The Origin Energy Ltd (ASX: ORG) share price has come under pressure on Friday morning.

At the time of writing, the energy company’s shares are down 5.5% to $4.44.

Why is the Origin share price sinking?

Investors have been selling Origin’s shares today following the release of an update on its guidance for FY 2021.

As you might have guessed from the Origin share price reaction, the company isn’t performing as well as it expected.

According to the release, the company has downgraded its earnings guidance due to an adverse and unexpected outcome on a domestic gas contract price review and continued headwinds in energy markets’ operating conditions.

In respect to the price review, Origin has been engaged in a price review for gas purchased from the Otway Basin fields owned by Beach Energy Ltd (ASX: BPT).

This dispute was referred to arbitration, but Origin didn’t receive a favourable decision as it expected. As a result, the new gas price is likely to be materially above Origin’s expectations and recent comparable wholesale contracts.

The release explains that the outcome is expected to result in an increase in Origin’s cost of supply of $30 million to $40 million for FY 2021, before increasing to $60 million to $80 million in FY 2022.

Origin will now assess the timing and extent to which this increased cost of supply can be mitigated.

Origin CEO, Frank Calabria said, “We are disappointed in this decision which we believe is wrong, and entirely inconsistent with our prior experience in the gas market. This will result in a gas price that does not reflect market prices, and it is therefore a very poor outcome.”

What will the earnings impact be?

Combined with tough operating conditions, energy markets operating earnings is now expected to be in the range of $940 million to $1,020 million.

This is down from its previous guidance of $1,000 million to $1,140 million. It will also be a 30% to 35.5% decline year on year from $1,459 million in FY 2020.

One positive, though, is that some of the weakness in the energy markets division will be offset by the continued strong performance and upgraded guidance for Australia Pacific LNG.

Origin expects the cash distribution from Australia Pacific LNG to be greater than $650 million, driven by continued strong production and capital and operating cost discipline. This has resulted in a lower distribution breakeven of US$22-25/boe.

FY 2022 outlook

Management has warned that FY 2022 will be a tough year as well.

It explained: “As previously foreshadowed, challenging operating conditions in Energy Markets are expected to persist in FY2022. Electricity gross profit is expected to be lower, primarily due to a ~$20/MWh reduction in forward electricity prices compared to a relatively fixed cost supply on ~16 TWh.”

“Natural Gas gross profit is expected to decline, due to higher procurement costs as a result of price reviews and increases in the JKM index, as well as lower volumes and prices on commercial and industrial sales reflecting current subdued domestic market conditions.”

In light of this, Origin is continuing to target significant capital and operating cost savings and mitigating actions. This includes the roll out of the new retail operating model and Kraken platform over FY2022-2024.

Following today’s decline, the Origin share price is now down 11% over the last 12 months. This compares to a 30% gain by the ASX 200 index.

More reading

• Origin (ASX:ORG) share price edges higher after hydrogen update
• Buru Energy (ASX:BRU) share price jumps 6% on Canning Basin project
• How are ASX 200 shares faring in the carbon revolution?
• Genex (ASX:GNX) share price frozen on hydro project fund raising
• Top broker issues buy alert on Santos (ASX:STO) and these ASX energy shares

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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Coca-Cola Amatil Ltd (ASX: CCL) shares are slumping lower on Friday. At the time of writing, the Coca-Cola Amatil share price is sliding 1.26% to $13.29.

This comes as shareholders of the S&P/ASX 200 Index (ASX: XJO) listed beverage giant are voting on the long-proposed acquisition by Coca-Cola European Partners (CCEP).

Shareholders are meeting virtually this morning in Amatil’s Independent Shareholder Scheme Meeting, being held by management in Sydney.

What exactly are shareholders voting on?

Yesterday, after market close, Coca-Cola Amatil announced that the New Zealand Overseas Investment Office (OIO) had given the green light for CCEP to acquire up to 100% of the shares in Amatil. That ticked the last box needed to meet all the regulatory approval conditions precedent under the Implementation Deed.

CCEP initially announced its intention to acquire all the independently held shares in Amatil back in 2019. Since then, it has gradually increased its offer price. On 26 October 2020, CCEP offered $12.75 per share. On 15 February this year, the European beverage giant increased its offer to $13.50 per share.

The lengthy acquisition process was spurred along last month when the Supreme Court of New South Wales approved the convening of a scheme meeting.

What happens if Amatil shareholders approve the acquisition scheme?

According to Ilana Atlas, chair of Coca-Cola Amatil, if the scheme is approved and implemented:

CCEP will acquire all of the shares in Coca-Cola Amatil held by independent shareholders, being all shareholders other than The Coca-Cola Company, for $13.50 cash per share less the cash amount of the final second half 2020 dividend of 18 cents per share, which was announced on 18 February 2021. CCEP has declared this to be its best and final offer.

The company said it expects to pay the second half dividend on 30 April. Atop the 18-cent dividend, if the shareholders approve the scheme today, they’ll receive $13.32 cash per share upon implementation of the scheme. That’s expected to occur on 10 May.

Amatil’s Related Party Committee and group managing director Alison Watkins unanimously recommend that independent shareholders vote in favour of the scheme.

Coca-Cola Amatil share price snapshot

Following a big rise on 26 October, after the CCEP takeover offer was lifted to $12.75 per share, the Coca-Cola Amatil share price has gained another 4.2%.

Year to date, Coca-Cola Amatil shares are up 2.7%, compared to a gain of 5.6% on the ASX 200.

More reading

• 5 things to watch on the ASX 200 on Friday

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 Mayne Pharma Group Ltd (ASX: MYX) share price is shooting higher on Friday morning.

At the time of writing, the pharmaceutical company’s shares are up a massive 28% to 59 cents.

This latest gain means the Mayne Pharma share price is now up 69% since the start of the year.

Why is the Mayne Pharma share price charging higher?

Investors have been buying the company’s shares this morning following the release of a very positive announcement.

According to the release, the US Food and Drug Administration (FDA) has approved the New Drug Application (NDA) from Mayne Pharma and Mithra Pharmaceuticals for the novel combined oral contraceptive Nextstellis.

Following this approval, Mayne Pharma anticipates the commercial launch of Nextstellis by the end of June 2021.

What is Nextstellis?

Nextstellis was developed by Mithra and is the first and only contraceptive pill containing estetrol. This is a native estrogen which is now produced from a plant source. Estetrol is also the first new estrogen introduced in the US in more than 50 years.

The release explains that almost 10 million American women use short-acting combination (estrogen and progestin) contraceptives. This led to the US market for combined hormonal contraceptives generating US$3.6 billion in sales for the 12-month period ending January 2021 according to IQVIA.

Mayne Pharma has a 20-year exclusive license and supply agreement in the US and Australia for Nextstellis. The product is still under active review at the Australian Therapeutics Goods Administration.

Positively, the University of California’s Professor and Director of Family Planning, Mitchell Creinin, spoke very positively about the product.

He said: “Nextstellis is a new innovative contraceptive that has been shown in clinical trials to be not only safe and effective but also well tolerated with a desirable bleeding profile and minimal impact on triglycerides, cholesterol and glucose, as well as weight and endocrine markers.”

Management commentary

Given that the company considers this an important milestone, it isn’t surprising to see the Mayne Pharma share price shooting higher.

The company’s CEO, Scott Richards, commented “The approval of Nextstellis represents an important milestone, providing women with a new choice for their reproductive health. We are delighted to be introducing a new estrogen and bringing to market this novel, safe and effective option for women to consider with their healthcare providers.”

“As a result of receiving FDA approval for Nextstellis, Mayne Pharma will pay Mithra US$11m in cash and issue 85.8m ordinary Mayne Pharma shares. Mithra is also entitled to a Mayne Pharma Board position. The new appointment will be subject to shareholder approval at the next Annual General Meeting in November 2021.”

Based on the current Mayne Pharma share price, those shares are worth approximately $50.6 million.

More reading

• Why the Dusk (ASX:DSK) share price is in focus
• Why the Coventry (ASX:CYG) share price will be on watch this morning
• Top fund manager names these 2 ASX shares as buys
• Is the SEEK (ASX:SEK) share price in the buy zone?
• Can you imagine paying tax on every share purchase?

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 Dusk Group Ltd (ASX: DSK) share price is in focus this morning after the company reported a surge in quarterly earnings.

Why is the Dusk share price on watch?

Dusk this morning provided a trading update for the third quarter ended 31 March 2021 (Q3 2021). The Aussie retailer reported “trading remained strong” with high rates of like-for-like sales growth.

Sales surged to $27.7 million for the quarter, up from $18.4 million in Q3 2020. On a year-to-date (YTD) basis, sales grew 54.2% to $118.7 million compared to 2020 figures.

Underlying earnings before interest and tax (EBIT) numbers also soared during the quarter. It will be interesting to see how the Dusk share price responds as underlying EBIT surged to $4.9 million, up from a $0.9 million loss in Q3 2020.

On a YTD basis, underlying EBIT rocketed 281.6% to $33.2 million in Q3 2021. Dusk said the primary driver of the earnings growth was excellent like-for-like sales growth of 44% for the quarter.

The Aussie retailer also reported strong gross margin expansion which is up ~400 basis points on a YTD basis. Dusk’s EBIT margin also grew to 28.0% for the quarter, up from 11.3% on a YTD basis in Q3 2020.

In further news that could impact Dusk shares today, the company also provided FY2021 guidance. Sales are forecast to land between $147 million and $151 million with underlying EBIT guidance of $38 million to $40 million.

Today’s strong trading update comes on the back of a solid half-year result for the Aussie retailer. 

Having listed in November 2020, the Dusk share price was on fire in late February after a bumper result. The company reported half-year revenue of $90.9 million, up from $58.6 million in 1H 2020.

Earnings per share (EPS) more than doubled, up from 11 cents in 1H 2020 to 27 cents in the most recent half-year period. The board declined to provide full-year FY2021 guidance at that time, making today’s update an important one for shareholders.

Foolish takeaway

The Dusk share price will be on the radar this morning after the company delivered a strong trading update and provided full-year guidance.

More reading

• Why the Coventry (ASX:CYG) share price will be on watch this morning
• Top fund manager names these 2 ASX shares as buys
• Is the SEEK (ASX:SEK) share price in the buy zone?
• Can you imagine paying tax on every share purchase?
• The Nasdaq just got the green light for record gains

Motley Fool contributor Ken Hall 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 Coventry Group Ltd (ASX: CYG) share price will be on watch this morning following the company’s release of a trading update.

At yesterday’s market wrap, the industrial solutions provider’s shares finished the day at $1.31.

How did Coventry perform?

The Coventry share price could be on the move today as investors digest the company’s solid performance for Q3 FY21.

For the period ending 31 March 2021, Coventry reported robust growth across its key metrics. Group sales accelerated by 16.9% over the prior corresponding period (pcp), and were up 12.6% when excluding acquisitions.

Coventry revealed that year-to-date sales are at $209.2 million, a jump of 13.9% on the previous comparable year. When excluding H.I.S Hose, year-to-date sales lifted 12.1%.

The overall result was mostly driven by the company’s Fluid Systems segment which recorded a 32% gain on sales in Q3 FY20. The business unit achieved new sales orders throughout the period and completed a prior order of $8 million that was placed in Q1 FY21.

Moving on, the Trade Distribution segment realised a 7.4% increase over this time last year. Coventry noted that all divisions within Trade Distribution have improved contribution.

At the end of March, the company closed the quarter with net assets of $107.6 million.

No outlook was given due to the uncertainty surrounding COVID-19. However, the group stated that its outstanding performance is continuing to run into Q4 FY21.

Coventry group CEO and managing director Robert Bulluss commented:

We are pleased the Group has delivered a third consecutive quarter of strong sales growth in FY21. All business units contributed to the improved performance of the Group. We are continuing to execute our clear strategy for long term sustainable profitable growth.

Coventry share price snapshot

The Coventry share price has been advancing since April 2020, reflecting a 150% surge and, year to date, it is sitting 36% higher. The company’s shares hit a 52-week high of $1.35 on Wednesday and could be set to break that feat again if investors respond positively to today’s update.

On valuation grounds, Coventry commands a market capitalisation of roughly $117.9 million, with 90 million shares on issue.

More reading

• Why the Coventry Group (ASX:CYG) share price is in focus 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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High-performing fund manager Wilson Asset Management (WAM) has revealed two ASX shares that it rates as buys within the WAM Research Limited (ASX: WAX) portfolio.

WAM operates several listed investment companies (LICs). Two of those LICs are WAM Capital Limited (ASX: WAM) and WAM Leaders Ltd (ASX: WLE).

One of the LICs is called WAM Research, which looks at smaller businesses on the ASX.

WAM describes WAM Research as a LIC that invests in the most compelling undervalued growth opportunities in the Australian market.

The WAM Research portfolio has delivered gross returns (that’s before fees, expenses and taxes) of 16.1% per annum since the strategy changed in July 2010, which is superior to the S&P/ASX All Ordinaries Accumulation Index return of 9% per annum.

These are the two ASX shares that WAM outlined in its most recent monthly update:

Maas Group Holdings Ltd (ASX: MGH)

MAAS Group was listed a few months ago. It provides construction materials, equipment and services across the civil, infrastructure, mining and real estate markets.

WAM Research pointed out that in the company’s first interim result, it revealed a 30% revenue growth on the prior corresponding period.

There was “significant” growth in the ASX share’s civil construction and hire business division according to WAM Research.

The fund manager expects continued growth over the next four to five years as both state and federal governments have committed to large amounts of infrastructure spending, including record expenditure committed by the NSW state government for regional areas.

WAM Research also believes that low interest rates, government support and improved consumer confidence should also benefit regional housing markets in 2021.

Link Administration Holdings Ltd (ASX: LNK)

In Link’s own words, it administers financial ownership data and drives user engagement through technology.

There are five segments that Link says it services: retirement and superannuation solutions, corporate markets, fund solutions, banking and credit management, and technology and operations.

What the fund manager is particularly attracted to about the ASX share is Link’s 44% investment in Property Exchange Australia (PEXA). PEXA is the leading electronic property settlement provider.

In the Link Group FY21 half-year result, PEXA saw transaction volumes grow 28% on the prior corresponding period and contributed $18.7 million to Link’s operating net profit after tax and amortisation.

The fund manager said that PEXA has a 75% market share of conveyancing in the domestic market here in Australia. However, the fund manager is positive on the ability of PEXA’s technology to expand globally. This could be pretty beneficial for Link Group.

More reading

• Wilson Asset Management (WAM) thinks these 2 ASX shares are a buy
• 5 things to watch on the ASX 200 on Friday
• ASX 200 Weekly Wrap: Inflation fears hold ASX down
• 11 top ASX shares that WAM thinks will make great buys
• These were the best performers on the ASX 200 last week

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration 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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The SEEK Limited (ASX: SEK) share price has been a strong performer over the last six months.

Since this time in October, the job listings giant’s shares are up a sizeable 30%.

This leaves the SEEK share price trading within sight of their record high of $31.89.

Can the SEEK share price go higher?

One broker that believes the SEEK share price may now have peaked for the time being is Goldman Sachs.

According to a note this morning, the broker has reiterated its neutral rating and lifted its price target to $27.40.

This price target implies potential downside of just over 9% for its shares.

What did Goldman Sachs say?

Goldman Sachs has been looking at recent industry data and believes SEEK is well-placed for a stronger than expected second half performance in the ANZ market.

It notes that the Seek Employment Index has continued to recover from 2020 lows. It has increased from 50 in April 2020 to 162 at the end of March.

The broker estimates that if March levels are maintained for the remainder of the half, it will imply 65% listings growth for the period.

Goldman also notes that SEEK is continuing to outperform its competitors Indeed and LinkedIn in respect to volume recovery. It believes this is due to the company’s more cyclical exposures.

Earnings estimates upgraded

In light of the above, the broker has upgraded its earnings estimates.

“Overall we revise SEK FY21/22/23 EBITDA by +4%/+7%/+5%, reflecting stronger ANZ volumes and FX changes, offset by incremental costs. We now forecast FY21 Group EBITDA of A$485mn, 5.4% above FY21 Guidance of $460mn,” Goldman explained.

However, despite this, it believes the SEEK share price is fully valued and thus holds firm with its neutral rating.

Goldman sees more value in fellow listings company Hipages Group Holdings Ltd (ASX: HPG). It currently has a buy rating and $3.10 price target on its shares.

More reading

• Where to invest your Rio Tinto (ASX:RIO) dividends
• Here’s why SEEK (ASX:SEK) and these ASX shares are at 52-week highs
• 2 outstanding ASX shares to buy and hold
• Seek (ASX:SEK) share price lifts as jobs ads reach 12-year high
• ASX 200 up 0.9%: Cleanaway jumps, tech shares rise, Incitec Pivot sinks

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended SEEK 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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Australia is a real estate-obsessed nation.

As a share investor, you would no doubt have been at barbecues during which property is discussed for hours while the stock market is not even mentioned once.

But one massive advantage we shareholders tell our friends and family about is that we don’t pay stamp duty for our investments.

In Sydney, where the median house price is at $1.1 million and climbing, one would need to hand over more than $45,000 in tax for the privilege of buying an average home.

Steep, right? But purchasing shares was not always free of stamp duty.

Share purchases used to attract stamp duty

Stamp duty, officially known as transfer duty in some states, was originally meant to be paid on many different types of transactions.

“A few years ago, it was necessary to pay stamp duty on all share purchases,” H&R Block tax communications director Mark Chapman told The Motley Fool.

“Stamp duty is a levy imposed on certain dutiable transaction[s], such as the transfer of land. You’ll need to pay stamp duty for things like motor vehicle registration and transfers, insurance policies, leases and mortgages, hire purchase agreements [and] transfers of property (such as a business and real estate).”

As well as publicly listed (ASX) shares, stamp duty was previously payable on transfers of equity in a private business.

Why did stamp duty disappear on shares?

The implementation of the goods and services tax (GST) in Australia in the late 1990s gave state and federal governments a chance to reform the tax system.

This is when the state governments agreed to abolish the tax on listed shares, in return for revenue shared from the federal collection of GST.

The reason for the removal?

“The tax was abolished for share transfers, with state governments proclaiming the need to keep share markets vibrant,” said Chapman.

“The imposition of stamp duty on share transfers did not achieve that end.”

However, duty was not removed from transfers of unlisted public shares or equity in private businesses. That was left to the states to do individually as they saw fit. 

For example, it wasn’t until 2016 when NSW abolished the tax on unlisted shares.

There’s still one situation in which stamp duty is payable on shares

One exception remains to this day though.

If a company is considered “land rich”, then stamp duty is payable on transfers of shares in that business.

This is to prevent taxpayers simply “corporatising” real estate to dodge the duty.

The definition of “land rich” varies from state to state. It’s usually triggered by a percentage or an absolute threshold of the company’s assets that are taken up by land holdings.

More reading

• Is the SEEK (ASX:SEK) share price in the buy zone?
• The Nasdaq Just Got the Green Light for Record Gains
• Why the Suncorp (ASX:SUN) share price is on watch
• Why Kogan (ASX:KGN) should be on your watchlist at this share price
• 2 ASX shares ready for a post-COVID rally: fundie

Motley Fool contributor Tony Yoo 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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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.

Stocks were up sharply on Thursday, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) had its fair share of gains. As of just after 3 p.m. EDT, the Nasdaq was up about 1.25%.

Some investors have been frustrated about the fact that the Nasdaq has been below its record high levels, even as other major market benchmarks have pushed into uncharted territory over the past week. However, today’s gains are taking the index closer to its high-water mark, and one signal from a different part of the financial markets could point toward a sustained upward move for the Nasdaq in the weeks and months to come.

Are interest-rate concerns going away?

The Nasdaq suffered a significant correction in late February and early March, going through a much smaller version of the huge losses it suffered a year earlier at the beginning of the COVID-19 pandemic. At its worst levels, the Nasdaq was down more than 10% from its highs from earlier in 2021.

The culprit at the time was the bond market. Interest rates on long-term bonds had moved up precipitously, with 30-year Treasuries seeing yields jump more than a full percentage point. That caused losses for bondholders, but it also resulted in investors worrying a bit about stocks, in general, and high-growth tech stocks, in particular.

The link between the bond market and the stock market hinged on a couple of things. First, in general, when bond yields are on the rise, it puts pressure on stocks because investors who would usually prefer to invest in bonds but have been forced into the stock market due to low bond yields, suddenly are able to get the income levels they want from fixed-income securities like Treasuries.

Second, many models for valuing stocks use methods that take prevailing interest rates as an input. When interest rates rise, the factor used to discount future earnings gets larger, and the greater discounting depresses the value of those future earnings in terms of current stock value. Many of the high-growth stocks in the Nasdaq have no current earnings and aren’t expected to become profitable for years to come, and that makes valuations of years well into the future that much more important for those high-growth stocks.

A big reversal of fortune in the bond market

Thursday brought a big shift in the prevailing sentiment in the bond market. Yields on the 10-year Treasury were down more than a tenth of a percentage point, falling nearly to the 1.5% mark. That might not seem like much, but it’s a huge move for the bond market.

Low interest rates support the stock market in several ways. They make it cheaper for companies to get financing through selling bonds, preserving greater profits for shareholders. They also force more investors to buy stocks as a way of generating the income they need from their portfolios.

Perhaps the most interesting thing about today’s bond market move is that it comes despite signs of a strong U.S. economy. Retail sales soared during March, and that would ordinarily make investors worried about the Federal Reserve looking to raise interest rates. Instead, market participants seem to believe the Fed will avoid responding with rate hikes, even as the economy strengthens.

Full speed ahead?

If the reason for the drop in high-growth Nasdaq stocks in February was the rise in long-term interest rates, then a rate decline should arguably lead those same stocks back upward. That appears to be what’s happening today, and a full-scale reversal of the upward move in bond yields could well send the Nasdaq to record heights and beyond.

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

More reading

• Why the Suncorp (ASX:SUN) share price is on watch
• Why Kogan (ASX:KGN) should be on your watchlist at this share price
• 2 ASX shares ready for a post-COVID rally: fundie
• Westpac (ASX:WBC) and these ASX shares have just hit 52-week highs
• Could Tesla’s electric vehicle deliveries soar 85% this year?

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

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The Suncorp Group Ltd (ASX: SUN) share price is one to watch today after a litigation update from the Aussie insurer.

Why is the Suncorp share price in focus?

A Suncorp subsidiary is facing Victorian Supreme Court proceedings related to the sale of add-on insurance products. That subsidiary, AAI Limited, has received a representative proceeding for the sale of add-on insurance through MTA Insurance.

The proceedings were lodged by Maurice Blackburn and are targeting add-on car insurance sold by MTA.

Suncorp said that it is currently reviewing the matter and it intends to defend the class action. The Suncorp share price will be one to watch following the latest update. 

Suncorp is far from the first Aussie insurer to be targeted by Maurice Blackburn over these products. On 11 November 2020, Maurice Blackburn commenced a class action against the Australian arm of Allianz Insurance.

The Allianz Car Dealer Add-On Insurance Class Action relates to the add-on of insurance products. Those include loan protection insurance, motor equity insurance, extended motor warranty and tyre and rim insurance.

It follows similar class actions that have settled against Swann Insurance, Winter & Slattery, and Davantage Group Pty Ltd (National Warranty Company), conducted by law firm Baker McKenzie.

The Suncorp share price climbed 2.1% yesterday to close at $10.46 per share.

Shares in the Aussie insurer have also jumped 13.0% in the last 12 months and 28.8% since the start of November 2020.

Foolish takeaway

The Suncorp share price is worth watching after the latest class action suit by Maurice Blackburn.

Suncorp intends to defend against the suit, with the insurer already having refunded $17.2 million in add-on insurance premiums back in January 2018. That saw the insurer refund 41,428 add-on insurance customers of MTA between 2009 and 2017.

More reading

• Credit Clear (ASX:CCR) share price jumps 10% on Q3 update and Suncorp contract win
• 5 things to watch on the ASX 200 on Thursday
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• ASX 200 jumps 1.35%: Zip inks deal with JB Hi-Fi, Suncorp’s flood update
• Suncorp (ASX:SUN) share price on watch after NSW flood update

Motley Fool contributor Ken Hall 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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