The Cochlear Limited (ASX: COH) share price will be on watch today following the release of its half year results.

How did Cochlear perform during the first half?

Cochlear’s performance continued to improve during the first half of FY 2021 after surgeries recovered following COVID-19 related shutdowns. Management notes that the pace of recovery varied across markets, with strong growth recorded in the United States, Japan, Korea, and China. This was supported by improving momentum in Western Europe, which partially offset a slower recovery in emerging markets.

For the six months ended 31 December, Cochlear reported a 4% (or 1% in constant currency) decline in sales to $742.8 million. This was driven by a 7% increase in second quarter constant currency sales, which almost offset an 8% decline in the first quarter.

On the bottom line, the company reported a 6% decline in underlying net profit to $125.3 million. This reflects a recovery in its sales and lower operating expenses due to material COVID-19 related savings. Impressively, this is a 4% constant currency decline over the record half year profit it achieved in the prior corresponding and COVID-free period.

In light of its improved performance and solid cash flow generation, the Cochlear board has declared a $1.15 per share interim dividend. This is down 28% from the prior corresponding period.

Cochlear to return COVID-19 support

Cochlear revealed that it has decided to repay $24.6 million in pre-tax COVID government assistance received during the half.

It notes that it met the eligibility requirements to participate in these programs. However, trading conditions have improved, and while there is still uncertainty ahead, it believes returning the payments is the appropriate thing to do. These funds will be repaid in the second half.

Outlook

Potentially giving the Cochlear share price a lift today is management’s guidance for the remainder of the year.

It has provided full year underlying net profit guidance of $225 million to $245 million. This represents a 46% to 59% increase on FY 2020’s profits.

Management acknowledges that there continues to be uncertainty about the trajectory of COVID, but is increasingly confident of the resilience of its hearing implant business. This guidance is based on the Australian dollar averaging 77 U.S. cents for the second half.

More reading

• 5 things to watch on the ASX 200 on Friday
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• Top brokers name 3 ASX shares to buy next week
• 5 fantastic ASX shares to buy right now
• Leading brokers name 3 ASX shares to sell today

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 Cochlear Ltd. The Motley Fool Australia has recommended Cochlear 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 Wesfarmers Ltd (ASX: WES) share price could be on the move today.

This morning a leading broker upgraded the conglomerate’s shares in response to its half year results.

What happened?

On Thursday Wesfarmers released its results for the six months ended 31 December. It reported a 16.6% increase in revenue to $17,774 million and a 25.5% jump in net profit after tax (excluding significant items) to $1,414 million.

The key driver of its growth was its Bunnings business. The hardware giant reported a 24.4% increase in revenue to $9,054 million for the half. This represents over half of the company’s revenue during the period.

Also supporting its growth was a 23.7% jump in Officeworks revenue to $1,523 million, a 9% lift in Kmart Group revenue to $5,441 million, and a 6.6% increase in Chemicals, Energy and Fertilisers revenue.

According to a note out of Goldman Sachs, this was far better than it was expecting.

“WES delivered a stronger than expected 1H21 EBIT of A$2057mn +27.4% (12.3% beat vs. GSe and +10.3% versus Visible Alpha Consensus Data), primarily due to Dept store turnaround but generally solid performance across the board. Revenue grew to A$17.8bn, +0.9% vs. GSe (+3.5% vs. consensus). Group NPAT was at A$1390mn, +9.5% vs. GSe on a post-AASB16 basis and an interim dividend of A$0.88 was declared, +4.6% vs. GSe.

Where next for the Wesfarmers share price?

In light of this strong performance and its balance sheet flexibility, Goldman Sachs has upgraded Wesfarmers shares to a buy rating and lifted its price target on them by 23.6% to $59.70.

This price target implies potential upside of 9.6% for its shares over the next 12 months excluding dividends. This stretches to just over 13% if you include the fully franked 3.6% dividend yield the broker expects in FY 2021.

Why is Goldman Sachs positive?

Goldman Sachs notes that Wesfarmers is well-placed to benefit from Australia’s economic recovery. It also believes it has excess capital that could be used for earnings accretive acquisitions. It explained:

“Management noted improving confidence in the economic recovery in their outlook statement, which is a notable improvement on prior cautious commentary from the company. Kmart turnaround and Bunnings property cycle exposure suggest WES is well positioned to participate in recovery as it gathers pace in Australia.”

“We have consistently highlighted in our prior research that WES has excess capital over and above its A-/A3 credit rating requirements. The beneficial cash conditions experienced by discretionary retailers currently has exacerbated WES’ balance sheet position, with the company now demonstrating what we consider to be an excessive capital position with an estimated >A$8bn in excess of credit requirements, prior to the Mt Holland development. We revise FY21/22 NPAT forecsts by +16.3% and +21.9% respectively.”

More reading

• ASX 200 mixed, CSL reports 44% profit growth, TWE soars
• Wesfarmers (ASX:WES) share price tumbles despite strong half year profit growth
• Wesfarmers (ASX:WES) share price on watch following lithium update
• ASX 200 Weekly Wrap: ASX cools on earnings reality check
• Wilson Asset Management thinks these 2 ASX shares are a buy

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers 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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The CSL Limited (ASX: CSL) share price was a positive performer on Thursday.

The biotherapeutics company’s shares charged 3% higher to end the day at $289.00.

Why did the CSL share price charge higher?

Investors were buying CSL shares following the release of a strong half year result.

For the six months ended 31 December, the company delivered a 16.9% increase in revenue over the prior corresponding period to US$5,739 million.

This was driven largely by a 38% jump in Seqirus revenue, thanks to a 44% increase in seasonal influenza vaccine sales. Demand for flu vaccines has been exceptionally strong due to the COVID-19 pandemic.

Also supporting the company’s growth was its CSL Behring business, which reported a 9% increase in revenue. This was driven by solid growth in its core immunoglobulin portfolio, the successful transition to its own distribution model in China, and strong growth in HAEGARDA sales.

And thanks to margin expansion, CSL delivered a 45% jump in reported net profit after tax to US$1,810 million.

Guidance

However, potentially holding the CSL share price back a touch, was that management has held firm with its full year guidance despite the strong first half profit growth.

It expects to report a full year net profit after tax of US$2,170 million to US$2,265 million at constant currency. This is in line with previous guidance and represents year on year growth of 3% to 8%. A big pullback from its first half growth of 45%.

Management also warned that plasma collections have been adversely affected during the pandemic and additional collection costs have been incurred.

CSL share price downgraded

CSL’s outlook didn’t go down well with analysts at Goldman Sachs.

The broker said: “By reaffirming the FY21 earnings target of +3-8% despite delivering a +25% beat at 1H, CSL is now guiding to an earnings decline of (47)-(58)% in 2H21. Whilst management has likely applied more than its usual degree of conservatism amidst so much uncertainty, it is also clear that the company is having to take tougher decisions on customer allocations than we had expected to see at this stage.”

“It has been long-understood that the plasma collection deficit would pressure FY21-22, but to see such a sharp sequential slowdown in IG during a period which was mostly unaffected by these challenges was a negative surprise to us/consensus, particularly ahead of two reporting periods which appear tougher still (1H21 volumes +3%),” it added.

As a result, the broker has downgraded its earnings estimates for FY 2022 and FY 2023 and is now forecasting “three consecutive years of single-digit earnings growth.”

In light of this, it believes its shares are overvalued at the current level.

“At current valuation of 29.3x EV/EBITDA (vs. sector 21.6x), we no longer see sufficient upside to justify a positive stance. We downgrade to Neutral (from Buy),” it explained.

Goldman Sachs has a $308.00 price target on the CSL share price.

More reading

• 5 things to watch on the ASX 200 on Friday
• ASX 200 mixed, CSL reports 44% profit growth, TWE soars
• Why did Aussie investors get a 9% dividend cut from CSL (ASX:CSL)?
• ASX 200 up 0.2%: ANZ and CSL impress, Fortescue declares huge interim dividend
• Why CSL, Domino’s, IPH, & Treasury Wine shares are storming higher

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 CSL Ltd. 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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Experts have warned treasurer Josh Frydenberg’s proposal to weaken public disclosure laws will let ASX companies get away with duping retail investors.

Continuous disclosure laws make it illegal for directors of ASX-listed companies to withhold information that may affect the share price.

Last year, Frydenberg temporarily relaxed some obligations for public companies in response to the COVID-19 pandemic. This included a partial reprieve from continuous disclosure requirements.

This week, the federal treasurer proposed converting that into permanent law, by requiring that shareholders can only sue if a director violated the obligations with “knowledge, recklessness or negligence”.

In other words, claiming ignorance could become a legitimate excuse.

Slater & Gordon Limited (ASX: SGH) head of class actions Ben Hardwick called Frydenberg’s proposal “madness”.

“Funny how the pandemic crisis has apparently abated enough to stop JobKeeper, but is still serious enough to warrant permanently watering down corporate responsibility,” he said. 

“The ASX is about to hit an all-time high, and the treasurer thinks it’s important to offer extra shields to company directors to avoid accountability.”

Frydenberg will give incentive for bad behaviour

In the US and UK, where ignorance is already allowed as a legal strategy, it’s called the ‘honest idiot’ defence.

Australian Shareholders Association chair Allan Goldin told The Motley Fool that it’s also called the ‘dumb director’ defence. 

“Previously if there was any failure to keep the market informed under the current continuous disclosure rule, it was a simple black and white situation. Don’t tell shareholders something material, and the company and its directors were liable,” he said.

“This was great for shareholders because they do not have insider or special interest knowledge, and all they know is what they are told and what they read.”

If Frydenberg’s proposal is written into law, ASX company board members could deliberately tell staff to not tell them controversial information.

“The new instruction to management from boards could be, if you want to keep some information to yourself or exaggerate a bit, just make sure you don’t tell me – so no one can sue me,” said Goldin.

Hardwick wondered why the treasurer would oppose the Australian share market’s world-leading transparency.

“Australian directors know they have to be open with the market or they might be accountable to their investors through a class action,” he said.

“Josh Frydenberg is apparently uncomfortable with this situation.”

Why does Frydenberg want this?

So if it’s such a bad suggestion, why would the federal treasurer want it?

The lobby group representing many of the ASX’s biggest companies, the Business Council of Australia, and the Australian Institute of Company Directors (AICD) support the changes.

“The AICD welcomes the treasurer’s announcement today which comes when encouraging investment and risk-taking is crucial to Australia’s economic future,” said AICD chief Angus Armour.

“Australia’s securities class action settings have been out of step with the rest of the world, making us a lucrative market for litigation funders and driving adverse consequences for businesses, shareholders and the economy generally.”

Goldin said the changes wouldn’t benefit anyone except for privileged board members, who form a support base for Frydenberg’s side of politics.

“The only people who like this change are the AICD and the Business Council. The only ones who like it are because of self-interest,” he told The Motley Fool.

“With the Liberal Party, a lot of their supporters and donors like it.”

Hardwick agreed, saying “mum and dad investors” would lose out.

“If you truly believe in markets then you’ll consider transparency and accountability to be good things because they allow investment to flow rationally. If, however, you prefer crony capitalism and protecting corporations from consequences, then you’ll take a different view.”

He hoped that sanity would prevail and the proposal would be killed off by others in Canberra.

“I suspect the senate crossbench may have greater integrity when it comes to defending the true interests of investors and our markets,” said Hardwick.

“The last thing we should want is for Australia to develop an international reputation as a jurisdiction that’s soft on corporate misbehaviour. That’s a surefire way to dry up investment.”

More reading

• CSL (ASX:CSL) share price hit by broker downgrade
• 2 ASX dividend shares with very generous yields
• 3 exciting small cap ASX shares to put on your watchlist
• Will Fortescue (ASX:FMG) shares really pay a 18% dividend yield in FY21?
• Did you miss the Rural Funds (ASX:RFF) 94% profit growth in HY21?

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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The great news for income investors in this low interest rate environment, is that there are a good number of ASX dividend shares offering generous yields.

Two ASX dividend shares with big yields are listed below. Here’s what you need to know about them:

Charter Hall Social Infrastructure REIT (ASX: CQE)

The first ASX dividend share to look at is the Charter Hall Social Infrastructure REIT. It is a real estate investment trust investing in high quality social infrastructure properties. These are properties with specialist use, limited competition, and low substitution risk. This includes childcare centres and government properties.

It recently released its half year results and reported a 14.1% increase in operating earnings to $29.1 million. Management also revealed other improvements to key metrics. This includes an occupancy rate of 99.7% and a weighted average lease expiry (WALE) of 14 years.

This strong performance allowed the Charter Hall Social Infrastructure REIT board to increase its FY 2021 distribution guidance to 15.7 cents per unit. Based on the current Charter Hall Social Infrastructure share price, this represents a 5.25% yield.

Fortescue Metals Group Limited (ASX: FMG)

Another ASX dividend share to look at is Fortescue. The mining giant has just released its half year results and revealed huge revenue and profit growth.

For the six months ended 31 December, Fortescue delivered a 44% increase in revenue to US$9,335 million and a 66% lift in net profit after tax to US$4,084 million. This was driven by record shipments and a significant rise in the iron ore price. In respect to the latter, Fortescue reported an average realised price of US$114 per dry metric tonne for its iron ore. This was a 42.5% increase on the prior corresponding period.

In light of this impressive performance and its strong balance sheet, the mining giant declared a fully franked A$1.47 per share interim dividend. This is an increase of 93.4% on the prior corresponding period.

According to a note out of Goldman Sachs, it is expecting more of the same in the second half. As a result, based on the current Fortescue share price, it estimates that it offers income investors a fully franked 10.7% yield in FY 2021.

More reading

• Will Fortescue (ASX:FMG) shares really pay a 18% dividend yield in FY21?
• ASX 200 mixed, CSL reports 44% profit growth, TWE soars
• 3 ASX dividend shares smashing records this reporting season
• ASX 200 up 0.2%: ANZ and CSL impress, Fortescue declares huge interim dividend
• Fortescue (ASX:FMG) share price pushes higher after declaring huge dividend

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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At the small end of the Australian share market, there are a number of companies with the potential to grow materially in the future.

Three that investors might want to get better acquainted with are listed below. Here’s what you need to know about them:

IntelliHR Ltd (ASX: IHR)

The first small cap ASX share to look at is IntelliHR. It is a cloud-based human resources and people management platform provider. Last month the company released its second quarter update and revealed that its international expansion strategy was going very positively. This expansion underpinned a 23% increase in second quarter Annualised Recurring Revenue (ARR) and and a 147% increase contracted subscriber headcount. Approximately 77% of its new subscribers came from the massive North American market.

PlaySide Studios Limited (ASX: PLY)

Another small cap ASX share to look at is PlaySide Studios, It is one of Australia’s largest independent video game developers, with a growing portfolio of games. This includes games based on its own original intellectual property and games developed with Hollywood studios such as Disney. Late last month, PlaySide released its second quarter update and revealed quarterly revenue of $3.13 million. This was an increase of a 66% over the first quarter. Given that management estimates that the global mobile games market is worth $77.2 billion per annum, it clearly has a long runway for growth in the future.

Whispir Ltd (ASX: WSP)

Whispir is a software-as-a-service communications workflow platform provider. Its software platform allows businesses and governments to deliver actionable two-way interactions at scale using automated multi-channel communication workflows. Earlier this week, Whispir released its half year results and reported a 29.2% increase in its ARR to $47.4 million. This was driven by increased activity from its existing customers and the addition of 77 net new customer to a total of 707 customers. This is still only scratching at the surface of its global market opportunity.

More reading

• Why the Whispir (ASX:WSP) share price is on the rise today
• 3 fantastic ASX shares to buy for strong returns
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• 3 under the radar ASX small cap shares to watch
• Could these exciting small cap ASX shares be the next big thing?

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 and recommends Whispir Ltd. The Motley Fool Australia has recommended Whispir 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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At the current share price, Fortescue Metals Group Limited (ASX: FMG) is projected by some analysts to pay a grossed-up dividend yield of 18% in FY21.

The large iron mining business just reported its FY21 half-year result which included a dividend of $1.47 per share. That dividend alone amounts to a grossed-up yield of 8.4% from Fortescue. But there are analysts out there that think there could be another big dividend with the annual report in six months.

But before we get to that, let’s look at what Fortescue just reported.

Fortescue’s half-year result

In the six months to 31 December 2020, Fortescue sold 90.2 Mt of iron ore, which was 3% higher than the prior corresponding period. The realised price of that ore jumped 42% to US$114 per dry metric tonne (dmt).

The higher iron ore price and increased volume sold led to Fortescue’s revenue rising by 44% to US$9.3 billion.

With the benefit of higher prices and a continued focus on cost management through productivity and innovation, Fortescue was able to increase its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) margin by six percentage points to 71%. This helped underlying EBTIDA rise by 57% to US$6.6 billion.

Net profit after tax (NPAT) rose by 66% to US$4.08 billion. Looking at earnings per share (EPS) in Australian dollar terms, it rose by 58% to $1.84.

Operating cashflow grew by 42% to US$4.4 billion and free cashflow rose 12% to US$2.5 billion.

Fortescue’s net debt is down to just US$110 million, down from US$258 million at 30 June 2020. The gross debt still stands at US$4.1 billion and the cash balance is US$4 billion.

Whilst the $1.47 dividend per share declared by the board represented a payout ratio of 80% of net profit, it also said what it’s going to do with the other 20%.

It has established Fortescue Future Industries (FFI) to identify projects in the renewable energy and green hydrogen sectors. Projects have been identified in both Australia and globally.

Fortescue said it’s going to leverage its successful track record of identifying, assessing, and developing large-scale resource and infrastructure opportunities. The company said it will bring its demonstrated capability of adopting innovation and technology to ensure future green energy projects will position Fortescue at the forefront of this emerging industry.

The company will allocate 10% of its net profit to fund renewable energy growth with FFI. The other 10% will fund other resource growth opportunities.

Is that huge dividend yield possible?

It depends which projections you look at. Commsec has estimated that Fortescue can generate EPS of $3.61 per share in FY21, and that it will pay an annual dividend per share of $3.10. That would equate to the grossed-up dividend yield of almost 18%.

Broker Morgans has previously estimated that Fortescue could pay an even bigger dividend, of around $3.31 per share, with EPS of $4.14 for FY21.

But broker Macquarie Group Ltd (ASX: MQG) doesn’t think that the Fortescue dividend will be as big as the above estimates, with a projected FY21 dividend per share of $2.04. That’d be a grossed-up dividend yield of 11.7%, which is still materially above 10%.

More reading

• ASX 200 mixed, CSL reports 44% profit growth, TWE soars
• 3 ASX dividend shares smashing records this reporting season
• ASX 200 up 0.2%: ANZ and CSL impress, Fortescue declares huge interim dividend
• Fortescue (ASX:FMG) share price pushes higher after declaring huge dividend
• Fortescue (ASX:FMG) share price hit by a $3 billion cultural problem

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Rural Funds Group (ASX: RFF) reported its FY21 half-year result yesterday, which included a large increase in its statutory profit.

What happened with Rural Funds?

The agricultural real estate investment trust (REIT) announced that its earnings (total comprehensive income) per unit increased by 94% to 17.3 cents.

Rural Funds also reported that its adjusted net asset value (NAV) per unit – which includes water entitlements at market value – increased by 4% to $2.01.

The increase in earnings and adjusted net assets are largely driven by the sale of the Mooral almond orchard at a 21% premium to the book value. This money will be used for re-investing in other farms.

In terms of the adjusted funds from operations (AFFO), it decreased by approximately 7% to 6.6 cents per unit. However, it’s on track to meet its forecast of 11.7 cents per unit. Rural Funds said that AFFO would increase after the completion of its development plans.

There was an increase of the guarantee associated with the JBS-operated feedlots from $82.5 million to $99.9 million, providing increased revenue.

No rent relief was required by lessees during the period due to COVID-19.

Rural Funds disclosed that its gearing ratio was 30.2%, which is at the lower end of its 30% to 35% target.

It had a weighted average lease expiry (WALE) of 11.1 years at the end of December 2020, which is one of the longest in the Australian listed REIT sector.

Macadamia plans

The REIT acquired 22 sugar cane farms for $56.4 million and another three for $18.3 million during the period. These are being leased as cropping properties, with a plan to convert them to macadamia orchards.

Rural Funds is planning to develop 500 hectares of macadamia orchards in the 2021 calendar year. Some Rural Funds management horticultural staff have relocated to central Queensland to oversee the macadamia developments.

It also acquired two cattle properties for $13.1 million for near-term development to macadamia orchards.

The farmland landlord said that it has existing earnings and balance sheet capacity to enable the commencement of the developments while continuing to fund distributions.

Rural Funds Management said that it is currently in the process of securing lessees to further increase revenue generation.

Rural Funds distribution guidance

The FY21 half-year distributions amounting to 5.64 cents per unit is on track with the full-year forecast. The AFFO payout ratio for the six-month period was 85%.

Rural Funds also announced that the forecast FY22 distribution per unit is 11.73 cents, which is in-line with its annual 4% growth target.

More reading

• 2 reliable ASX dividend shares to buy for your income portfolio
• 2 quality ASX dividend shares to buy and hold
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• Beat deposit rate cuts with these ASX dividend shares

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. 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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On Thursday the S&P/ASX 200 Index (ASX: XJO) was on form but gave back the majority of its gains late on to end just a few points higher at 6,885.9 points.

Will the market be able to build on this on Friday? Here are five things to watch:

ASX 200 expected to tumble

The Australian share market looks set to end the week on a disappointing note. According to the latest SPI futures, the ASX 200 is expected to open the day 34 points or 0.5% lower this morning. This follows a poor night on Wall Street, which in late trade sees the Dow Jones down 0.35%, the S&P 500 down 0.45%, and the Nasdaq down 0.7%.

Cochlear half year update

The Cochlear Limited (ASX: COH) share price will be one to watch this morning when it releases its half year results. According to CommSec, due to COVID headwinds, the hearing solutions company is expected to report a net profit after tax of $64.3 million. This will be down roughly 50% on the prior corresponding period.

Oil prices pull back

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could come under pressure after oil prices pulled back. According to Bloomberg, the WTI crude oil price is down 1.9% to US$59.96 a barrel and the Brent crude oil price is down 1.5% to US$63.37 a barrel. This appears to have been driven by profit taking by traders after a series of solid gains.

Gold price flat

Gold miners Evolution Mining Ltd (ASX: EVN) and Resolute Mining Limited (ASX: RSG) will be on watch after a flat night of trade for the gold price. According to CNBC, the spot gold price is flat at US$1,773.60 an ounce. The gold price firmed after US treasury yields eased overnight.

CSL downgraded

The CSL Limited (ASX: CSL) share price could come under pressure today after analysts at Goldman Sachs downgraded the biotherapeutics company’s shares. According to the note, the broker has downgraded CSL shares to a neutral rating with a $305.00 price target. Its analysts don’t believe its valuation is reflecting of the ongoing uncertainties it is facing. It added: “With our new forecasts driving (3)-(5)% earnings downgrades from FY22-23, we expect three consecutive years of single-digit earnings growth.”

More reading

• ASX 200 mixed, CSL reports 44% profit growth, TWE soars
• Why did Aussie investors get a 9% dividend cut from CSL (ASX:CSL)?
• ASX 200 up 0.2%: ANZ and CSL impress, Fortescue declares huge interim dividend
• Why CSL, Domino’s, IPH, & Treasury Wine shares are storming higher
• CSL (ASX:CSL) share price pops on increased dividend

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 Cochlear Ltd. and CSL Ltd. The Motley Fool Australia has recommended Cochlear 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 Bank of Queensland Limited (ASX: BOQ) share price won’t be going anywhere on Friday.

After the market close on Thursday, the regional bank requested two back to back trading halts for up to four trading days.

This means the Bank of Queensland share price is likely to be out of action until Thursday 25 February.

Why is the Bank of Queensland share price in a trading halt?

Bank of Queensland requested a trading halt this afternoon so that it can consider, plan and execute a proposed equity capital raising.

According to the request, this equity capital raising comprises an accelerated non-renounceable pro-rata entitlement offer and a placement to institutional investors. It is being undertaken to fund a potential acquisition.

What is the potential acquisition?

According to the AFR, Bank of Queensland is on the cusp of acquiring ME Bank for $1.325 billion.

The report claims that the regional bank was selected for a final round of exclusive talks and is expected to sign a formal sale agreement in the next few days.

In order to fund the all-cash acquisition, the news outlet understands the bank will look to raise over $1 billion from shareholders. It is expected to pitch the acquisition to shareholders as a major strategic move and earnings accretive purchase.

Macquarie Capital is understood to be running the auction, with ME Bank’s owners, industry superannuation funds including AustralianSuper and Cbus, keen to sell the Melbourne-based bank.

The report also claims that fellow banks Australia and New Zealand Banking GrpLtd (ASX: ANZ) and Bendigo and Adelaide Bank Ltd (ASX: BEN) were previously in the running to acquire ME Bank before being pipped at the post by Bank of Queensland.

With the Bank of Queensland share price generating a total return of just 1.4% per annum over the last five years, shareholders will no doubt be hoping that this acquisition leads to better returns over the next five years.

More reading

• Bank of Queensland (ASX:BOQ) shares hit a 52-week high today

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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