Nine Entertainment Co Holdings Ltd (ASX: NEC) shares are on the rise today after the company announced some changes to its board. During intraday trade, the Nine share price surged more than 6% to reach a new 52-week high of $3.13.

At the time of writing, the media company’s shares have retreated back to $3.06, up 4.08% for the day with only moments of trade remaining.  

What’s driving the Nine share price?

The Nine share price is leaping higher today following the company’s announcement that board member Patrick Allaway has resigned. In a statement released to the ASX after close of trade yesterday, Nine Entertainment chair and former federal government treasurer Peter Costello announced Mr Allaway would resign by early April.

Mr Allaway commented on his upcoming departure, stating:

My time with Fairfax and now on the Nine board has seen much growth and change for our business and I have valued the work we have done together as a Board and with management to create Australia’s largest locally owned media company. It was always my intention to stay on the Board through the merger [with Fairfax] and to see the success we have created is gratifying.

He added:

With more intense duties now as Chairman of Bank of Queensland I have taken this opportunity to step down and allow for orderly renewal on the Nine board.

According to an article published yesterday by the Sydney Morning Herald (SMH), tensions have flared in the Nine boardroom between the three Fairfax and three Nine Entertainment members. Mickie Rosen, another board member with ties to the defunct Fairfax, is also considering his future at the company, according to SMH.

The third Fairfax board member, Nick Falloon, is currently under investigation for the alleged misuse of a corporate golf club membership.

CEO Hugh Marks also resigned in November last year. His resignation came following the revelation he was in a relationship with the former managing director of commercial, Alexi Baker.

Other recent news

In its half-yearly report, Nine reported a 108% leap in its net profit after tax. The company also paid a fully franked dividend of 5 cents per share for the period.

In other recent news, the media conglomerate penned a $30 million deal with Google owner Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) and is expected to sign a similar deal soon with Facebook Inc (NASDAQ: FB).

Furthermore, Channel Nine show Married at First Sight is currently the highest-rated program on Australian TV. On top of this, a Nielsen report from January, as reported by Mediaweek, listed nine.com.au, the Sydney Morning Herald, and The Age as the number 2, 5, and 8 most viewed news websites in Australia, respectively.

Nine share price snapshot

As stated, the Nine share price hit its highest point in 12 months during intraday trading today. Over the same period, the company has seen a phenomenal rise in its value. On 23 March 2020, Nine Entertainment shares were trading at 84 cents each. As such, today’s high watermark represents a 273% increase from the company’s 2020 bear market low.  

More reading

• ASX 200 drops, Appen sinks, Nine jumps
• Nine (ASX:NEC) share price on watch as profit doubles
• Facebook strikes first deal with Seven West (ASX:SWM) as media bargaining code looms large
• Facebook ban on Australian news ends
• Facebook vs Australia feud escalates as government pulls ads

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (C shares) and Facebook. The Motley Fool Australia has recommended Alphabet (C shares) and Facebook. 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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Brent crude oil, the international benchmark, hasn’t traded above US$100 per barrel since the heady days leading up to the global financial crisis. In other words, for more than 13 years.

The last time it traded above US$80 was back in October 2018.

Stymied by record level oil production from the United States, and driven by breakthroughs in shale oil production, Brent largely traded in the US$60–70 range since then. Right up until the end of January last year.

We all know what happened then.

COVID-19 entered the scene and demolished global demand for oil as air, land, and sea travel all but ground to a halt. By 24 April 2020, Brent was selling for US$21 per barrel.

Needless to say, ASX energy shares were walloped.

But as the price of crude has rebounded, so have the share prices of most ASX oil and gas companies.

Today, a barrel of Brent crude is trading for US$62.91. That’s up from US$51.80 since 1 January.

But crude prices could have much further to run.

Crude oil to US$100 per barrel?

Hayal Ahmadzada is Socar Trading’s chief trading officer. As Bloomberg reports, he expects to see global oil stocks, which swelled during the early months of the pandemic, to be depleted by northern summer.

According to Ahmadzada, Socar has already sold some 15 million barrels of oil it had stored earlier last year.

He also believes that today’s high steel prices will hinder oil companies from ramping up new supplies as the cost of new pipes and other steel-intensive materials for the industry has soared. “Ahmadzada comment “we may see a shake-out in that industry, due to very high steel prices”.

So when can ASX investors expect oil to reach US$100 per barrel again?

According to Ahmadzada:

I will not be surprised if we see $80 a barrel in summer or before year-end and above $100 a barrel in the next 18 to 24 months… It’s coming. Credit costs are much higher and the appetite for risk is much lower. The majors are cutting jobs and reducing capex. All the ingredients are there.

Two leading ASX energy shares

Australia has a number of listed companies working in the oil and gas industry.

Two leading ASX energy shares are Santos Ltd (ASX: STO) and Oil Search Ltd (ASX: OSH).

Since the 23 March lows last year, the Oil Search share price has rebounded 133%. The Santos share price bottomed out on 19 March and has since rocketed 166% higher. By comparison, the S&P/ASX 200 Index (ASX: XJO) is up 50% from its own 23 March low point.

So far in 2021, Santos shares are up 14% while Oil Search shares are up 13%.

If Ahmadzada is correct and oil breaks through US$100 per barrel in the next 18-24 months, Santos, Oil Search, and indeed most ASX energy shares should enjoy some healthy tailwinds.

More reading

• Why Limeade, Oil Search, Platinum, & Whispir shares are sinking
• 5 things to watch on the ASX 200 on Monday
• The Santos (ASX:STO) share price dips on stable credit rating
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday

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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Atomo Diagnostics Ltd (ASX: AT1) shares are on the rise in afternoon trade today. At the time of writing, the Atomo share price has surged 6.52% to 24.5 cents.  

With no news announced today, let’s take a look at the company’s latest results update to see how it has been performing. 

An Atomo rundown  

Atomo is an Australian medical device company that supplies blood-based rapid diagnostic test (RDT) devices to the global market.

The company reported in its latest results presentation that its monthly production of blood testing devices increased during the first half of FY21 (1H21) from 750,000 per month to 1.6 million per month.

At the end of the 1H21 period, Atomo posted global sales of 3.5 million devices. The business also disclosed that an additional 2 million devices have been contracted for. 

Atomo produced some strong financial results for the half with a 389% hike in revenue and a 278% increase in gross profits compared to 1H20.

Earnings before interest, tax, depreciation and amortisation (EBITDA), on the other hand, came in at a $2.12 million loss for 1H21.

As of 31 December 2020, Atomo Diagnostics held $24.69 million of cash and no debt.

What’s on the horizon for Atomo?

Regarding what lies ahead for Atomo, the company stated that it will continue to drive the growth of its COVID-19 rapid antibody tests in Australia. Atomo is also pursuing opportunities internationally, including in the United States.

The business further highlighted its intention to create commercialisation agreements for new products upon completion. Atomo intends to continue investing in technology that supports both the company and its client base.

In addition to being contracted for 2 million more devices, an FDA Emergency Use Authorisation has also approved sales beyond this amount.

Atomo Diagnostics share price snapshot

The Atomo Diagnostics share price has fallen by 12.5% over the past month. Over the previous 6 month period, Atomo shares have fallen by around 37%.

Based on the current Atomo share price, the company has a market capitalisation of approximately $94 million with 565.4 million shares outstanding.

More reading

• Why the Atomo Diagnostics (ASX:AT1) share price closed 7% down today

Motley Fool contributor Gretchen Kennedy 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 Kogan.com Ltd (ASX: KGN) share price is not having a fantastic time of late. At the time of writing, Kogan shares have shed 3.4% to $13.79 a share. Not that there has been any major news out of the e-commerce company.

Well, apart from an ASX posting that informed the markets that Kogan’s new director, James Spencely, has an interest in his new company of approximately zero shares. Yep, zip and nada. That’s not exactly inspiring, but also probably not the likely reason why investors are selling out of Kogan today.

In fact, today’s move in the Kogan share price is actually a continuation of a trend that has been playing out for some time. Kogan lost a hefty 22% over the month of February alone. It’s also down almost 30% year to date in 2021 so far. And since it last reached its reigning all-time high share price of $25.57 back in October last year, the Kogan share price has lost 45% of its value. Ouch.

But, as Einstein taught us, everything is relative. Kogan is still way in front if you go back 12 months (up 211%). And if you backtrack 5 years, investors are still enjoying gains of around 805%. Not including dividends.

Still, Kogan has indisputably had a few months to forget. So why the pessimism from investors of late?

Kogan share price comes off the boil

Well, to answer that, let’s take a look at why Kogan shares rocketed last year to begin with. Kogan was one of the rare absolute winners of the coronavirus pandemic. With retail stores in lockdown last year, Kogan’s online store (which sells almost everything) suddenly became hot property. In its quarterly update for the 3 months ending 30 June last year, Kogan reported a gross sales increase of 95% and profit growth of 115%. That update in July helped push Kogan up another 20% when it hit its all-time high in October.

But here’s the thing. Investors can often get a bit carried away, especially with growth stock like Kogan. When presented with numbers like that, it can be easy to forget that it’s possible that those numbers were more of a pandemic-induced one-off than a ‘new normal’ for the company.

Kogan recently delivered its half-year earnings report for the 6 months to 31 December 2020. Even though it presented investors with another unquestionably strong set of numbers, it wasn’t enough to stop the Kogan share price fr0m tanking 9% that day.

Sometimes, investors just push a quality company’s share price too high. That is what might have happened last year. But although investors who bought into the hype back then are licking their wounds today, it’s all relative if you look further out.

More reading

• ASX 200 up 1.5%: Afterpay & Zip jump, Fortescue tumbles
• The Kogan.com (ASX:KGN) share price sank 22% in February: Time to buy?
• These were the worst performing ASX 200 shares in February
• 2 ASX tech shares to buy in March 2021
• 2 ASX growth shares to buy in March 2021

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 Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com 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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Global hospital group Ramsay Health Care Limited (ASX: RHC) gave investors something to cheer about last week when it released its first-half results for the 2021 financial year. The Ramsay Health Care share price rose 8% as the company announced net profit after tax (NPAT) was up almost 1%, despite the challenges presented by COVID-19. 

Importantly for income investors, the company also announced it would resume paying dividends after not paying a final dividend in 2020. Here’s what you need to know.

What is the Ramsay Health Care dividend yield?

Ramsay Health Care declared an interim dividend of 48.5 cents per share for the six months to 31 December 2020. This was down -22.4% on the same period in 2019 and because there was no final dividend paid in 2020 at the current share price of $68.49, Ramsay has a trailing dividend yield of just 0.71%, though it does come fully franked.

OK, so it’s not hugely exciting. But, as we can see from the company’s dividend history below, there are good reasons to think this may just be a short-term, COVID-19 induced blip.

When does Ramsay Health Care pay its dividend?

The Ramsay Health Care share price will go ex-dividend on Monday, 8 March 2021.  The ‘ex-date’ is when the shares start selling without the value of their next dividend payment so an investor needs to own the shares before the ex-date to receive the dividend. The dividend will then be paid on Wednesday, 31 March 2021.

What does Ramsay Health Care’s dividend history look like?

Ramsay’s dividend history over the last decade makes for quite a sight. If there are two things dividend investors love to see it’s consistency and growth, both of which Ramsay was delivering hand over fist until COVID-19 hit in 2020.

The chart below shows how the company’s dividend had been rising strongly right up until 2020:

Source: Chart compiled by author using data from Ramsay Health Care

When COVID-19 struck, elective surgery dropped in most of Ramsay’s key markets and the company pivoted to providing more capacity to the public sector through special government arrangements.

Earnings fell as a result and in the ongoing uncertainty, Ramsay decided not to pay a final dividend in 2020. The company also raised $1.5 billion in equity to strengthen its balance sheet and repay debt. 

How much of its earnings does Ramsay Health Care pay out?

Over the last five years, Ramsay Health Care has typically paid out around 50% of diluted earnings per share in dividends. This was slightly lower (40%) in 2020 as the company held back its final dividend.

By retaining some of its earnings, Ramsay is able to reinvest back into the business, developing new hospitals or paying back debt, which helps to grow earnings and dividends over time. Investors will no doubt hope that continues to be the case so they have something else to cheer about when the company releases its full-year results for 2021.

More reading

• Is it time to buy these 2 hot ASX healthcare shares?
• Top ASX shares to buy in March 2021
• Why the Ramsay Health (ASX:RHC) share price is up 8% today
• 2 excellent blue chip ASX 200 shares to buy

Motley Fool contributor Regan Pearson has no position in any of the stocks mentioned. You can follow him on Twitter @Regan_Invests The Motley Fool Australia has recommended Ramsay Health Care 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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Shares in ResApp Health Ltd (ASX: RAP) surged higher on open today after the company announced its wearable device has achieved CE mark certification. In early trade, the ResApp share price leapt 10.53% to 6.3 cents. However, at the time of writing, ResApp shares have retreated back to 5.8 cents, up 1.75% for the day so far. 

Let’s take a look at what the digital health company announced.

What caused the ResApp share price to jump?

The ResApp share price was on the rise this morning after the company declared its wearable, cough monitoring device has achieved CE mark certification as a “Class I medical device accessory”. A CE mark indicates that a product has conformed with the necessary health, safety and environmental standards to be sold in the European Union market.

According to ResApp:

The device has very high accuracy and precision. It can identify over 93% of coughs events, with less than 1% of identified events being false positives. Unlike existing solutions, it does not require manual review of cough sounds by an analyst, ensuring a less labour-intensive and more rapid approach to monitoring.

ResApp developed the device in conjunction with Avanti Capital Group subsidiary, Avanti Med. The group is a United Kingdom-based venture capital company. ResApp will now issue Avanti with 6.25 million shares with an approximate value of $500,000 under its 15% placement capacity.

Words from the CEO

ResApp managing director and CEO Dr Tony Keating said

Achieving CE Mark is a major achievement, and we are confident that our wearable device will provide a number of commercial opportunities.

Discussions with potential partners, including global pharmaceutical companies, to introduce the wearable device into clinical trial settings have already commenced. The availability of the device provides a strong value proposition to potential partners and allows ResApp another opportunity to commercialise new products aimed at assessing and predicting respiratory disease progression.

ResApp share price snapshot

Despite today’s positive news, the ResApp share price has been on the slide of late. Over the past twelve months, ResApp shares have fallen by more than 68% from 18 cents to their current level. 

This is in stark contrast to many other ASX healthcare shares than benefitted during the COVID-19 pandemic.

At its current valuation, ResApp has a market capitalisation of around $43.1 million.

More reading

• Here’s why the Resapp (ASX:RAP) share price closed 5% lower
• Why the ResApp (ASX:RAP) share price is climbing higher

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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The Centuria Capital Group (ASX: CNI) share price is edging lower today, down 1% in afternoon trading. At the time of writing, the Centuria share price was trading at $2.32.

Shares have been lagging the returns from the S&P/ASX 200 Index (ASX: XJO) despite the specialist investment manager recently upgrading its earnings guidance to 10.0 cents per share (cps).

According to Centuria, the earnings guidance upgrade was supported by the company’s $162 million in equity raising since 3 January. This was for 3 unlisted real estate funds. The 2021 equity raises to date support a total of more than $286 million of industrial and healthcare property.

These funds are not listed on the ASX, with the investment funds managed directly by Centuria.

What did Centuria report on its real estate fund equity raisings?

Centuria reported that Augusta Capital, its New Zealand platform, raised NZ$109 million (AU$102.5 million). This is for its Augusta Penrose Limited fund. The capital raising was used to settle Centuria’s acquisition of the Visy Glass manufacturing facility. Centuria forecasts an initial pre-tax annual cash distribution of 5% from the fund.

So far in 2021 Centuria also raised $40 million for its newly launched Centuria Industrial Income Fund No.1 (CIIF1). That fund encompasses 3 industrial assets in Adelaide and Brisbane.

The third fund to see a major equity inflow since 2 January was the Centuria Healthcare Property Fund (CHPF). The company reported CHPF has raised $20 million in the advance bookbuild. This is prior to the fund opening for applications later this month for the third time.

Jason Huljich, Centuria’s Joint CEO commented:

It’s exciting to confirm the significant funds we have raised in the eight short weeks of the 2021 calendar year across Australia and New Zealand. These unlisted single asset and multi-asset funds comprise hotly contested assets across the industrial and healthcare sectors.

So what about the office markets?

According to Huljich, there is light at the end of the tunnel for the embattled office sector. He says, “[W]e are still confident and optimistic about the decentralised office markets. With the rollout of the COVID-19 vaccine now underway, we anticipate white-collar workers across Australia will continue to return to the office.”

Centuria share price snapshot

Having yet to fully recover from the pandemic driven market selloff last February and March, Centuria’s share remains down 9% over the past year. By comparison, the ASX 200 is up 6% in that same time.

So far in 2021, the Centuria share price is down 10%.

More reading

• Here’s what’s likely to supercharge ASX logistics demand in 2021: fundie
• Centuria Capital (ASX:CNI) share price falls despite record acquisitions

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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February just didn’t seem fair for ASX 200 tech share investors. The S&P/ASX 200 Info Tech (ASX: XIJ) index slumped by more than 10% despite the ASX 200 closing 1% higher in February. 

It wasn’t just ASX 200 tech shares struggling in February 

It wasn’t just ASX 200 tech shares that found February to be a challenging month. A similar narrative played out in the US, where the tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) found itself up more than 8% by mid-February before giving up all its gains to finish the month just 1% higher.  

What’s driving the weakness in tech? 

Long-term US interest rates, otherwise known as bond yields, have surged in recent months to briefly touch 1.60%.  

When COVID-19 rattled the markets back in March 2020, bond yields took a plunge to as low as 0.50%. Low yields typically spell good news for equity markets as investors have to consider buying higher-risk investments such as shares to get a better return. 

Yields have since pushed steadily higher since October, to close at 1.46% last Friday.

Higher yields signal higher borrowing costs and inflation, which negatively impact businesses and drag on equity market performance. 

What about other sectors?

Value sectors that typically generate high cash flow with moderate valuations typically do well in higher interest rate environments. This was evidenced by the strong performance from sectors such as the S&P/ASX Energy (ASX: XEJ), S&P/ASX Materials (ASX: XMJ) and S&P/ASX Financials (ASX: XFJ) that finished the month a respective 2%, 7% and 4.5% higher. 

ASX 200 tech shares giving up gains 

The weakness in the tech sector towards the second half of February saw many ASX 200 tech shares giving up gains.

Tech heavyweights such as Afterpay Ltd (ASX: APT) hit a record all-time high of $160.05 mid-February before diving 25% lower to close at $119.50. Xero Ltd (ASX: XRO), on the other hand, spent most of February in the red and down 8% for the month. Its shares are now almost 30% below their record highs set in December. 

March has so far seen ASX 200 tech shares sliding sideways, with the Info Tech index down 0.48% at the time of writing. 

More reading

• Leading brokers name 3 ASX shares to sell today
• Is Deferit listed on the ASX?
• Why Afterpay, IOUpay, Liontown Resources, & Redbubble are racing higher
• Here’s why the Afterpay (ASX:APT) share price fell 11% in February
• 2 of the best ASX tech shares to buy and hold

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Xero. 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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We’re already into the third month of 2021 and there are still plenty of potential ASX share opportunities.

Share prices of businesses are always changing and sometimes this can present value for investors to grab.

Not every business is experiencing growth right now, but some companies have been seeing growing customer activity in recent months:

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is an ASX share that offers a variety of tools for US churches to manage their operations. One of the key components of the company is a donation payment service where Pushpay processes money on behalf on the churches and takes a small cut.

In the report for the six months to 30 September 2020, it processed US$3.2 billion. This was an increase of 48%, or $1 billion, from the prior corresponding period.

Pushpay says that it expects continued growth in its total processing volume by a larger proportion of new medium and large customers, further development of its products to result in higher adoption and usage, and increased adoption of digital giving.

The ASX share grew its net profit after tax (NPAT) by triple digits in the most recently reported result, with NPAT rising 107% to US$27 million.

Pushpay has increased its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) guidance a few times over the last 12 months. The company views this as a useful metric to judge its operating performance.

Before the company’s annual general meeting (AGM), the EBITDAF guidance was for a range of between US$48 million to US$52 million. Since then, the company has raised its guidance to US$56 million to US$60 million. This came after donation volumes were better than expected in December 2020.

Pushpay said that it expects operating leverage to continue to accrue to the company over the second half of the financial year.

Using Commsec estimates, the Pushpay share price is valued at 22x FY23’s estimated earnings.

Bubs Australia Ltd (ASX: BUB)

The Bubs share price has been a casualty from COVID-19 impacts as the number of daigou purchases of its products slowed right down during the middle of the 2020 calendar year.

The ASX share revealed that things are turning round. Bubs founder and CEO Kristy Carr said:

The external forces brought on by the COVID-19 pandemic led to extensive channel disruption and supply and demand volatility across our sector in 2020.

While not immune to these factors, Bubs’ strong foundations, organisational agility and resilient business model delivered solid turnaround momentum with quarter on quarter sales growth following the major COVID-19 driven disruption to the daigou channel.

There were two particular areas of growth in the result that Bubs wanted to bring to the attention of investors.

It said that Bubs was the fastest growing infant formula manufacturer across Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Chemist Warehouse. It tripled its market share with combined retail scan sales at the checkout up 55% in the first half of FY21 compared to the prior corresponding period.

Another thing that the ASX share pointed investors to was that its goat infant formula gross revenue to China increased by 36% during the period, which offset unforeseen disruption to the daigou channel.  

What does Mrs Carr think about the outlook? She said:

Although the first half was challenging and resulted in group gross margin pressure as we rebalanced our inventory position, we have a robust plan in place to focus on core goat dairy profit drivers working alongside our strategic partners, including supporting our daigou channel partners to maximise the opportunity for Bubs as a lead challenger brand in the infant formula category from the recovery.

More reading

• Coles’ (ASX:COL) dividend is hitting Woolworths (ASX:WOW) out of the park
• ASX 200 Weekly Wrap: Friday carnage ruins last week of ASX earnings
• How Aldi plans to disrupt many ASX retail shares
• 2 reliable ASX dividend shares to buy in March
• 2 outstanding ASX growth shares to buy in March

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 BUBS AUST FPO and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended BUBS AUST FPO and PUSHPAY FPO NZX. 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 Nanosonics Ltd (ASX: NAN) share price has been a disappointing performer in 2021.

Since the start of the year, the infection control specialist’s shares have fallen a sizeable 25%.

Is the Nanosonics share price in the zone now?

According to a note out of Goldman Sachs, its analysts aren’t recommending investors jump in just yet.

A note out of the investment bank from last week reveals that its analysts currently have a neutral rating and $5.50 price target on Nanosonics’ shares.

So with the Nanosonics share price currently fetching $6.18 on Tuesday afternoon, this implies potential downside of approximately 11%.

What did Goldman Sachs say?

Goldman Sachs was disappointed with Nanosonics’ recent half year results. It notes that the company fell short of its expectations on both sales and earnings. The broker commented:

“H21 sales/earnings miss by -16%/-68%. Revenue declined 11% vs. Visible Alpha consensus’ +5%, driven by a shortfall in both capital (-35% vs. consensus -5%) and consumables (-1% vs. consensus +4%). Although 2Q consumables growth improved +29% from 1Q, the growth rate slowed sharply in the last two months of the period, since growth had been tracking +4% YoY at the November trading update. Capital sales were impacted by a sharp reduction in purchases by key distributor GE Healthcare due to their own inventory management triggered by Covid-19 (previously flagged).”

Rising costs

Another concern the broker has is the company’s decision to allow its costs to increase even when revenues are falling. It explained:

“Expenses continued to grow despite top-line pressure, driving EBIT/PBT to zero. Despite the 11% decline in revenue, the company continues to invest in its growth strategy, with 1H21 opex +8% YoY.”

One positive, though, is that the company is well-placed to ride out the storm thanks to its strong cash balance. It notes:

“FCF was negative in the period at -$2.4m vs. +10m in the pcp, but the company is debt-free and cash still remains robust at $88m (vs. $92m in FY20).”

Furthermore, Goldman points out that management expects growth in revenue and profitability in the second half.

Positive broker

One broker that is a bit more positive on the company is UBS. In response to its half year results, the broker put a buy rating and $7.00 price target on its shares.

This price target implies potential upside of 13% for the Nanosonics share price over the next 12 months.

Time will tell which broker has made the correct call.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post The Nanosonics (ASX:NAN) share price is down 25% in 2021: Time to buy? appeared first on The Motley Fool Australia.

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