There are a quite a few compelling reasons why the Pushpay Holdings Ltd (ASX: PPH) share price could be worth thinking about right now.

What is Pushpay?

Pushpay is an ASX tech share. The software business has a donor management system, which includes donor tools, finance tools and a customer community app and a church management system to the ‘faith sector’, non-profit organisations and education providers located mostly in the US.

The aim of Pushpay’s offerings is to make it easier for engagement, payments and administration. Pushpay says that its customers can increase participation and build stronger relationships with communities.

Pushpay also has a subsidiary called Church Community Builder which provides a software as a service (SaaS) church management system, predominately in the US. It can do things like record members service history, track online giving and performance a range of administrative functions.

What are some reasons why the Pushpay share price could be a buy?

1: Gaining market share at a quick pace

A business that is growing quickly may be able to generate good investment returns as well, particularly if the valuation doesn’t overshoot the growth rates the company is generating.

In the FY21 half-year result Pushpay reported that its operating revenue grew by 53% to US$85.6 million. Total processing volume increased by 48% to US$3.2 billion.

Pushpay expects continued growth in total processing volume driven by a larger proportion of new medium and large customers, further product development leading to higher adoption and usage, and increased adoption of digital giving.

2: Operating leverage

Pushpay is generating increased operating leverage as it gets bigger. In the FY21 half-year result, its gross profit margin went up from 65% to 68%.

For the six month period to 30 September 2020, expenses only grew 16%. As a percentage of operating revenue, total operating expenses improved by 12 percentage points, from 50% to 38%.

Pushpay said that it expects significant operating leverage to accrue as operating revenue continues to increase, while growth in total operating expenses remains low.

In the half-year result, Pushpay increased its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) by 177% to US$26.7 million.

Pushpay recently increased its FY21 EBITDAF guidance to a range of between US$56 million to US$60 million and said it expects operating leverage to continue to accrue to the business over the remainder of FY21.

3: Pushpay share price valuation

The Pushpay share price has fallen by around 25% since 28 October 2020, despite Pushpay increasing its EBITDAF guidance materially since then.

Earnings estimated on Commsec suggest strong profit growth between now and FY23. At the current Pushpay share price, it is valued at 22x FY23’s estimated earnings.

In the FY21 half-year result it grew its net profit after tax (NPAT) by 107% to US$13.4 million, whilst operating cash flow went up by 203% to US$27 million.

4: Long-term growth plans

Pushpay has set its sights on other areas of growth.

One area that it’s looking at is the Catholic segment of the US faith sector.

Pushpay is looking at different geographies where it can expand including South East Asia and South America, which could lead to a bigger total addressable market and give it more earnings diversification.

Adjacent donation areas could also become larger parts of the business including not-for-profits, education and tertiary.

More reading

• 3 fantastic ASX growth shares to buy in March
• 2 stellar ASX tech shares to buy in March
• 2 ASX shares to buy in March 2021
• 2 outstanding ASX growth shares to buy in March
• 3 explosive ASX growth shares to buy next 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 PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 4 top reasons why the Pushpay (ASX:PPH) share price could be a buy appeared first on The Motley Fool Australia.

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At lunch on Tuesday the S&P/ASX 200 Index (ASX: XJO) is on track to record another solid gain. The benchmark index is currently up 0.7% to 6,788 points.

Here’s what is happening on the market today:

Tech shares sink

It has been a very disappointing day of trade for tech shares such as Afterpay Ltd (ASX: APT) and Zip Co Limited (ASX: Z1P). Following another poor night of trade on the tech-heavy Nasdaq index, local tech shares have been sold off on Tuesday. So much so, the S&P/ASX All Technology Index (ASX: XTX) is down a sizeable 3% at the time of writing. Rising bond yields are hitting investor sentiment in the sector.

Vocus takeover offer accepted

The Vocus Group Ltd (ASX: VOC) share price is storming higher today after it accepted a takeover offer. According to the release, the specialist fibre and network solutions provider has entered into a Scheme Implementation Deed with a consortium owned by Macquarie Infrastructure and Real Assets (MIRA) and Aware Super. The consortium has tabled a $5.50 per share offer, which the Vocus board is recommending shareholders accept. This is of course in the absence of a superior offer and subject to the independent expert’s report.

Gold miners tumble

Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) are under pressure today after the spot gold price dropped again. According to CNBC, the spot gold price fell 1.1% to US$1,679.20 an ounce during overnight trade. This leaves the precious metal trading at a nine-month low. Rising bond yields and a stronger US dollar have been weighing on gold. The S&P/ASX All Ords Gold index is down 1.5% at lunch.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Tuesday has been the Vocus share price with a gain of 8.5%. This follows the release of its takeover update this morning. The worst performer has been the Afterpay share price with a 9% decline. The payments company’s shares have been hit very hard by the tech selloff.

More reading

• Why AVZ, Legend Mining, Nuix, & Vocus shares are surging higher
• The tech-heavy Nasdaq is now in a correction!
• Why the Afterpay (ASX:APT) and Zip (ASX:Z1P) share prices are under pressure again
• Why ASX 200 tech shares could be in for another wild session
• ASX All Technology Index teetering on verge of a bear market

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 AFTERPAY T FPO and ZIPCOLTD FPO. 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 Digital Wine Ventures Ltd (ASX: DW8) share price hit a 5-year high of 9.5 cents in morning trade. At the time of writing, shares in the online beverage distributor are selling at 9.1 cents, up 18% on yesterday’s close. This rise occurred after the company announced massive increases on one of its sales platforms.

In comparison, the S&P/ASX All Ordinaries Index is up only 0.7% in morning trade.

Let’s take a closer look at what’s sent the Digital Wine share price soaring today.

What did Digital Wine announce today?

In a statement to the ASX, Digital Wine announced a monumental 931% year-on-year rise in the number of wine cases shipped via its platform WINEDEPOT during February. The company confirmed that 20,864 cases of wine were shipped last month. The company also stated this was a 28% increase on January 2021.

In further good news for investors, 9,494 orders were processed in February. That’s a 918% increase on February 2020 and a 32.4% increase on January 2021. The average amount of cases per order shipped is 2.2.

As well, the announcement detailed that 26 new suppliers are signing deals with the WINEDEPOT platform.

What is WINEDEPOT?

Digital Wine’s WINEDEPOT aims to streamline wine and beverage distribution through technology. It is both a consumer-facing and business-to-business operation. Many of its customers are wine traders, as well as traditional retailers and consumers.

The company generates revenue through a mixture of market trading fees, channel management fees, logistics fees, subscriptions, and liquidity fees.

Digital Wine half-yearly report

For the 6 months ending 31 December 2020, Digital Wine recorded a net loss of $2.4 million. In the prior corresponding period (pcp) it was an approx. $830,000 loss.

A $14,000 gross profit in the pcp became a $60,000 loss. However, revenue was up 1041.8% on the pcp to total $991,000.

Losses from administration expenses were up 76% to total $815,000. Advertising expenses were up 247.7% totalling $265,000 for the half year.  Significantly, salaries and wages went from $66,00 in the pcp to $948,000. This equates to a 1,336.4% rise.

Digital Wine share price snapshot

This time last year, shares in the venture were trading at half a cent each. If an investor bought back then, they would be sitting on a jaw-dropping 1,760% increase on their investment.

Digital Wine has a current market capitalisation of $151.4 million.

More reading

• Digital Wine (ASX:DW8) share price flies 13% higher on partnership deal

Motley Fool contributor Marc Sidarous 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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to record another solid gain. At the time of writing, the benchmark index is up 0.75% to 6,790.8 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are surging higher:

AVZ Minerals Ltd (ASX: AVZ)

The AVZ share price is up 6% to 21.2 cents. Investors have been buying the lithium-focused mineral exploration company’s shares following the announcement of a second offtake agreement. According to the release, AVZ and Shenzhen Chengxin Lithium Group have signed a binding offtake agreement for the supply of up to 180,000 tonnes per annum of spodumene concentrate from the Manono Lithium and Tin Project.

Legend Mining Limited (ASX: LEG)

The Legend Mining share price is up 4% to 13 cents. The catalyst for this has been news that diamond drilling has commenced at its Mawson prospect within the Rockford project in Western Australia. Investors appear optimistic the nickel and copper focused mineral exploration company will unearth a lucrative resource.

Nuix Ltd (ASX: NXL)

The Nuix share price has jumped 16% to $5.46. This appears to have been driven by bargain hunters swooping in to buy shares after they fell to a 52-week low on Monday. When the Nuix share price hit that level, it meant it was down a massive 61% from its 52-week high. A disappointing half year result has been weighing on its shares.

Vocus Group Ltd (ASX: VOC)

The Vocus share price has surged over 8% higher to $5.43. Investors have been buying the specialist fibre and network solutions provider’s shares after it entered into a Scheme Implementation Deed with a consortium owned by Macquarie Infrastructure and Real Assets (MIRA) and Aware Super. The consortium has tabled a $5.50 per share offer, which the Vocus board is recommending shareholders accept.

More reading

• Why the AVZ Minerals (ASX:AVZ) share price is surging 15% higher today
• Vocus (ASX:VOC) share price on watch after accepting takeover offer
• 2 ASX shares at 52-week lows: Are they bargain buys?
• One person earned $250,000 on Airtasker last year. Now it’s listing
• Here’s why the Nuix (ASX:NXL) share price is storming 5% higher today

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Nuix Pty Ltd. The Motley Fool Australia has recommended Nuix Pty 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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Overnight, something strange happened over in the US. The tech-heavy US Nasdaq Composite (INDEXNASDAQ: .IXIC) Index fell a hefty 2.4%. That in itself isn’t too newsworthy (although it is a sizeable drop). No, what this test move means is that the Nasdaq is now officially in a ‘correction’. A correction is one of those rather superficial Wall Street terms that’s meant to dress up something bad as something good. A correction is a term given for a 10% or more drop in an index’s value. And since the Nasdaq has now dropped from around 14,095 points on 12 February to 12,609 after last night, the index is now down 10.54%. And that means we are now in correction territory.

What’s even more interesting though is how confined this ‘correction’ is to Nasdaq shares in particular. The broader S&P 500 Index (INDEXSP: .INX), which consists of both Nasdaq and New York Stock Exchange (NYSE) companies, is only down 2.88% over the same period. The Nasdaq and the NYSE are the two major share markets of the United States. The Nasdaq tends to hold most of the US’s tech stocks (such as the FAANGs), while the NYSE is home to most of the ‘old-school’ giants like Walmart Inc (NYSE: WMT) and Ford Motor Company (NYSE: F).

Put simply, it’s only tech stocks that are selling off with enthusiasm.

Tech sells off with a vengeance

Looking at what’s been going on, this becomes very obvious. Take tech darling Tesla Inc (NASDAQ: TSLA). Tesla shares are down a whopping 31% since 12 February. Amazon.com Inc (NASDAQ: AMZN) is down around 10% over the same period. Apple Inc (NASDAQ: AAPL) is down around 14%, while Netflix Inc (NASDAQ: NFLX) is down around 11%.

All in all, it hasn’t been a nice few weeks to own US tech stocks! This tech sell-off has also spilled over to the ASX. This morning, we reported on how the ASX tech sector is facing a bear market (a fall of 20% or more) if it falls too much lower. This has been exemplified by the performance of former ASX high-flyers like Afterpay Ltd (ASX: APT). Afterpay shares have fallen more than 30% in just the past month alone.

It’s hard to say exactly what is causing these seemingly-precipitous drops. But one could possibly put it down to the sector blowing off some steam after an incredible run up over the past few months. Rising bond yields are also especially problematic for tech stocks.

But even though a ‘correction’ is a scary thought for investors, the reality is that the Nasdaq is now back at levels that we were calling ‘all-time highs’ back in December. It’s hardly a time for panic.

More reading

• Why the Afterpay (ASX:APT) and Zip (ASX:Z1P) share prices are under pressure again
• Why ASX 200 tech shares could be in for another wild session
• Why Tesla Stock Fell Further on Monday
• ASX All Technology Index teetering on verge of a bear market
• 5 things to watch on the ASX 200 on Tuesday

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Ford and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Apple, Netflix, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and recommends the following options: short March 2023 $130 calls on Apple, long January 2022 $1920 calls on Amazon, long March 2023 $120 calls on Apple, and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon, Apple, and Netflix. 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.

What happened

Visa (NYSE: V) and Mastercard (NYSE: MA), the two largest payment-processing companies in the world, both saw their stock prices hit new all-time highs on Monday on more positive reopening and stimulus news.

At one point earlier in the day, Mastercard saw its stock rise as much as 6%, and at the time of writing trades around $373. Shares of Visa rose as much as 5% today and currently trade around $222.

So what

Over the weekend, the U.S. Senate approved President Joe Biden’s $1.9 trillion stimulus bill, all but guaranteeing it will be passed into law.

Also today, the Centers for Disease Control and Prevention provided guidance that said fully vaccinated people could meet with other vaccinated people and some unvaccinated people indoors without masks.

This news is great for Visa and Mastercard’s business model. While you may see their logos and brand names on your credit and debit cards, Visa and Mastercard do not actually extend credit.

Instead, they set up the card network for transactions to be made among financial institutions, merchants, and consumers, and they collect fees based on volume. So, more money in people’s pockets from economic stimulus and more positive reopening news will likely translate into more spending.

Now what

While the pandemic caused some short-term pain for Visa and Mastercard, it will likely prove to be extremely beneficial long term because it has significantly advanced the use of digital payments.

In 2019, Mastercard said that card payments only made up about 13% of the $235 trillion payments market, leaving huge growth potential for digital payments.

With some research firms and banks projecting gross domestic product (GDP) to surpass 6% in 2021, that would be the highest GDP growth since 1984. It’s hard not to like Visa and Mastercard in this environment with pent-up demand and a heavier reliance on digital payments than ever before.

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

More reading

• What’s going on with the Senex (ASX:SXY) share price today?
• Here’s why the Catalyst Metals (ASX:CYL) share price is rocketing 9%
• Why the Afterpay (ASX:APT) and Zip (ASX:Z1P) share prices are under pressure again
• Top broker tips Integral Diagnostics (ASX:IDX) share price to climb 22% from here
• Why ASX 200 tech shares could be in for another wild session

Bram Berkowitz 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 Mastercard and Visa. The Motley Fool Australia has recommended Mastercard. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why Visa and Mastercard Shares Just Hit Their All-Time Highs appeared first on The Motley Fool Australia.

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

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The Senex Energy Ltd (ASX: SXY) share price is sliding today, despite the company announcing a new gas sales agreement. During mid-morning trade, the energy producer’s shares are down 1.3% to 38 cents.

Let’s take a closer look at what Senex updated the market with.

New gas agreement

The Senex share price is in negative territory regardless of the positive announcement made by the company earlier today.

According to this morning’s release, Senex has entered into a new gas sales agreement with CleanCo Queensland.

Established in 2018, CleanCo is a government-owned electricity generation and trading company. The business is focused on providing reliable clean energy solutions at a competitive price for the people of Queensland.

The contract is expected to deliver 2.55 petajoules of natural gas from the Wallumbilla Gas Hub. This brings Senex’s total amount of gas supplied to CleanCo to more than 5.1 petajoules over the 2020–22 calendar years. One petajoule is equivalent to powering 19,000 homes for an entire year, or almost 100,000 dwellings with 5.1 petajoules.

The agreement is for a 1-year term and is scheduled to commence on 1 January 2022. The price of the gas will be at a fixed amount that is in line with current market rates.

Management commentary

Senex managing director and CEO Ian Davies welcomed the new deal, saying:

The strong ongoing relationship between Senex and CleanCo contributes to security of power supply that helps the recovery of the Queensland and Australian economies.

Senex will continue to build a portfolio of gas sales agreements that support jobs and regional economies as we partner with commercial and industrial customers for long-term and mutually beneficial relationships.

Each of our long-term and mutually beneficial relationships – with partners also including CSR, Orora, Visy Glass, Alinta Energy and Southern Oil Refining – reinforces Senex’s significance as a supplier of natural gas to the east coast market.

About the Senex share price

The Senex share price has been a solid performer over the past 12 months, rising by more than 90%. The company’s shares hit a multi-year low of 12 cents last March, but have since recovered on an upwards trajectory.

Based on current valuations, Senex commands a market capitalisation of around $565 million.

More reading

• What’s up with the oil price right now?
• Here’s why the Senex Energy (ASX:SXY) share price is 8% higher

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 Catalyst Metals Ltd (ASX: CYL) share price is rocketing in morning trade, up 9.14%.

This comes after the ASX gold miner updated the market on its latest drill results.

What results did Catalyst report?

Catalyst Metals’ share price is moving higher after the gold miner reported visible gold in 4 of the 9 diamond drill holes completed in Boyd’s Dam at the Four Eagles Gold Project.

Catalyst has a 50% interest in the Four Eagles Gold Project, located in Victoria. Gold Exploration Victoria Pty Ltd holds the other 50% interest.

The company reported it has thus far received assays for 4 of the 9 holes, 2 of which (FEDD047 and FEDD044) came back with significant gold intersections. Those results include:

• 35 metres @ 117.0 grams per tonne gold (g/t Au) from 326.1 metres in FEDD047
• 4 metres @ 7.1g/t Au including 0.3 metres @ 22.5g/t Au and 0.3 metres @ 33.8g/t Au from 107.5 metres in FEDD044
• 8 metres @ 2.7g/t Au from 68.0 metres including 0.3 metres @ 17.2g/t Au and 0.75 metres @13.8g/t Au in FEDD044

Commenting on the initial assays, Bruce Kay, Technical Director of Catalyst Metals said:

It is very encouraging to intersect quartz structures with visible gold in four of the nine diamond drill holes completed so far this year, especially considering the wide spaced nature of the drilling. The discovery of a new deep structure beneath Boyd North adds to the potential of the whole mineralised system.

Catalyst has 2 diamond drill rigs and 1 reverse circulation (RC) drill rig operating at Boyd’s Dam and Boyd North.

Catalyst share price snapshot

ASX gold shares have broadly lost ground along with the sliding gold price. At time of writing an ounce of gold is worth US$1,684. That’s the lowest gold price in 11 months, and well below the US$2,063 per ounce on 6 August.

With today’s intraday gains factored in, Catalyst Metals shares are down around 16% over the past 12 months. That compares to 20% gain on the All Ordinaries Index (ASX: XAO).

Year-to-date the Catalyst share price is down just shy of 5%.

More reading

• Why the Afterpay (ASX:APT) and Zip (ASX:Z1P) share prices are under pressure again
• Top broker tips Integral Diagnostics (ASX:IDX) share price to climb 22% from here
• Why ASX 200 tech shares could be in for another wild session
• Why Tesla Stock Fell Further on Monday
• Why the Red 5 (ASX:RED) share price is soaring higher today

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 Afterpay Ltd (ASX: APT) and  Zip Co Ltd (ASX: Z1P) share price performances have gone from bad to worse after both buy now, pay later (BNPL) giants have lost more than 35% in value since mid-February.  

The Zip share price is still up ~51% year-to-date, while Afterpay has dipped into negative territory and down 13% for the year. 

Just as you think the pain might be over, today looks to be shaping up to be another tough session for Afterpay and Zip shares. 

US tech shares under fire 

Rising bond yields continued to threaten richly valued tech and growth sectors overnight. Benchmark US government yields hit a one-year high of 1.60% despite the US being close to passing its US$1.9 trillion stimulus package. 

The Nasdaq Composite (NASDAQ: .IXIC) slumped 2.41% while the S&P 500 Index (SP: .INX) was down only 0.54% and the Dow Jones Industrial Average Index (DJX: .DJI) finished the session 0.97% higher. 

More notably, leading US-listed BNPL giant, Affirm Holdings Inc (NASDAQ: AFRM) closed 8.42% lower at US$74.31. This brings its shares to a new all-time low after listing on 13 January 2021 at an IPO offer price of US$39. Its shares hit a peak of US$146.90, a 275% return for those that managed to participate in the IPO. Conversely, those that bought Affirm shares at its peak would also find a 50% hole in their pockets on current prices. 

The Affirm share price reflects a similar sell-off narrative as the ASX-listed BNPL shares. Affirm shares peaked on 10 February, a similar timeline to Afterpay and Zip shares, which began to plateau around the same time. 

Why are the Afterpay and Zip share prices still falling? 

Despite being competitors, the Affirm, Afterpay and Zip share price largely move in tandem. 

The broader weakness across US tech shares combined with Affirm’s 8.42% slump and inability to bounce off lows has translated into a weaker open for ASX-listed BNPL shares. 

At the time of writing, the Zip share price has bounced off its intraday low of $8.41 to be trading for $8.51, which is down 4.71%, while the Afterpay share price is still sitting at intraday lows, down 8.96% at $101.20 per share. 

More reading

• Why ASX 200 tech shares could be in for another wild session
• ASX All Technology Index teetering on verge of a bear market
• Subreddit ASX Bets is gambling these 4 ASX shares will follow in GameStop’s footsteps
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 rises, TWE jumps, Zip sinks

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Afterpay (ASX:APT) and Zip (ASX:Z1P) share prices are under pressure again appeared first on The Motley Fool Australia.

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The Integral Diagnostics Ltd (ASX: IDX) share price has been a positive performer on Tuesday.

In morning trade, the medical imaging service provider’s shares are up 1.5% to $4.50.

This means the Integral Diagnostics share price is now up a solid 25% since this time last year.

Can the Integral Diagnostics share price go even higher?

Positively, one leading broker believes the Integral Diagnostics share price can still go a lot higher from here.

According to a recent note out of Goldman Sachs, its analysts have initiated coverage on the company with a buy rating and $5.50 price target.

Based on the current Integral Diagnostics share price, this implies potential upside of ~22% over the next 12 months.

And if you include the 2.5% dividend yield that the broker is forecasting, this potential return stretches to almost 25%.

Why is Goldman Sachs bullish on Integral Diagnostics?

Goldman believes the medical imaging service provider is a well-run business in an attractive industry.

It also notes that it has a relatively secure volume profile of mid to high single digit growth and a clear path for further growth through brownfield expansions and merger and acquisition activities.

In addition, Goldman feels Integral Diagnostics is well-positioned to benefit from a number of key drivers. These include:

“1) Aging population and increasing prevalence of chronic diseases underpin the long term sustainability of the industry’s volume growth profile;

2) Steady increase in utilisation/vol. of MRI and CT as Australia’s current levels still remain well below its developed market peers (c.-50%), and we see little impediment to the narrowing of that gap;

3) Positive mix shift to high-acuity modalities over the mid-term (MRI, CT and PET) as these services deliver higher quality clinical outcomes while also generating higher revenue/margin per service for IDX (CT and MRI revenue c.2-3x above industry avg);

4) Pricing tailwind from reintroduction of indexation at c.1.5% p.a for 90% of Medicare items (c.80% of benefits). Further upside risk for pricing should MRI & PET (20% of benefits) get reindexed;

5) Clear scope for growth via further brownfield expansion and M&A (consolidation of a fragmented industry), for which we see a long runway of opportunities in both areas.”

All in all, Goldman expects this to lead to earnings growth of ~9% per annum through to FY 2023.

And with the Integral Diagnostics share price trading at 22x estimated FY 2021 earnings, it feels this is an undemanding valuation for its current growth profile.

More reading

• 2 highly rated ASX dividend shares to buy now
• Integral Diagnostics (ASX:IDX) share price lifts on strong half-year results

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Integral Diagnostics 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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