ASX bank shares had a fantastic year, with the S&P/ASX 200 Banks Index (ASX: XBK) surging 30% over the past year, outperforming the 6% return of the S&P/ASX 100 Index (ASX: XTO).

Commonwealth Bank of Australia (ASX: CBA) shares performed well, increasing by 30% over the past year, in line with the ASX 200 Bank Index.

After the stock price surge, the bank became Australia’s largest company through market capitalisation, overtaking mining giant BHP Group Ltd (ASX: BHP).

But, after such a wonderful year, is it the right time to consider locking in some gains?

How expensive are CBA shares?

It’s exciting to see the share prices rise rapidly. However, it becomes problematic if earnings fail to grow quickly enough to keep up with the share price performance. That might be the case here for CBA shares.

According to S&P Capital IQ, analysts predict that the bank’s earnings-per-share (EPS) will remain steady, rising from $5.76 in the trailing 12 months to $5.91 in FY26, representing approximately 1% annual growth.

The bank’s 1-year forward price-to-earnings (P/E) ratio has increased from 16x in March 2023 to 23x now due to inconsistencies in earnings growth and share price movements. This is not only the highest P/E multiple in its history but also more expensive than other ASX bank shares. Compared to its peers, based on S&P Capital IQ estimates:

• Westpac Banking Corp (ASX: WBC) shares are valued at FY25 P/E of 15x
• National Australia Bank Ltd (ASX: NAB) shares are valued at FY25 P/E of 16x
• ANZ Group Holdings Ltd (ASX: ANZ) shares are valued at FY25 P/E of 13x

Expert views

Bell Potter believes it is time to sell CBA shares. The broker has a sell rating on CBA shares mainly due to higher valuations relative to the bank’s growth potential, according to The Bull. Analyst Christopher Watt said:

Our recommendation is based on potential overvaluation concerns and limited growth prospects in a fiercely competitive banking sector. While it remains a strong institution, its current market price may not justify the investment risk. The shares have risen from $111.86 on April 19 to trade at $129.85 on July 11. Investors may want to consider taking some profits.

Melbourne-based fund manager L1 Capital is another expert noticing CBA’s high valuations. In its latest investment letter for the June quarter, the asset manager highlighted:

CBA currently trades at the most expensive valuation in its history, despite offering no earnings growth for the next two years. It also stands out as an outlier relative to the other major Australian banks, trading at a ~60% premium to peers on an earnings multiple basis compared to its long-term
average premium of only ~17%. In our view, this performance is not supported by fundamentals, rather it indicates a level of crowding and over-valuation.

After all, this might be an opportune time to realise your profits, according to these experts.

The CBA share price is up slightly by 0.075% to $132.79 this morning.

The post Is now the time to take some profits on CBA shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Kate Lee has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.

Telix Pharmaceuticals Ltd (ASX: TLX) shares were a standout performer on the ASX in FY24, rallying more than 66% over the twelve months.

This extends the enormous growth Telix has shown since 2019. The stock is up from $1.55 in December of that year to trade at $20.37 just after the open on Tuesday.

You can see this impressive rise over the past year in the chart below.

As we head into FY25, the question is whether this impressive run will continue. Here’s what the experts say.

Telix shares surge in FY24

The meteoric rise of Telix shares last financial year was driven by several key factors. One major catalyst was the company’s quarterly update in April.

In it, Telix reported unaudited total revenue of $175 million, an 18% increase from the previous quarter. Growth was largely due to stronger sales of its prostate cancer imaging product, Illuccix, particularly in the U.S. market.

CEO Dr. Christian Behrenbruch also mentioned Telix’s acquisitions of ARTMS Inc. and IsoTherapeutics Group, LLC, as catalysts. According to my colleague James, Behrenbruch said these transactions “enhance the vertical integration of [Telix]” and “differentiate Telix as a leading independent radiopharmaceutical company.”

Aside from that, the company also completed the listiing of its American Depositary Receipts (ADRs) on the Nasdaq Global Market (Nasdaq) in June.

This sent Telix shares to yet another record high.

What’s the outlook for FY25?

Management has reaffirmed its FY24 revenue guidance, expecting between US$445 million and US$465 million for the year.

This marks a 35%-40% increase over FY23. The company’s optimistic outlook is built on its ongoing investment in research and development. It anticipates R&D spending to grow by 40%-50% in FY24, which could be positive for Telix shares.

Moreover, in July, Telix shares benefited from proposed changes by the Centers for Medicare & Medicaid Services (CMS) in the U.S.

These changes are set to improve payments for diagnostic radiopharmaceuticals. Telix’s Illucix diagnostics product falls under this label.

Once in effect, the new changes could enhance patient access and support the use of Illuccix and other upcoming diagnostic products.

Dr Behrenbruch also said Telix is progressing with three drug approval submissions in the U.S. and is expanding its Phase III ProstACT GLOBAL therapy trial internationally, pending regulatory approvals.

The trial is investigating Telix’s new compound, TLX591, in patients with prostate cancer.

Aside from that, Telix is rated a buy based on the consensus of analyst estimates, according to CommSec.

Foolish takeout

With a strong pipeline, solid revenue growth, and strategic acquisitions, Telix shares could be well-positioned for continued success in FY25.

Investors looking for exposure to the innovative field of radiopharmaceuticals might find Telix attractive.

But remember, past performance is no indication of future results. Conduct your own due diligence.

The post Up 66% in FY24, will Telix Pharmaceuticals shares continue? appeared first on The Motley Fool Australia.

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• Why is the Telix Pharmaceuticals share price rocketing 15% to a record high?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Telix Pharmaceuticals. The Motley Fool Australia has recommended Telix Pharmaceuticals. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

S&P/ASX All Ordinaries Index (ASX: XAO) shares are down 0.073% in early trading on Tuesday.

Meantime, The Australian reports that brokers have upgraded their ratings on these three ASX shares.

Let’s check them out.

3 ASX shares just upgraded by the experts

ASX communications share has ‘a very strong position’, says Citi

Citi has raised its rating on ASX large-cap communications share CAR Group Limited (ASX: CAR) from hold to buy. The broker has placed a 12-month price target of $39.80 on Car shares.

The broker expects double-digit earnings growth over the medium term. It is tipping earnings per share (EPS) growth of 17% for FY24 compared to the 13.2% achieved in FY23.

We’ll find out if Citi is right on 12 August when Car Group reports its full-year results.

Citi analyst Siraj Ahmed said:

While another RBA rate rise and weakening demand are risks to the Australian business, we see Car Group having a very strong position and expect it to deliver solid growth even in a tough environment.

Goldman Sachs also has a buy rating on Car shares. The broker recently raised its price target to $41.40.

As we recently reported, Car Group was the top-performing stock of the communications market sector in FY24. The Car share price surged by 48% over the financial year.

The ASX communications share is currently $35.89, up 2.08% today and 14.33% in the year to date.

Broker positive on ASX real estate share

JP Morgan has commenced coverage on ASX mid-cap property share PEXA Group Ltd (ASX: PXA). The broker has given the stock an overweight rating and a $15 price target over the next 12 months.

Late last month, the Australian Registrars National Electronic Conveyancing Council (ARNECC) ceased its interoperability program, which aimed to enable more competition for electronic conveyancing services. The news lifted PEXA shares by 2.06% on the day.

PEXA will release its full-year FY24 results on 21 August.

The PEXA share price is $14.21, up 3.57% on Tuesday and 28.83% in the year to date.

10% potential upside on ASX industrials share

Barrenjoey has raised its rating on diversified industrials and investment company Seven Group Holdings Ltd (ASX: SVW) to overweight. The broker has a 12-month share price target of $40 on the stock.

Seven Group was the No. 1 stock for price growth in the industrials market sector in FY24. Seven shares rose by 52.9% over the 12-month period.

Last week, Seven announced it would pay a fully franked final dividend of 30 cents per share, up 30% on last year. The ex-dividend date is 19 August, and shareholders will be paid on 2 September.

This brings Seven’s total dividends for FY24 to 53 cents per share, equating to a dividend yield of 1.45%.

The Seven share price is $36.35, up 1.42% on Tuesday and down 2.21% in the year to date.

The post Brokers say buy! 3 ASX shares receiving upgrades today appeared first on The Motley Fool Australia.

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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group, JPMorgan Chase, and PEXA Group. The Motley Fool Australia has recommended Car Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ResMed Inc (ASX: RMD) shares have been on an interesting journey this year to date. The stock is around 20% higher since January, and hit yearly highs of $33.10 in May after a volatile period.

This pertains to the market’s response to various announcements regarding GLP-1 weight loss medications, which have had far-reaching effects.

The thinking is that these compounds could impact everything from obesity and blood pressure to lifestyle and food choices, including respiratory and sleep disorders. Naturally, companies in the healthcare industry have seen their share prices wobble as new studies emerge on these drugs.

In fact, despite their impressive run in 2024, Resmed shares are currently trading at $30.49, down more than 6% over the past 12 months.

Despite this decline, some analysts believe now is a good time for investors to consider adding this ASX 200 healthcare stock to their portfolios.

Resmed shares rated buy

Brokers are generally bullish on Resmed shares. According to CommSec, consensus rates the company a buy.

Bell Potter is one of those firms. It points to the company’s consistent annual profit before tax increases and a 7% revenue boost in Q3 FY 2024.

Analyst Christopher Watt believes ResMed’s growth trajectory is solid, despite recent concerns over the impact of weight loss drugs, according to The Bull.

This means it could be undervalued, offering “an attractive entry level” to buy the stock.

[Resmed] shares suffered in the first half of fiscal year 2024 over investor concerns regarding the potential negative impact that weight loss and diabetes drugs could have on its business. 

However, RMD lifted revenue by 7 per cent in the third quarter of fiscal year 2024 when compared to the prior corresponding period. Income from operations increased by 25 per cent. In our view, RMD is undervalued and presents an attractive entry level for long term investors.

Earlier in the year, the broker estimated that more than a billion people worldwide suffer from obstructive sleep apnoea (OSA), with many remaining undiagnosed. This could be a tailwind for ResMed, it says.

Bell Potter has set a price target of $36.00 for ResMed shares.

Morgans also rates Resmed a buy. According to my colleague James, it sees weight loss drugs as “having little impact on the large, underserved sleep disorder breathing market…”.

It has a price target of $34.11 on Resmed shares, around an 11.5% upside potential at the time of writing.

Fundies are also bullish on Resmed. ECP Asset Management finds ResMed’s valuation very appealing. Wilsons’ analysis supports this view, noting that ResMed trades at a significant discount to its historical price-to-earnings (P/E) multiples.

It expects the ASX healthcare stock to rise as concerns about GLP-1 weight loss drugs ease, allowing the market to focus on ResMed’s fundamentals.

Foolish takeaway

Despite market concerns about the impact of GLP-1 weight loss drugs, many experts believe these concerns are overblown for Resmed shares.

Whether or not they are correct remains to be seen. The stock is down around 4.5% in the past month.

As always, broker opinions are just that – opinions. Remember to conduct your own due diligence.

The post Buy Resmed shares at ‘attractive entry level’ says top broker appeared first on The Motley Fool Australia.

More reading

• Why the ResMed share price tanked in FY 2024 and what to expect in FY 2025
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• Top ASX shares to buy for FY25

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Wesfarmers Ltd (ASX: WES) share price is up 0.3% after the company revealed it had appointed a new director with significant healthcare and services experience. This movement comes with the S&P/ASX 200 Index (ASX: XJO) currently down 0.04%.

Wesfarmers may be best known for its Bunnings, Kmart, and Officeworks retailers, but it also has a growing healthcare division that it wants to expand further.

Some of the businesses inside its healthcare segment include Priceline, the Soul Pattinson Chemist brand, Clear Skincare, SILK Group (which operates laser clinics) and InstantScripts (a digital service to access prescriptions and doctors).

Wesfarmers appoints new director

The company has appointed Kate Munnings to the Wesfarmers board. Munnings has worked across a range of roles, professions, and industries. She started her career as a registered nurse before studying law, practising as a lawyer, and holding senior executive and board positions in healthcare organisations.

Between 2020 and 2023, she was the managing director and CEO of Virtus Health, an ASX-listed assisted reproductive services business that was taken private in 2022. Between 2016 and 2020, Munnings was the chief operating officer of Ramsay Health Care Ltd (ASX: RHC).

Munnings worked at Transfield Services for ten years, from 2006 to 2016, where she finished as the chief executive of operations. She also served as chief risk and legal officer and company secretary.

She’s currently the non-executive director of Ryman Healthcare. Munnings is also the chair of the Digital Health Cooperative Research Centre, as well as the CEO of Vitrafy Life Sciences Ltd.

Leadership comments

The Wesfarmers chair, Michael Chaney, said:

Kate brings a unique blend of experience that will complement the capabilities on our Board and aligns with our focus on delivering shareholder value over the long term. Her background in healthcare will be particularly valuable as Wesfarmers continues to develop its health division.

The new director, Kate Munnings, said:

I look forward to joining Wesfarmers and contributing the insights I have gained from my diverse experiences, particularly most recently within the health sector.

Munnings will stand for election at the Wesfarmers annual general meeting, which is scheduled to be held on 31 October 2024.

What’s the attraction of healthcare?

Wesfarmers noted in its recent 2024 strategy briefing day presentation that the company operates in “large addressable markets with strong growth trends.”

The business said there is a “growing demand for health products and services and increasing role of community pharmacists in primary care.” Wesfarmers also pointed to an “increasing spend on beauty and wellbeing products and services”. The company then noted, “increasing adoption of digital delivery models and growing expectations for more personalised and integrated experiences.”

In total, Wesfarmers thinks there is an addressable market of around $60 billion, with “opportunities in logical adjacencies”. The breakdown of the total addressable market is: a $26 billion addressable market for health, beauty and retail, $23 billion for pharmacy wholesale, $6 billion for medi-aesthetics and $4 billion for digital health.

Time will tell how effective Wesfarmers is at growing in those areas.

Wesfarmers share price snapshot

The chart below shows that the Wesfarmers share price has risen by around 20% since the start of 2024.

The post Wesfarmers share price rises amid healthcare expert appointment appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has positions in and has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

One ASX defence stock is trying to upstage the high-flying DroneShield Ltd (ASX: DRO) on Tuesday.

That stock is Electro Optic Systems Holdings Ltd (ASX: EOS), which comprises two divisions. These are Defence Systems and Space Systems.

The Defence Systems division specialises in technology for weapon systems optimisation and integration, as well as ISR (Intelligence, Surveillance and Reconnaissance) and C4 systems for land warfare. Its key products include next-generation remote weapon systems, vehicle turrets, and high-energy laser weapons (directed energy).

Whereas the Space Systems division includes its Space Technologies and EM Solutions businesses. These are businesses specialising in applying optical sensors and effectors to detect, track and characterise objects in space, as well as delivering RF and optical space communications technology.

Why is this ASX defence stock rocketing?

Investors have been bidding the Electro Optic Systems share price 10% higher to $1.79 this morning following the release of the company’s half year sales update.

According to the release, the company achieved unaudited first half revenue of approximately $142.6 million. This is an increase of 92% on the $74.3 million that it recorded in the prior corresponding period.

However, management has warned that investors should not necessarily expect similar growth in the second half. It explains that “[g]iven the lumpy nature of EOS revenue, quarterly figures should not be used to imply full year estimates.”

Management advised that its strong first half revenue performance was driven by growth across all of businesses. This includes the impact of accelerating production and delivery of remote weapons systems under an existing contract with a customer in the Middle East, growth in the EM Solutions business, and growth in the Space Technologies business.

At the end of the period, the ASX defence stock had an unaudited cash balance of $52.2 million. While this is down from a cash balance of $72.4 million at the end of March, it includes the previously announced repayment of $20.5 million of debt during the month of April.

A further debt repayment of $52.1 million is due in October 2025. This gives the company over a year to build its cash position and make its repayment. Speaking of which, management has not included any cash flow information with this update. However, this will be released to the market before the end of the month.

Following today’s gain, this ASX defence stock is now up over 70% since the start of the year.

The post Guess which ASX defence stock is rocketing 10% today (Hint: not DroneShield!) appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield and Electro Optic Systems. 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 Scott Phillips.

IGO Ltd (ASX: IGO) shares are having a tough time on Tuesday.

In morning trade, the battery materials miner’s shares are down 1% to $5.94.

This latest decline means that its shares are now down 61% over the past 12 months.

Why are IGO shares under pressure today?

Investors have been hitting the sell button today after the company completed a detailed review of its exploration portfolio.

As a reminder, IGO has previously announced that it has been undertaking a comprehensive exploration business review. This has included a detailed examination of its portfolio of exploration tenement holdings and land positions.

It notes that the review was focused on rationalising the portfolio and ensuring that the company’s resources are allocated effectively to the targets which are most prospective for commercial success.

What were the results?

According to the release, following the review, IGO expects to record an impairment against these assets in its FY 2024 financial results.

At this stage, the determination of the final impairment value is incomplete and will be subject to audit review.

However, IGO has laid out its expectations for what could appear when it releases its results

It estimates that the impairment charge to its exploration assets will be between $275 million and $295 million for the full year. This impairment relates to the revaluation of the Silver Knight and Mt Goode nickel exploration assets, as well as the broader exploration portfolio rationalisation.

The non-cash impairment will not impact IGO’s FY 2024 EBITDA but will be recorded in the company’s audited financial results when they are released on 29 August 2024.

Should you buy the dip?

While analysts at Goldman Sachs have not yet responded to this update, the broker currently sees IGO shares as a great option for investors looking for battery materials exposure.

Last week, its analysts retained their buy rating with a new price target of $7.15. This implies potential upside of 19% for investors over the next 12 months.

It likes IGO due to its low costs and compelling lithium expansion potential. It said:

Greenbushes is the lowest cost lithium asset in our coverage; Production growth more than offsets increasing strip ratio: The addition of CGP3 (under construction) and CGP4 (planned) should take Greenbushes production capacity from ~1.5Mtpa today to ~2.4Mtpa (excluding tailings processing of ~0.3Mtpa), and they are planned to be funded from existing Greenbushes debt facilities, combined with Greenbushes cash flows (though we factor in below nameplate).

We reiterate our belief that further Greenbushes expansion remains one of the most economically compelling brownfield lithium projects, where the JV also retains significant optionality around extending/converting the TRP, while the resource likely underpins even further expansion (i.e. CGP5, subject to market conditions). Further, we note on our mass balance analysis that JV partners may need further Greenbushes expansions.

The post IGO shares drop on $295 million hit appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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 Scott Phillips.