Little Green Pharma Ltd (ASX: LGP) shares are on the rise this morning following the company’s announcement of a new European distribution deal. The Australian medicinal cannabis manufacturer has signed an agreement that will see its products sold in Denmark. At the time of writing, the Little Green Pharma share price is trading 1.31% higher at 77.5 cents.

Let’s look closer at the company’s latest news.

Distribution in Denmark

Little Green Pharma has signed a 5-year, non-exclusive distribution agreement with Balancial Danmark ApS.

The agreement will see Balancial distributing Little Green Pharma-branded cannabis oil and flower medicines in the Scandinavian nation.

According to the company’s release, the deal is another step in its plan to grow its market share in key European medicinal cannabis markets.

It has already nabbed entry points into Germany, France, and the United Kingdom.

The agreement comes with certain terms and conditions. One being that Balancial cannot market or manufacture any other cannabis oil or flower products in Denmark until it has ordered 20,000 units from the Australian company.

 Another is that the Danish company must order at least 2,000 units per shipment, on a continuous basis.

Denmark is currently more than 3 years into a 4-year trial period for the use of medicinal cannabis products. Within the trial, medicinal cannabis prescriptions are 50% reimbursed (up to US$1,500 per year) by the state, and fully reimbursed for terminally ill patients.

Little Green Pharma states, since the trial’s introduction, medicinal cannabis patient count and prescription volumes have been growing quickly. As of February 2020, the market was expected to be worth 500 million euros and represent 2% of the population by maturity.

Commentary from management

Little Green Pharma’s managing director Fleta Solomon commented on the agreement:

LGP is pleased to announce another agreement for the distribution of LGP products into a prospective EU medicinal cannabis marketplace, and looks forward to collaborating with Balancial to help service our future Danish customers.

Little Green Pharma share price snapshot

The Little Green Pharma share price has been performing well on the ASX lately.

Currently, the company’s share price is up by around 38% year to date. It’s also up by around 158% over the last 12 months.

The company has a market capitalisation of around $101 million, with approximately 187 million shares outstanding.

More reading

• Leading brokers name 3 ASX shares to sell today
• Lynas (ASX:LYC) share price down 7% despite ‘strong’ quarterly update
• Why the Australian Primary Hemp (ASX:APH) share price is up 5%
• The latest 3 ASX shares leading brokers are urging you to buy now
• Woolworths (ASX:WOW) share price lower despite announcing $223m investment

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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On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below. Here’s why these brokers are bearish on these ASX shares:

A2 Milk Company Ltd (ASX: A2M)

According to a note out of Credit Suisse, its analysts have resumed coverage on this infant formula and fresh milk company’s shares with an underperform rating and $7.15 price target. The broker notes that Chinese birth rates are falling, which it fears could soon lead to a contraction in the infant formula industry in the lucrative market. It believes this could weigh on a2 Milk’s profit growth in the future. The a2 Milk share price is fetching $8.04 on Tuesday.

Mayne Pharma Group Ltd (ASX: MYX)

A note out of Macquarie reveals that its analysts have downgraded this pharmaceutical company’s shares to an underperform rating with an improved price target of 38 cents. The broker made the move partly on valuation grounds after some strong recent gains. And while Macquarie sees positives in the approval of its combined oral contraceptive Nextstellis in the United States, it isn’t enough to become more positive. Particularly given its belief that near term trading conditions will remain subdued. The Mayne Pharma share price is trading at 46.5 cents this morning.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

Another note out of Credit Suisse reveals that its analysts have retained their underperform rating but lifted their price target on this airport operator’s shares to $5.30. According to the note, the broker has increased its estimates to reflect the positive impact of the ANZ travel bubble on passenger volumes. It notes that this particular route accounted for 7% of passengers prior to the pandemic. However, even after making these adjustments, it still feels its shares are expensive at the current level. Especially given the risk associated with the roll out of COVID-19 vaccines. The Sydney Airport is currently fetching $6.06.

More reading

• Australia-NZ bubble now open! The 4 ASX shares impacted
• Why GPT, Mayne Pharma, Talga, & Zip shares are tumbling lower
• These 3 ASX shares have just hit 52-week highs or better
• ASX 200 Weekly Wrap: ASX 200 hits new post-COVID high
• Is the worst over for the A2 Milk (ASX:A2M) share price?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk and Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Lynas Rare Earths Ltd (ASX: LYC) shares are retreating on Tuesday after the company provided what it called a strong March quarterly update. At the time of writing, the Lynas share price is trading 6.9% lower at $5.94.

Let’s take a look at what the company reported.

Lynas share price slumps despite robust demand 

The Lynas share price is on the slide today despite the company reporting that heightened levels of demand for renewable technologies and electric vehicles saw it deliver another robust quarter.

Total rare earth oxide production for Lynas was 4,463 tonnes and total NdPr (Neodymium and Praseodymium) production was 1,359 tonnes for the quarter. This compares to a respective 3,410 tonnes and 1,367 tonnes produced in the second quarter of FY21 (2Q21). 

The company achieved sales revenue of $110 million for the quarter, in part due to the delay in cash collection from revenue generated in the December quarter. Invoiced revenue has continued to face delays due to the impact of COVID-19 on global trade and the blockage of the Suez Canal in March. 

Rare earth spot prices continue to gain momentum with 3Q21 sales averaging $35.5/kg compared to $29.5/kg in 2Q21 and $19.8/kg in 3Q20.  

In further news that could be dragging on the Lynas share price, the company reports that its Malaysia processing facility is operating at approximately 75% of original nameplate production. Its current focus is on improving cost performance and rare earth recoveries. According to the company, its production rate at this point in time remains sufficient to meet key customer demand while maintaining strict COVID-related health and safety protocols. 

Lynas 2025 foundation projects pushing ahead 

Lynas 2025 represents the company’s ambitious growth targets in driving production, diversifying its industrial footprint and becoming the supplier of choice to non-Chinese customers. 

During the quarter, Lynas continued to progress its 2025 foundation projects. 

These include its agreement with the United States Government to jointly fund the construction and development of a commercial Light Rare Earths separation plant in the US. Once operational, the project will secure a critical domestic source of high quality separated rare earth materials. The company is currently working through detailed engineering and design work for the heavy rare earths facility which is expected to be lodged with the US Government in the June Quarter. 

Lynas aims to drive production capability with the expansion of a new processing facility in Kalgoorlie, Western Australia. Today’s quarterly update highlighted an approval for the commencement of limited preliminary construction works from WA Government agencies. 

The company also announced that Prime Minister Scott Morrison publicly stated the construction of the Kalgoorlie facility is a “…gold standard example of the cooperation on critical supply chains between Australia and the US.”  

Lynas observes that critical mineral supply chains were discussed during the recent ‘Quad’ leaders meeting between Australia, the US, Japan and India. The company believes this reiterates the importance of its development plans and industry-leading role as the largest rare earth producer outside China. 

Despite a reasonably strong financial and operational update, the Lynas share price is slumping following the release of the update. Notwithstanding today’s weakness, the Lynas share price has still surged some 40% year to date and is within 14% of its 52-week high seen early last month. 

Based on the current Lynas share price, the company commands a market capitalisation of around $5.7 billion.

More reading

• These top 2 ASX 200 shares have thumped the index’s 2021 returns
• ASX stock of the day: The Greenland Minerals (ASX:GGG) share price is up 18% today
• The new race between US and China is good news for these ASX shares
• The Lynas (ASX:LYC) share price is bouncing back, what’s next?
• These were the best performing ASX 200 shares last week

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

The post Lynas (ASX:LYC) share price down 7% despite ‘strong’ quarterly update appeared first on The Motley Fool Australia.

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The Australian Primary Hemp Ltd (ASX: APH) share price is on the rise following the announcement of a new distribution deal.

At the time of writing, the company’s shares are swapping hands for 39 cents, up 5.41%.

What did Australian Primary Hemp announce?

Investors are sending Australian Primary Hemp shares higher after digesting the company’s latest positive update.

According to this morning’s release, Australian Primary Hemp secured its largest retail distribution agreement with Coles Group Ltd (ASX: COL).

Under the deal, the supermarket giant will range 5 additional Mt. Elephant products from Australian Primary Hemp. It is expected that the new inclusions will be available for purchase in stores from July 2021.

Australian Primary Hemp estimates that the agreement will generate roughly $3 million in revenue per year.

The latest news follows the successful relationship between both parties. In early March, Australian Primary Hemp signed its first retail distribution agreement with Coles to stock its Mt. Elephant ‘mylk’ hemp and oat milk range.

Australian Primary Hemp managing director and CEO Neal Joseph commented:

APH’s Mt. Elephant brand was developed to focus on capturing the demand for high-quality, plant-based ‘superfood’ products – with Australian-farmed hemp used in all our products.

This latest agreement with Coles represents APH’s largest retail distribution agreement with any retail partner, and we are proud to see Coles recognise the Mt. Elephant product range. We look forward to further potential agreements in the future as we further our Company’s development in becoming a producer, manufacturer, and distributor of premium hemp-based products.

Australian Primary Hemp share price snapshot

Over the last 12 months, the Australian Primary Hemp share price has gained around 190%, with year-to-date up 17%. The company’s shares reached a multi-year high of 62 cents earlier this year, before treading lower.

On valuation grounds, Australian Primary Hemp commands a market capitalisation of approximately $27 million, with 75 million shares outstanding.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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 market tumbled into the red this morning, but that didn’t stop these brokers from putting these ASX shares on their “buy” list.

The S&P/ASX 200 Index (Index:^AXJO) fell 0.5% in early trade no thanks to a weak lead from Wall Street overnight.

But many experts are still expecting ASX shares to deliver decent gains this year. If they are right, any pullback will be a buying opportunity.

Broker picks this ASX share to buy after its battering

If you are hunting for bargains, Morgans reckons you should put the Origin Energy Ltd (ASX: ORG) share price on your list.

This is even after Origin share price crashed on the back of a profit downgrade late last week.

The energy company cut its FY21 Energy Markets earnings before interest, tax, depreciation and amortisation (EBITDA) to between $940 million and $1.02 billion. That’s down from its earlier forecast of $1 billion to $1.04 billion.

Overlooking the short-term pain

“There is no doubt that the next 12 – 18 months will be challenging for ORG,” said Morgans.

“However, the company is expecting to offset weaker revenue with cost reductions and its LNG business will reap more of the benefits of higher oil prices in FY22.

“While we expect near term challenges, we see upside potential in the medium term and maintain our ADD rating with a $5.79 price target.”

Opportunity to add during the cap raise

Another tumbling ASX share to watch is the Seven Group Holdings Ltd (ASX: SVW) share price. Shares in the mining equipment conglomerate fell 4% to $22.50 after it emerged from its trading halt.

The group is undertaking a $550 million capital raising and the Seven Group share price is right bang on the new share offer price.

UBS reckons investors should buy the dip even as the dilution from the cap raise prompted it to lower its 12-month price target to $27.35 from $27.50 a share.

The broker has a bullish outlook on two of Seven Group’s main businesses, Coats Hire and WesTrac. These businesses are leveraged to the booming mining sector and the large pipeline of infrastructure construction projects.

ASX share to buy ahead of its results

Meanwhile, Citigroup reiterated its “buy” recommendation on the Resmed CDI (ASX: RMD) share price ahead of its results.

The sleep disorder treatment company will release its quarterly earnings on 30 April. Citi expects it to post an earnings per share of US$1.34, which is ahead of consensus expectations of US$1.31.

Don’t need an another COVID booster shot

While ResMed’s results won’t be bolstered by extra demand for its equipment from COVID-19, Citi believes its organic business is tipped to grow by 9%.

“At constant currency, we forecast revenue growth of 5% and an FX benefit of ~4% due to the lower USD,” explained Citi.

“We believe that the company has performed very well operationally throughout the pandemic, growing market share.”

The broker’s 12-month price target on the ResMed share price is $29 a share.

More reading

• Why the Seven (ASX:SVW) share price is on watch
• ASX miners in focus as the copper price looks poised to crack above 10-year highs
• 5 things to watch on the ASX 200 on Tuesday
• Why is the Seven Group (ASX:SVW) share price frozen?
• Top broker picks ASX shares next in line for a profit upgrade

Motley Fool contributor Brendon Lau owns shares of Seven Group Holdings Limited. The Motley Fool Australia has recommended ResMed Inc. 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 Woolworths Group Ltd (ASX: WOW) share price is trading lower on Tuesday despite the release of an announcement.

At the time of writing, the retail conglomerate’s shares are down 0.5% to $41.81.

What did Woolworths announce?

This morning Woolworths announced that it is investing $223 million to increase its stake in Quantium from 47% to 75%.

Woolworths describes Quantium as a world-class data science and advanced analytics business.

Woolworths originally acquired 50% of Quantium in 2013 for a lowly $20 million. That acquisition led to the two parties entering into a long-term partnership that has enabled Woolworths and its supplier partners to make customer-first decisions across pricing, ranging, and promotions.

Since then, Quantium has experienced exponential growth both in Australia and internationally. This led to a significant increase in its valuation since its orginal investment.

Woolworths’ Chairman, Gordon Cairns said: “We have long admired the Quantium business. We have enjoyed a successful partnership with them over the last eight years by jointly developing products and services that provide critical insights to both Woolworths Group and our suppliers, helping us put our customers first in our decision making.”

This sentiment was echoed by Woolworths’ CEO, Brad Banducci.

He commented: “Advanced analytics is key to improving the experiences, ranges and services we provide to our customers and the support we provide to our teams and suppliers. The way we gather data, interpret it, and protect it, is becoming ever more important.”

“Through this transaction, we aspire to bring together Quantium’s advanced analytics capability and Woolworths Group’s retail capabilities to unlock value across our entire retail ecosystem. By working better together, we aim to transform the rapidly evolving retail sector, helping us better service our customers and support our team and supplier partners,” Mr Banducci added.

What now?

Following the completion of the transaction, Quantium will form part of Woolworths Group, and a new business unit called Q-Retail will be established.

Q-Retail will bring together Quantium and Woolworths Group’s collective data science and advanced analytics capabilities with a focus on delivering against the company’s advanced analytics aspirations.

Leading Q-Retail will be Amitabh Mall as Managing Director. He will also serve as Woolworths Group’s Chief Analytics Officer. Mr Mall joins the company after 20 years at the Boston Consulting Group where he most recently led their Consumer and Retail practice in Asia-Pacific.

More reading

• Wesfarmers (ASX:WES) share price climbs 10% in a month amid ‘favourable momentum’
• Top broker picks ASX shares next in line for a profit upgrade
• ASX 200 Weekly Wrap: ASX 200 hits new post-COVID high
• Westpac (ASX:WBC) and these ASX shares have just hit 52-week highs
• 2 blue chip ASX dividend shares to buy today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths 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 Volpara Health Technologies Ltd (ASX: VHT) share price is rising this morning following the release of a trading update. The healthcare technology company has been making tailwinds recently, reflecting a surge in its shares from March onwards. 

At the time of writing, the Volpara share price is trading at $1.44, up 0.015%.

How did Volpara perform?

Volpara shares are on the move today after the company provided investors with a business update for Q4 FY21.

For the period ending 31 March, Volpara experienced its largest ever quarterly sales performance. Annual Recurring Revenue (ARR) soared US$1.1 million in the period, bringing total ARR to US$18.6 million for the full year. This represents organic growth of 20% in ARR when compared to FY20. That’s not including the recently acquired CRA Health business. Management highlighted that strong result attained is despite increased churn related COVID-19 costs and customer-related COVID-19 IT delays.

Underpinning the performance, Volpara noted that it won its biggest sales contract to date for its Volpara live image positioning software. In addition, multiple customers expanded their existing deals, along with new major contracts from well-recognised academic centres. The company estimates that at least one of its software products is used by 32% of women in the United States.

Average revenue per user (ARPU) lifted to US$1.40 at the end of Q4. This compares to the ARPU of US$1.22 achieved at the end of the prior quarter. The company stated ARPU’s in Q4 ranged from US$1.00 to US$5.65.

Outlook

Looking ahead, Volpara is also focusing its efforts towards its risk and genetics growth strategy for FY22. Educational patient letters are set to be launched in October 2021 to engage directly with women needing breast cancer screening.

As part of the company’s realignment, CEO of Volpara Health, Katherine Singson, and director of United States sales, Debra Saunders, will depart. Current group CEO, Dr. Ralph Highnam, will assume the extra responsibilities from Ms. Singson. In addition, experienced industry executive Jill Spear will take over the reins from Ms. Saunders.

Words from the CEO

Dr. Ralph Highnam touched on the company’s results, saying:

The contracts that Volpara secured in Q4, despite the continuing challenges of the COVID-19 pandemic, show the clear clinical need for our products, the strength of our sales and marketing teams globally, and the successful pivot to a greater focus on risk and genetics.

We are very pleased with how the financial year has ended, and we look forward to accelerating out of COVID-19 in FY22 and to working ever closer with our new colleagues at CRA Health in Boston following its acquisition in early February.

Volpara share price summary

The Volpara share price is relatively flat when looking at its performance over the course of the last 12 months. The company’s shares reached a high of $1.715 in early February, before falling to a low of $1.19 in March.

The company’s shares finished yesterday at a price of $1.425.

More reading

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Aaron Teboneras 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 VOLPARA FPO NZ. The Motley Fool Australia has recommended VOLPARA FPO NZ. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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

In the unlikely event that you haven’t heard much about it lately, Johnson & Johnson (NYSE: JNJ) will report its first-quarter earnings before the market opens tomorrow. Investors are bound to be overflowing with questions about the healthcare giant’s performance. 

Two days after the earnings report, the company will have its annual meeting of shareholders. Whether you’re a shareholder or a potential buyer, tuning in will shed light on the future of the company, not just the most recent quarter. In particular, there are a few items that investors should pay close attention to, starting with the company’s latest coronavirus vaccine troubles.

1. When and how will the coronavirus vaccine issues be resolved?

The biggest thing to look for in the earnings report will be any clues about how management is going to handle the latest hitches with the company’s vaccine. In late March, manufacturing issues were slated to cause vaccine shipments to drop by 80%. These problems had their origin in a factory run by Emergent BioSolutions, where an accident led to the loss of up to 15 million doses. It’s unlikely that such a costly mistake will happen twice, but more clarity on how J&J plans to improve quality control will doubtlessly be on investors’ minds.

Then there’s the even more recent (and more pressing) problem. After eight recently vaccinated people developed severe blood clotting and one person died, the vaccine’s rollout in the U.S. is slamming to a halt at the behest of regulators. Across the Atlantic, the European Commission seems equally displeased at J&J’s abrupt announcement that its vaccine deliveries to the E.U. would be delayed until it knew more about the blood clotting issue. So far, the company’s response to the problem seems somewhat disorganized, which is very much out of character.

In all likelihood, the one-dose vaccine will return to deployment as soon as regulators understand the scope of the newly revealed risk. According to Janet Woodcock at the Food and Drug Administration, the process could be as quick as “a matter of days.” But, investors need to watch the issue carefully, especially with regard to management’s plans for a contingency in which the vaccine can’t be administered to certain populations due to the clotting hazard. Even a small reduction in its total addressable market could have a significant and negative impact on its expected revenue over the course of a year.

2. Are earnings still shrinking?

Vaccine woes aside, the company’s efficiency will be in focus with the release of its earnings report. While it isn’t a cause for alarm, J&J’s earnings shrunk by 2.7% in 2020 compared to 2019 even as sales grew by 0.6%. More recently, in the fourth quarter of 2020, earnings plummeted by 56.7% year over year, which might raise a few eyebrows if similarly sized contractions continue into 2021. Some of this drop is attributable to the negative economic impact of the pandemic, but there could be other factors at play. Management is unlikely to address the topic directly, but shareholders may find a few hints nonetheless.

Data by YCharts.

Specifically, investors should keep an eye on the company’s cost of goods sold (COGS) as well as its selling, general, and administrative (SG&A) expenses. Both have risen by upwards of 12% over the last three years, but it hasn’t stopped J&J’s free cash flow from steadily growing in the same period.

In closing, investors and potential buyers should keep in mind that the earnings update is just one bundle of new information. For a multinational corporation of its size, the results of one quarter aren’t going to define whether the stock is a good long-term investment. Still, worse-than-expected data could be an excellent opportunity to buy it at a rare discount.

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

More reading

• The Johnson & Johnson COVID vaccine halt: here’s what investors need to know
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• 2 top ASX ETFs to buy right now

Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Johnson & Johnson. 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 Temple & Webster Group Ltd (ASX: TPW) share price is under pressure on Tuesday morning.

At the time of writing, the furniture and homewares focused ecommerce company’s shares are down 5% to $10.18.

Why is the Temple & Webster share price under pressure?

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

According to the release, for the three months ended 31 March, Temple & Webster delivered a 112% increase in revenue over the prior corresponding period.

At the end of the period the company had ~750,000 active customers. This is up 10.6% from 678,000 at the end of the first half.

What about the fourth quarter?

Positively, while the company’s growth has moderated so far in the fourth quarter, its revenue is still higher than the prior corresponding period.

During the month of April, Temple & Webster achieved a 20% increase in revenue over the prior corresponding period. This is particularly impressive given that April 2020 was the fastest growing month last year due to the nationwide lockdowns.

Pleasingly, the company also reported that COVID-19 cohorts continue to perform better than historical cohorts.

Why are its shares trading lower?

Possibly weighing on Temple & Webster’s share price was management’s commentary relating to the future and its focus on revenue growth rather than earnings.

The company believes that COVID-19 has permanently accelerated online adoption in the Australian furniture and homewares market.

It explained: “… we estimate more than 20% of furniture & homewares was bought online in the US during 2020, and we believe Australia is following the same trajectory. We estimate that in 2020, ~9% of Australian furniture & homewares were bought online, an almost doubling of the ~5% bought in 2019. Online penetration in both markets is expected to continue to increase significantly.”

In light of the above and its online market leadership position, the company has reaffirmed its growth strategy.

This will see it building strong brand awareness to achieve a national brand status, using “tactical” pricing and promotions to increase conversion, investing in 3D and artificial intelligence capabilities, differentiating its range through new category additions and private label expansion, and growing its B2B sales teams.

This will of course come at a cost. As a result, management intends to focus on delivering strong double digit revenue growth with EBITDA margins in the 2% to 4% range.

Temple & Webster CEO & Co-Founder, Mark Coulter, said “You only need to look at the US to see how the e-commerce market is playing out, and why we remain bullish about the shift from offline to online. We are at the start of this once in a generation shift, and now is the time to put our foot down to secure market leadership and ensure we are the brand for the next generation of furniture shopper.”

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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 Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group 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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The Eroad Ltd (ASX: ERD) share price has been a solid performer on Tuesday morning.

At the time of writing, the transportation technology services company’s shares are 1% to $4.77.

Why is the Eroad share price charging higher?

Investors have been buying Eroad shares this morning following the release of an update on its performance during the fourth quarter of FY 2021.

According to the release, the company sold 2,726 contracted units during the quarter. This includes 1,054 MYEROAD Clarity Dashcam units in March. Management notes that this reflects continued growth across its markets.

The majority of the company’s new units were in the New Zealand market. Eroad added 2,295 units during the quarter in its home market after it secured a large New Zealand Enterprise customer, Toll New Zealand. This was supported by a 182 unit increase in North America and a 249 unit increase in Australia.

This left Eroad with a total of 126,203 contracted units at the end of the period.

Eroad guidance

Management also provided an update on its guidance for FY 2021 and FY 2022.

In respect to the former, Eroad continues to expect a small increase in second half revenue compared to the first half. Whereas EBITDA is anticipated to be similar to the first half’s figure. This reflects the acceleration of product development and increased sales and marketing costs associated with the launches of key products.

Looking to FY 2022, Eroad anticipates that revenue growth will strengthen, but not be at the level experienced in FY 2020.

It commented: “In New Zealand, EROAD expects similar growth to the last four years. In North America, targeting an increased addressable market through improved product market fit, to deliver increased unit growth. In Australia, growth during the next 2 years will come predominantly from an Enterprise pipeline of 15-20,000 vehicles.”

“As EROAD continues to accelerate new product delivery for future growth in FY23 and FY24, it anticipates spending 24-27% of revenue on R&D during FY22. However, the company anticipates EBITDA margin to be maintained but improving at the end of FY22, to provide further increased EBITDA margin.”

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 EROAD Limited. 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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