S&P/ASX 200 Index (ASX: XJO) gold shares are in the spotlight today.

Three of the top ASX 200 gold shares are all racing higher in late afternoon trading.

The Newcrest Mining Ltd (ASX: NCM) share price is up 3.7% to $27.69 per share.

The Northern Star Resources Ltd (ASX: NST) share price has gained 2.9% in intraday trading, currently at $11.21 per share.

And the Evolution Mining Ltd (ASX: EVN) share price leads the golden charge, with Evolution shares up 3.9% to %4.59 per share.

What’s supporting ASX 200 gold shares?

ASX 200 gold shares are broadly enjoying a lift in the gold price.

Analysts are crediting the yellow metal’s rise with a fall in the US dollar and declining US bond yields. Adding to that, growing angst over possible rising inflation may be spurring investors to seek out the classic inflation hedge.

An ounce of gold is currently worth US$1,763.48 (AU$2,281.35). That’s the highest level since 25 February.

Now, that’s well below the record high levels of just over US$2,065 per ounce, reached on 6 August last year. But it’s still up 4.6% since 31 March.

In that same time, Evolution Mining shares have gained 10.8%, while the Newcrest share price is up 13.5% since 31 March, and the Northern Star share price has soared 17.8%.

As my Foolish colleague, James Mickleboro, pointed out earlier today, Northern Star and Newscrest may be enjoying an extra boost thanks to a note from Goldman Sachs. The broker has upgraded both ASX 200 gold shares from neutral to a buy.

Why are the miners’ shares outpacing the price gains of gold?

If you look at the share price gains above again, you’ll see that the ASX 200 gold miners have seen their shares increase by more than double the gains in the gold price. In the case of Northern Star Resources, shares are up 286% the price of gold since 31 March.

Now that won’t always be the case. Other factors certainly impact on gold miners’ share prices. These include safety records, weather, drilling results that impact their gold estimates, and their costs to dig the yellow metal from the ground and bring it to market… among others.

But the price of the precious metal they dig from the ground does tend to have an outsized impact on their share prices.

You may have heard it said that gold shares are leveraged to the price of gold.

That’s because a gold miner’s costs are mostly fixed, regardless of whether they’re receiving $1,000 per ounce for their product or $2,000. So when the price does rise, as it’s done over the past 2 weeks, almost all of that goes straight to the miner’s bottom line.

And to a rising share price.

Do these miners pay dividends too?

Although many investors buy shares in gold miners hoping for some big share price gains, all 3 of these ASX 200 gold shares pay dividends as well.

Newcrest Mining has a current market cap of $22.7 billion and trades on a price to earnings (P/E) ratio of 17.6 times. Newcrest pays an annual dividend yield of 1.58%.

Northern Star has a market cap of $13.0 billion and trades on a P/E ratio of 26.2 times. Northern Star pays a dividend yield of 1.70%.

The leading dividend payer among the 3 ASX 200 gold shares is Evolution Mining. Evolution has a market cap of $7.8 billion and trade on a P/E ratio of 20.5 times. Evolution pays an annual dividend yield of 3.49%.

More reading

• The Monadelphous (ASX:MND) share price surges as Rio Tinto (ASX:RIO) overhang lifts
• Why you should buy these 2 defensive ASX shares today
• Why Eagers Auto, Mayne Pharma, Monadelphous, & Newcrest are pushing higher
• Eagers Automotive (ASX:APE) share price edges higher on trading update
• ASX 200 down 0.2%: Origin sinks on earnings downgrade, gold miners charge higher

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

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The Betmakers Technology Group Ltd (ASX: BET) has been an interesting performer on the ASX this week. This ASX share has drawn a lot of attention over the past month, largely thanks to the Betmakers share price appreciating 25% since mid-March.

We have seen significant volatility in Betmakers shares just this week, with the company hitting a new 52-week (and all-time) high of $1.28 yesterday and a low of $1.12 a share on Tuesday. That’s more than a 12% difference in just a couple of days, enough to give anyone an ASX whiplash (Mickey Rourke style).

But any long-term investor probably doesn’t mind too much. Betmakers shares are up almost 75% year to date, and up a staggering 577% over the past year. Talk about a winning hand!

So what’s been going on with the Betmakers share price this week?

Why is the Betmakers share price at all-time highs?

There hasn’t actually been any major news or developments out of Betmakers Technology this week that might easily explain its rather erratic share price movements. However, the Betmakers share price has been enjoying a couple of tailwinds for a few weeks now.

The first was its 22 March inclusion into the All Ordinaries Index (ASX: XAO). When an ASX share joins a major index like the All Ords, it usually gives the company something of a short-term boost. That’s because many investors, including international ones, use these indices as hunting grounds for their next investment. Thus, if a company joins, it usually increases the said company’s profile. It also means that any index funds that track the index in question have to buy into the company as well. 

Secondly, Betmakers gave an investor update at the end of last month that was well-received by investors. This update covered the 6 months to 31 December 2020. The company reported that revenues grew by an impressive 67% over the period, and it expects growth of a further 25% for the quarter ending 31 March 2021. 

The Betmakers share price responded very positively to this news and has been rising ever since, despite some minor pullbacks like what we saw on Tuesday.

At the time of writing, the Betmakers Technology share price is sitting at $1.23 after rising 3.8% today so far. At this pricing, Betmakers has a market capitalisation of $946.2 million and a trailing dividend yield of 2.87%.

More reading

• Why the Viva Leisure (ASX:VVA) share price is one to watch
• Why the Wisr (ASX:WZR) share price is on the move
• ASX 200 Weekly Wrap: ASX sees 7,000 points once more
• Why the Fatfish (ASX:FFG) share price is soaring today
• What’s happening with the Musgrave Minerals (ASX:MGV) share price?

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Betmakers Technology Group Ltd. The Motley Fool Australia has recommended Betmakers Technology 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 Brainchip Holdings Ltd (ASX: BRN) share price is rebounding today from its massive slump yesterday, where it lost nearly 10%.

The Brainchip share price is up 5.6% to 60.5 cents per share at the time of writing.

Brainchip is focused on the development of software and hardware-accelerated solutions for advanced artificial intelligence (AI) and machine learning applications.

Brainchip’s advanced artificial intelligence

These advanced artificial intelligence solutions are called neuromorphic computing. Neuromorphic computing is a branch of artificial intelligence (AI) that simulates the functionality of the human neuron. Essentially, Brainchip is trying to replicate the way the human brain learns and relates information in a computer chip.

The company has developed a revolutionary spiking neural network (SNN) technology, a type of neuromorphic computing that learns autonomously, evolves and associates information just like the human brain.

Brainchip’s primary product is its Akida Neuromorphic Processor Unit, which is a hardware product.

Brainchip’s Neuromorphic Processor starts production

The company released huge investor news two days ago when it confirmed that it has begun volume manufacturing of its aforementioned Akida AKD1000 neuromorphic processor chip for edge AI devices.

‘Edge’ in AI means that the AI program runs on the device itself and not on a cloud-based server.

BrainChip CEO Peter van der Made welcomed the news.

I am grateful to our engineering team, who worked hard over the past eight months to release the Akida technology for volume production, and to our EAP customers that have helped lead us to market readiness.

This move to manufacturing is a major milestone for BrainChip and for the industry at large as the first realistic opportunity to bring AI processing capability to edge devices for learning, enabling personalization of products without the need for retraining.

Brainchip share price snapshot

Brainchip investors also liked the news and sent its share price rocketing 19% that day, before a few appeared to immediately sell their interests the next day, culminating in a 9% drop.

Overall, the Brainchip share price has gained 9% this week, 6% the past month, 37% in 2021 so far and 1,307% over the past 12 months.

More reading

• Why BrainChip, Regis Resources, Whitehaven, & Zip shares are tumbling lower
• Why BrainChip, Dubber, Galaxy, & Resolute shares are charging higher
• Why the BrainChip (ASX:BRN) share price is rocketing 27% higher today
• Airtasker and Zip were among the most traded ASX shares last week
• Why BrainChip, Crown, Qantas, & Quickstep shares are tumbling lower

Motley Fool contributor Lucas Radbourne-Pugh 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 Strike Energy Ltd (ASX: STX) share price has come out of a trading halt today following the company’s successful placement. While Strike is pleased with the latest capital raising efforts, its shares have plummeted 9.33% to 34 cents.

Let’s take a closer look and see what Strike updated the ASX with.

Why is the Strike share price in negative territory?

A major catalyst for Strike shares sinking could be investor concerns about the impending dilution of shares.

According to its release, Strike advised it has received binding commitments from an array of institutions to raise $75 million. The strongly supported placement primarily came from local and international institutions, as well as other professional and sophisticated investors.

The placement will see 250 million new ordinary shares created at an issue price of 30 cents apiece. Strike will use its existing placement capacity under listing rule 7.1. This allows up to 15% of its shares to be issued without shareholder approval. The new shares will rank equally with Strike’s existing ordinary shares.

Strike recently announced a share purchase plan (SSP) to raise up to $5 million from eligible shareholders. The issue price was listed as the same offered in the placement.

Together, the company is seeking to raise $80 million (before transaction costs) to fund its transformation strategy. In addition, Strike is also allocating $10 million of its existing cash, further boosting funding reserves.

The proceeds will be used to delivered a number of strategic objectives, that include:

• project construction of Phase 1 of the Greater Erregulla project at West Erregulla
• gas resource addition in the Erregulla region via the 2D major seismic campaign and drilling of South Erregulla
• geothermal testing for the proposed Mid-West Geothermal pilot
• progressing the pre-FID milestones for the Project Haber proposed fertiliser development
• general working capital and corporate purposes.

Both the placement and the SPP’s new shares are expected to be allotted on Friday 23 April 2021.

Management commentary

Strike managing director Stuart Nicholls commented:

This highly successful capital raise, that attracted exceptionally strong demand, is an acknowledgment of the unique investment opportunity that is Strike as the company commences its transition to a fully integrated energy, renewable power and fertiliser company.

This raising marks the first time in 18-months since the discovery of West Erregulla that the Company has sort to raise capital from the equity markets. It also comes at a more than 30% premium to the last raise, which indicates the speed and quality of project delivery by the Company in the intervening period.

About the Strike share price

Over the past 12 months, the Strike share price has jumped more than 180%, and is up 30% year-to-date. The company’s shares recently reached an all-time high of 39.5 cents before being hit hard today.

Based on valuation grounds, Strike commands a market capitalisation of roughly $645.8 million, with 1.7 billion shares on issue.

More reading

• Why Mineral Resources, Origin, Strike, Whitehaven shares are sinking
• Strike Energy (ASX:STX) goes into trading halt for $80m cap raise
• Strike Energy (ASX:STX) share price rising on more WA gas discoveries
• Why the Strike Energy (ASX:STX) share price powered up today
• Why the Strike Energy (ASX:STX) share price opened 3% higher today

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 National Australia Bank Ltd (ASX: NAB) is seeing clear and widespread signs of businesses recovering from the coronavirus pandemic that drove last year’s recession.

NAB’s CEO Ross McEwan shared the news in his opening statement to the House of Representatives’ Standing Committee on Economics this morning.

Business owners and investors can now be reassured that the CEO of Australia’s largest business bank believes the country’s recovery is even better than he expected it to be.

ASX investors can rejoice, NAB affirms Australia’s recovery

McEwan told the House of Representatives that businesses will be the most important factor in Australia’s recovery.

He said NAB is currently approving more business loans that the banking giant was before the pandemic. Also, the bank’s latest monthly business survey has shown business conditions are at a record high.

“I see this when I visit customers around the country. They are more confident, and they are looking to expand. Others, particularly farmers, are choosing to pay off their loans faster – a trend we have seen previously in good times,” McEwan told the House of Representatives.

McEwan stated that, of the 130,000 business loans and mortgages NAB had paused in 2020, over 98% are no longer on deferral.

While the news will put a spring in the step of many Australians, McEwan warned not to get too excited just yet.

“The data we have is short term,” he said.

“We are only months into the recovery. Challenges and uncertainty do remain. While most of our customers are back on track, some sectors such as hospitality, transport, professional services and tourism continue to hurt because of COVID and more recently the floods and the cyclone in WA.”

NAB CEO’s advice to the government

McEwan said government support measures, such as the SME Recovery Loan Scheme, are vital to Australia’s economic recovery. Though he cautioned sometimes they won’t be enough.

He said the government must make it easier for small business to innovate and modernise their businesses. While he supports first home buyer incentives, he said states need to simplify their approval processes for land developments. Doing so would combat the housing crisis, he said.

He also said more needs to be done to resecure the international student market, commenting that more international students will bring life into Australia’s CBDs and supply businesses with seasonal labour. 

According to McEwan, to do all of the above, the government must prioritise 3 actions:

First of these priorities is for all of us to get behind the rollout of the COVID vaccine. I will be encouraging all my colleagues at NAB to be vaccinated and will support them to do so. Last week as I had my flu shot at work, I was considering how large employers like NAB could assist with the rollout of the vaccine. We would be happy to do so at the right time.

Secondly, as I’ve said before, we need to have a national plan for living with the virus. Short term lockdowns in capital cities disrupt travel plans, they undermine confidence and deter activity.

And the third is reopening our international borders. The travel bubble with New Zealand is very welcome and more of these arrangements are needed. This will show that Australia can manage international arrivals which is critical for confidence.

At the time of writing, the NAB share price is trading 1.19% lower on the ASX, swapping hands for $26.62.

More reading

• Why NAB (ASX:NAB) shares could take off: fundie
• This ASX telco and bank will go gangbusters: fundie
• ASX 200 rises, Zip (ASX:Z1P) flies, bank ratings upgraded
• Why Westpac (ASX:WBC) could be about to deliver a dividend surge
• Why the NAB (ASX:NAB) share price could push higher from here

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 Over The Wire Holdings Ltd (ASX: OTW) share price is having an interesting day today. Over The Wire shares are, at the time of writing, up 4.77% to $4.61 a share after closing at $4.40 yesterday afternoon. However, soon after open, the Over The Wire share price rose as high as $4.81, up almost 9% for the day before settling down to the current level.

Today’s move is the latest in what has been a pretty good few months for this company. Over The Wire shares are now up almost 30% since early January, and up almost 54% over the past 12 months. 

So who is this company? And why are Over The Wire shares rising so healthily today?

Over the Who?

Over The Wire is an IT company that provides internet and telecommunications services. The company helps businesses efficiently integrate their technology and communications infrastructure. Its main client base is mid-to-large businesses and enterprises. It has been listed on the ASX since 2015, where it has since gained more than 250% in value.

Over The Wire offers a multitude of internet connectivity options for businesses, including fibre, NBN, mobile data and wireless solutions. It also offers cloud-based products like data storage, VoIP and private networks. The company works with some big-name clients, including names like Ray White, Foodworks and National Storage REIT (ASX: NSR).

Over The Wire impressed investors mightily back in February when it reported its earnings for the 6 months to 31 December 2020. This report included a 17% increase in revenues over the prior corresponding half. Earnings before interest, taxes, depreciation and amortisation (EBITDA) also rose by 28%, while net profits after tax before amortisation enjoyed a 12% bump.

Why are Over The Wire shares climbing today?

At first glance, it’s hard to say exactly why we are seeing significant buying pressure for the Over The Wire share price today. There have been no major announcements or news out of the company since Wednesday. And those were just some paperwork, including a release regarding the company’s recently announced dividend of 1.75 cents per share. 

Zooming out though, and we can see that Over The Wire has had a few pricing spikes over the past 6 months or so. For example, the company closed at the prices of $4.10, $4.44 and $4.17 over 11-15 March last month. Perhaps we are seeing a repeat performance today. Otherwise, the big move upwards this morning might be a result of some institutional buying pressure. Over The Wire is a relatively small company, so any large fund managers buying in would conceivably cause a share price spike. 

ASX trading data does show that roughly 44,000 shares traded hands both yesterday and today so far. That’s a significant increase on the ~2,200 shares that swapped hands on Wednesday.

Whatever the cause, I’m sure Over The Wire investors are a happy lot today. At the current Over The Wire share price, the company has a market capitalisation of $273.8 million, a price-to-earnings (P/E) ratio of 54.2, and a trailing dividend yield of 0.87%.

More reading

• 3 ASX shares to buy for the real estate explosion
• 3 exciting small cap ASX shares for your watchlist
• 2 quality ASX dividend shares to buy next week
• The National Storage (ASX:NSR) share price is at a 52-week high. Here’s why
• 2 high quality ASX shares for retirees to buy today

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Over The Wire Holdings Ltd. The Motley Fool Australia has recommended Over The Wire Holdings 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a subdued note. At the time of writing, the benchmark index is down 0.1% to 7,053.2 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are sinking:

Mineral Resources Limited (ASX: MIN)

The Mineral Resources share price is down 5% to $42.92. This follows the release of a disappointing quarterly update this morning. According to the release, during the March quarter the company shipped just 4.1 million wet metric tonnes of iron ore. This compares to the average of approximately 4.8 million to 5.1 million wet metric tonnes per quarter required to achieve its guidance. Management blamed the weak shipments on a shortage of truck drivers caused by border closures.

Origin Energy Ltd (ASX: ORG)

The Origin share price has sunk 8% to $4.31. Investors have been heading to the exits in their droves after the energy company downgraded its earnings guidance for FY 2021. Origin was forced to make the downgrade due to an adverse and unexpected outcome on a domestic gas contract price review and continued headwinds in energy markets’ operating conditions. Origin is now expecting its energy markets division to post a 30% to 35% decline in operating earnings in FY 2021.

Strike Energy Ltd (ASX: STX)

The Strike Energy share price is down 9% to 34 cents. This morning the energy producer announced the completion of a $75 million placement. According to the release, the placement attracted strong demand from local and international institutions, as well as other professional and sophisticated investors. These funds were raised at a 20% discount of 30 cents and will be used to deliver a suite of potentially transformational Perth Basin outcomes.

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven share price has continued its slide and is down a further 5% to $1.48. Investors have been selling the coal miner’s shares since the release of a production and guidance update this week. That update reveals that the coal miner’s production has been impacted by poor weather conditions and geological challenges. As a result, Whitehaven has downgraded its FY 2021 managed ROM production at the Narrabri mine.

More reading

• ASX 200 down 0.2%: Origin sinks on earnings downgrade, gold miners charge higher
• Mineral Resources (ASX:MIN) share price sinks on activities report
• Here’s why the Origin (ASX:ORG) share price is sinking 5% today
• Why BrainChip, Regis Resources, Whitehaven, & Zip shares are tumbling lower
• Why the Whitehaven Coal (ASX:WHC) share price is plunging 14%

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 Field Solutions Holdings Ltd (ASX: FSG) share price is soaring today after the company shared news it has secured $20 million worth of government funding.

The Australian rural, regional and remote telecommunications carrier was awarded the funding by the Federal Government’s Regional Connectivity Program Fund (RCP).

After the news broke, the Field Solutions share price soared 50%. It has since dropped to trade for 16 cents, which is still a gain of 10.71%.

Let’s look closer at the news from Field Solutions.

Delivering broadband to previously underserviced Australian areas  

Field Solutions said the funding from RCP will help it deliver new networks in 5 states and territories where broadband and connectivity are lacking.

The telecommunications company will use RCP funding to build network infrastructure in 12 local government areas. The infrastructure will span New South Wales, Queensland, Victoria, Western Australia and the Northern Territory.

Construction on the projects is expected to begin in August 2021. Field Solutions hopes to have revenue coming in from them as early as the second half of the 2022 financial year.

Field Solutions’ other projects include deploying 5G on selected networks and its aim to grow to more than 160 towers across Australia over the next 18 months.

The company estimates, across all its projects, its total grant funding pool will be in excess of $600 million. That number includes both state and federal funding.

Commentary from management

Field Solutions’ CEO Andrew Roberts commented on the company’s funding from RCP. He said:

[Field Solutions’] community approach to building telecommunications infrastructure has been recognised as a viable, cost-effective and forward looking way of delivering true broadband solutions for rural, regional and remote areas…

Our aim is to deliver feature rich, quality telecommunications services, equivalent to what is available in metropolitan areas.

Field Solutions share price snapshot

The Field Solutions share price is having a party on the ASX lately.

Currently, it’s up by 325% year to date. It’s also up by 750% over the last 12 months.

Field Solutions has a market capitalisation of around $76 million, with approximately 543 million shares outstanding.

More reading

• Field Solutions (ASX:FSG) share price lifts on partnership agreement

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 Prospect Resources Ltd (ASX: PSC) share price is in negative territory in early afternoon trade. This comes despite the company announcing the completion of a strongly supported placement.

At the time of writing, the lithium producer’s shares are tumbling 8.1% to 17 cents.

Completed placement

Investors are sending Prospect shares lower as they come to grip with impending share dilution from the company.

According to its release, Prospect has received subscriptions to raise $6.5 million from institutional and sophisticated investors. Approximately 41.9 million new ordinary shares will be allocated at an issue price of 15.5 cents apiece. This represents a discount of 16.2% on Tuesday’s closing price of 18.5 cents before the trading halt came into effect.

Prospect highlighted that the strong support came from its largest shareholder, among new international and domestic institutions. The board and the management team also tapped into the company’s register.

The funds raised will be used to complete the acquisition of a further 17% interest in the Arcadia Lithium Project. This will increase Prospect’s holding to a total of 87%. In addition, the remaining monies will be used to advance the development funding process and for capital working purposes.

Settlement of the new shares is expected to take place on 23 April 2021.

Prospect managing director Sam Hosack commented:

The need for further, high-quality lithium projects to be developed in the face of a looming critical shortage in lithium-ion battery materials is becoming increasingly evident to industry and investment markets.

Arcadia is in the unique position of being the only lithium deposit that is expected to operate in the lowest cost quartile via production of both low iron spodumene concentrate for the lithium-ion battery market and high purity petalite lithium concentrate for the glass and ceramics markets.

Prospect share price snapshot

Over the past 12 months, the Prospect share price has accelerated by 70% but is flat year to date. The company’s shares reached a 52-week high of 27.5 cents in August last year, before moving in circles.

Based on the current share price, Prospect presides a market capitalisation of roughly $56.4 million, with 332 million shares outstanding.

More reading

• Why brokers are bullish on the Qantas (ASX:QAN) share price
• Can the Flight Centre (ASX:FLT) share price continue to rise?
• 2 outstanding tech ETFs for ASX investors to buy this month
• Jeff Bezos just revealed Amazon Prime’s latest subscriber number — and it’s a doozy
• Why the Neometals (ASX:NMT) share price has surged to a 52-week high

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

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It often feels like one step forward and two steps back for the Qantas Airways Limited (ASX: QAN) share price.

This week alone, investors had to juggle concerns that international travel is likely to remain limited until 2024, the cancellation of the AstraZeneca vaccine for under-50s and an upbeat business update from Qantas. 

While it might be a tug-of-war between the bulls and bears for where the Qantas share price will go next, brokers believe the company’s shares are in a position to outperform. 

Qantas business getting back on its feet

Yesterday, Qantas provided a number of updates regarding the ramp-up of its services. To recap its update, the company estimates that domestic travel can reach 80% of pre-COVID capacity in Q4 FY21. Looking ahead, it believes domestic travel levels could reach more than 90% by 4Q21 and 107% in FY22. 

To meet increased demand for domestic travel, Jetstar will deploy six Airbus A320 aircraft on loan from Jetstar Japan. It will also redeploy up to five of its Boeing 787-8 aircraft, usually flown on international routes, to the domestic market from mid-year until international flying returns. Overall, 90% of the group’s aircraft will be active in the fourth quarter, up from 25% during mid-2020. 

Brokers are bullish on the Qantas share price 

Macquarie has come out with an outperform rating and a $6.45 target price for Qantas shares. The broker expects FY22 domestic capacity to be approximately 110% of pre-COVID levels, supported by pent-up leisure demand, the government’s $1.2 billion aviation support package and recovering corporate travel volumes. 

Despite warnings that international travel could be off the cards until 2024, Qantas is optimistic about international borders re-opening from October 2021. 

The broker continues to monitor the COVID vaccine roll-outs in key destinations like the United States and Singapore that formed a big proportion of FY19 available seat kilometres. 

Similarly, Morgan Stanley is overweight on Qantas shares with a $5.90 target price. The broker believes the recovery in domestic capacity will allow for an organic repair to take place in its balance sheet but with a relatively small impact on profitability. Morgan Stanley says this will be supported by strong leisure figures assisted by government incentives and an early recovery in corporate travel. 

More reading

• Can the Flight Centre (ASX:FLT) share price continue to rise?
• Brokers name 3 ASX shares to buy now
• Qantas (ASX:QAN) share price edges higher on business update
• Flight Centre (ASX:FLT) share price falls despite border reopening hints
• Trashed COVID-19 vaccine targets hit ASX travel shares

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.

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