out on its own. Pfizer and BioNTech are splitting the profits on BNT162b2 evenly at the moment. It’s hard to say how much will hit their bottom lines, but the partners expect sales of the COVID-19 vaccine to reach around $15 billion this year.

If it turns out that annual booster shots are not needed, coronavirus vaccine sales could taper off significantly before the end of 2022, then dwindle to nearly nothing by 2024. BioNTech will have plenty of cash to fund the development of new mRNA drugs on its own, but competing with Pfizer will be a challenge. Bourla also said Pfizer intends to apply recently learned lessons to develop new mRNA vaccines at a blistering pace in the future.

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

More reading

• Johnson & Johnson coronavirus vaccine wins FDA authorisation

Cory Renauer 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 Pfizer to develop mRNA vaccines without BioNTech appeared first on The Motley Fool Australia.

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

from The Motley Fool Australia https://ift.tt/3vSTD5D

Macquarie Group Ltd (ASX: MQG) has come out with bleak commentary for the buy now, pay later industry. Its analysts have mapped a 10-year flightpath for the sector, highlighting leading indicators, inflection points and key triggers.  

It believes that Afterpay Ltd (ASX: APT) will face industry consolidation headwinds in the near-term, before a better long-term outlook. The broker has retained a neutral rating with a $120 target for the Afterpay share price. 

At the time of writing, Afterpay shares are up 0.3%, trading at $107.46.

“Pain before gain” 

Macquarie expects the near-term to be a “pain before gain” scenario for the Afterpay share price. Its report studies other industries that have experienced a boom-bust cycle that resulted in the industry emerging healthier in the long-term. 

The report observes trends such as China’s autos share price index that increased rapidly from 2016-2018 due to growing wealth levels and government stimulus. 2018 was also when the index logged its first year of negative growth since 1990, with factors such as emerging electric vehicles creating a significant oversupply.

After a two-year consolidation period between 2018 to 2020, the market experienced a significant rebound to return to levels prior to oversupply. Similar trends are observed in China’s cement share price index and the more recent resurgence of lithium prices. 

Looking at the BNPL industry, the Macquarie report said: 

The BNPL industry has seen explosive growth in the past few years and quickly gained popularity as a payment alternative, but as with many other such trends experienced in the past (China Commodities in 2015, China Autos in 2018), we think an excessive number of participants has entered the industry in the near term resulting in industry overcapacity.

We expect this to be followed by a few years of industry consolidation (i.e. pain for all players) before industry normalisation at a healthier supply/demand equilibrium.

What does the long-run look like for the Afterpay share price? 

Macquarie has described the “pain before gain” scenario as a period that typically lasts for 1-2 years, followed by a year or so of recovery before prices eventually return to levels prior to oversupply.  

As for the Afterpay share price, the broker is positive on its long-term outlook and bullish on its recent expansion into Europe. However, acknowledges the near-term pressure the industry is likely to experience.

Over time, the broker believes that “the strong become stronger and the weak get weaker”. The consolidation period could see weaker companies either fading out or being acquired by larger BNPL companies. 

More reading

• 8 ASX 200 shares rated as ‘outperform’ by brokers
• Why the Xero (ASX:XRO) share price is outperforming today
• Afterpay and Zip were among the most traded ASX shares last week
• The Fortescue (ASX:FMG) share price is down 20% in March
• How to counter the ASX 200’s Achilles heel

Motley Fool contributor Kerry Sun 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 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.

The post Macquarie sees near-term pain for the Afterpay (ASX:APT) share price appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3faCFdc