In the ongoing share market battle between the coronavirus and the next rounds of government stimulus, the virus took the upper hand yesterday. Major indexes the world over closed well into the red. And it’s pushing down share prices on the S&P/ASX 200 Index (ASX: XJO) again today.

On the virus side, case numbers are exploding across much of Europe and the United States. In efforts to minimise the tragic loss of lives, European nations are reimposing strict lockdowns sure to drag on their economies. And many US hospitals are already at or near capacity.

Of course, it’s not just the US and Europe.

Australia looks like it may join New Zealand and a handful of other less populated nations in containing or even eliminating the pandemic. But COVID-19 continues to expand across most of the rest of the world. Brazil, Mexico, India and Iran, to name a few, are all at or near record levels of new infections.

And yesterday news broke that the world’s most populous nation, China, reported its first new local infection since 14 October.

The reported case numbers were relatively small — 20 tested people showed symptoms while 161 were asymptomatic. But the prospect of a second wave in China was likely the culprit which drove the ASX 200 from early morning gains to close at a loss, while also driving the Aussie dollar lower.

Bring on the stimulus

With these alarming statistics in mind, investors are rightfully worried about the short to mid-term earnings outlooks for their shareholdings, and hence their share prices.

Let’s not forget that when the first wave of COVID crashed across the globe it sent the ASX 200 down 37% in less than 5 weeks, before hitting bottom on 23 March.

It was the same the world over.

The S&P 500 Index (INDEXSP: .INX) lost 34% during the panic selling. Germany’s DAX PERFORMANCE-INDEX (INDEXDB: DAX) tumbled 39%. Japan’s Nikkei 225 (INDEXNIKKEI: NI225) fell by 31%.

I could go on. But you get the idea. No major share market index in the world escaped the bloodbath.

And what was it that pulled share prices back up from those depths?

Record fiscal and monetary stimulus unleashed by the world’s leading central banks and wealthiest nations.

Only then did markets look past the immediate spectre of the economic fallout from lockdowns and social distancing to the longer-term outlook of what had been – and likely will be again – high quality, high performing shares.

At the moment all eyes are on the United States to do the next round of heavy lifting.

And for good reason.

The much-delayed new round of fiscal stimulus promises to be huge, regardless of how the final stages of negotiations work out. The White House now supports a US$1.9 trillion (AU$2.7 trillion) spending package. The Democrats are holding out for US$2.4 trillion.

Unfortunately, this half-a-trillion-dollar gap again saw House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin walk away (or hang up their phones) without reaching an agreement yesterday.

Here’s what the pros are saying

With so much riding on the stimulus versus virus battle, here are some soundbites from the market experts.

According to Keith Buchanan, portfolio manager for GLOBALT Investments in Atlanta (quoted by Bloomberg here and here):

Fiscal stimulus seems to not be coming as quickly as we thought and the virus is coming quicker than we imagined. Putting those two together is somewhat of a reality check for the markets…

The gains we made from an economic standpoint have been predicated on the feeling like we can start to deal with the virus and continue the economic recovery out of the bottom. It’s a scary moment from an economic standpoint to have all of those indicators that the virus is getting worse as stimulus seems to be slowing down very dramatically.

And David Donabedian, chief investment officer of CIBC Private Wealth Management says:

The overwhelming consensus in the market is that while the economic recovery to date is impressive, it still needs help. It’s not ready to stand on its own, and so some fiscal support is necessary and does not really seem to be forthcoming before year-end…

You really can’t blame the stock market for pulling back at any point given how far it’s come. It’s like a blast from the past – there’s rising concerns about COVID-19 and its impact on the economy.

Then there’s Ryan Detrick, chief market strategist for LPL Financial:

The double whammy of a stalled stimulus bill and new highs in cases is a harsh reminder of the many worries that are still out there. Most of the recent economic data has been strong, but when you see parts of Europe going back to rolling shutdowns, it reminds us this fight is still far from over.

But it’s not all doom and gloom for the short-term share market outlook.

A pre-election share market rally?

As a long-term investor, I believe you can look beyond most of this renewed angst. I’m confident that new stimulus measures will pass in the US and other developed nations. And, in time, the virus will be vanquished with effective vaccines and rapid testing.

On a much shorter time scale, next Tuesday, 3 November, marks the US presidential election. And if history is any guide, US – and likely Aussie – shares could rally into that date.

Miller Tabak strategist Matt Maley says the “odds are high” markets will rally through to 3 November.

As Bloomberg reports, in a note Maley wrote on Saturday, he pointed out the S&P 500 has rallied every time in the week before the presidential election since 1992, except 2016. The average gains in those 6 instances were 3.8%.

Maley noted:

Although the stock market fell 1.9% over the seven days of trading in 2016, you have to go all the way back to 1988 to find another time when it didn’t rally over the last week and a half of the election campaign.

Nothing is ever guaranteed in the markets… but our point is that history does tell us that the odds are high that the market will rally between now and Election Day.

With the average share price of the top 200 ASX companies down 1.3% at time of writing, we hope to see the pre-election market rally trend play out again this year.

More reading

• ASX 200 down 1.2%: Blackmores jumps, Bendigo and Adelaide Bank’s update, Zip sinks
• Boral (ASX:BLD) share price surges after announcing a US$1bn transaction
• ASX 200 slumps as second COVID-19 wave takes over US and Europe
• 5 things to watch on the ASX 200 on Tuesday
• 3 ASX stocks are outperforming today after brokers upgraded them to “buy”

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Will COVID-19’s second wave crash share markets a second time? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2JbgZjd

Today, the Alcidion Group Ltd (ASX: ALC) share price is storming higher as the company released a positive quarterly report to the market. Shares in the e-health provider are rising strongly despite the sharp sell off in the All Ordinaries Index (ASX: XAO). At the time of writing, the Alcidion share price is trading 4.17% higher at 12.5 cents.

Strong start to the year

Alcidion has posted very strong numbers despite the ongoing impacts of the global pandemic. The healthcare small cap announced $4.8 million in new contracted revenue. This number is up 30% on the previous quarter’s results and up a huge 92% from the prior corresponding period (pcp). Despite this sizeable increase in revenue, the Alcidion share price has slumped 40% over the past year.

As a result of the company’s surging revenue during the quarter, total contracted revenue to be realised in FY2021 has also increased. Alcidion reported this number stands at $14.7 million. Furthermore, the company reported strong cash receipts from customers of $6.4 million, a 34% increase on a year ago.

Despite the rise in income, Alcidion still reported net cash outflows of $1.2 million. However, it should be noted that this number reflects ongoing investment in growing the business and was in line with the company’s expectations.

Alcidion had cash reserves of $14.7 million at the end of the first quarter. 

Comments

Alcidion Managing Director, Kate Quirk, was pleased with the results, stating:

I am pleased with the strong start we have made to the new financial year. It has been an important sales quarter in Australia, where we signed initial contracts with significant potential for future expansion.

We continue to scale up our sales, product implementation and marketing capabilities to accelerate growth in all markets, as healthcare undergoes unprecedented digital transformation. Investment in these areas will remain our focus throughout the financial year to support further growth and firmly establish Alcidion as a leading provider of digital healthcare solutions in this rapidly growing market.

About the Alcidion share price

Alcidion is a Melbourne-based company that is focused on developing a range of software products for use in the healthcare sector. Some of the company’s most prominent brands are Miya and Patientrack. These platforms enable medical professionals to better manage their time and patients.

As at October 2020, the company’s platforms are utilised by more than 65,000 users across over 300 hospitals in Australia, New Zealand and the United Kingdom.

Despite strong revenue growth over the last couple of years, the Alcidion share price has been on a downward trend since reaching all time highs of 30 cents in September last year. Shareholders will be hoping the company’s ongoing revenue growth will help drive a turnaround in the Alcidion share price.

More reading

• Why Alcidion, Blackmores, Boral, & CogState shares are pushing higher

Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Alcidion Group Ltd. The Motley Fool Australia has recommended Alcidion Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Alcidion (ASX:ALC) share price storms higher on update appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3dXEwj1

The Clinuvel Pharmaceuticals Limited (ASX: CUV) share price has returned from its trading halt and is pushing higher on Tuesday afternoon.

At the time of writing, the biopharmaceutical company’s shares are up almost 1% to $22.11.

Why is the Clinuvel share price pushing higher?

Investors have been buying the company’s shares today following the release of an update on its Scenesse product.

Scenesse is the first treatment to provide erythropoietic protoporphyria patients (EPP) with protection from the wavelengths of light that cause phototoxicity. It reduces the number and severity of reactions and increases the amount of time that sufferers can be exposed to light.

Management notes that since the drug has been made available in Europe in 2016 and the United States in 2020, patients report that they have been given a freedom they never had imagined.

The good news for Australians with EPP, is that Clinuvel has just received approval for Scenesse to be prescribed in Australia. It will soon be listed on the Australian Therapeutic Goods Register following approval from the Therapeutic Goods Administration (TGA).

The release explains that Scenesse will be registered for the indication prevention of phototoxicity in adult patients with EPP. It will be available as a prescription medication, to be administered by trained and accredited healthcare professionals.

In light of the latter, the company will implement a comprehensive training and accreditation program and ensure that healthcare professionals are provided with information in line with the Australian approval.

Clinuvel’s Chief Scientific Officer, Dr Dennis Wright, commented: “Our team is delighted that an Australian innovation is returning home as an approved drug and will be made available for Australian EPP patients.”

“I recognise the work of patients, physicians, TGA staff and our team to facilitate today’s outcome, which is the result of many years of engagement and dialogue. Our objective has been clear: to find ways to enable all EPP patients worldwide to access the first ever treatment for this disorder which is largely misunderstood but which causes patients a lifelong imprisonment, away from a normal outdoor life,” he concluded.

More reading

• Why the Clinuvel (ASX:CUV) share price is pushing higher today
• These are the 10 most shorted shares on the ASX
• These are the 10 most shorted shares on the ASX
• These are the 10 most shorted shares on the ASX
• Here are the 10 most shorted ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the Clinuvel (ASX:CUV) share price is climbing higher today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3mrgJeo

You might have heard of Mike Cannon-Brookes… He’s the Aussie entrepreneur who, alongside his schoolyard buddy, Scott Farquhar, started the tech giant Atlassian Corporation PLC (NASDAQ: TEAM). Atlassian makes business software such as Jira, which aims to help businesses function better and solve problems more efficiently (presumably hence the ticker code). Even though Atlassian is headquartered in Sydney, and both Cannon-Brookes and Farquhar are Aussies, Atlassian is a United States-listed company. It joins the likes of Tesla Inc (NASDAQ: TSLA), Facebook Inc (NASDAQ: FB) and Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) on the tech-heavy Nasdaq Composite (NASDAQ: .IXIC) exchange.

Despite Atlassian’s American roots these days, reporting in the Australian Financial Review (AFR) this week gives us a rare insight into the fortunes of Mr Cannon-Brookes. Let’s take a look.

Like many successful entrepreneurs and investors, Cannon-Brookes has looked to diversify away from his core pillar of wealth in Atlassian shares. According to the AFR, Cannon-Brookes has a family office by the name of Grok Ventures. Grok employs Armina Rosenberg as a global equities portfolio manager (a stockpicker) to help in this endeavour.

According to the AFR, Ms Rosenberg has built a globally diverse portfolio for Mr Cannon-Brookes and his family – naturally dominated by tech stocks.

A look into Mike Cannon-Brookes’ share portfolio

Among his largest holdings are reportedly tech giants like Apple Inc (NASDAQ: AAPL), Amazon.com Inc (NASDAQ: AMZN) and Alibaba Group Holding Ltd (NYSE: BABA). But one of Ms Rosenberg’s favourite current picks – tech wunderkind Zoom Video Communications Inc (NASDAQ: ZM) – is noted by the AFR as a ‘controversial pick’. Why? Well, Zoom has become a poster child for what some commentators call a ‘tech bubble’.

No one questions that Zoom has been one of 2020’s biggest winners in terms of the dramatic shift to working from home and remote communication. But Zoom’s stock performance in 2020 has raised some eyebrows, perhaps understandably. Zoom shares started 2020 at just US$68.22. But today, they trade for US$517.79 (up 653% year to date) and have a 52-week high of $588.84. On the current share price, Zoom boasts a price-to-earnings (P/E) ratio of 661.

But according to the AFR, that valuation doesn’t bother Ms Rosenberg, who managed to invest in Zoom at its initial public offering (IPO) for US$36 a share, in the slightest. Labelling Zoom CEO ‘one of the best founders [I] have ever met”, Ms Rosenberg had this to say on the company:

Everyone thought that video-conferencing was commoditised, and to a large extent it was. But Eric saw all the challenges people had with existing options given he worked at Webex, so he knew that Zoom’s unique selling proposition had to be its technology.

Foolish takeaway

In my opinion, ordinary investors like you and me shouldn’t take too much guidance from the portfolios of billionaires like Mike Cannon-Brookes. Remember, Mr Cannon-Brookes is probably attempting to diversify his wealth rather than building it with his stock portfolio. Even so, I still think knowing where the wealthy have their money is a very useful tool for becoming a better investor.

More reading

• Will Apple miss on earnings this week?
• 3 FAANG stocks to buy right now
• Why is everyone talking about Amazon (NASDAQ:AMZN) stock?
• 3 reasons you should buy Amazon stock before there’s a coronavirus vaccine
• How to tell if an ASX share is a bargain or a dog

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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. Sebastian Bowen owns shares of Alphabet (A shares), Facebook, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alibaba Group Holding Ltd., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Atlassian, Facebook, Tesla, and Zoom Video Communications and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Facebook, and Zoom Video Communications. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post A look into Mike Cannon-Brookes’ share portfolio appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3otyGL5

The Livetiles Ltd (ASX: LVT) share price is falling today despite the release of a positive first quarter update to the market.

Although, the ASX market is currently in retreat following heavy Wall Street losses overnight, the software company shares haven’t fared well. At the time of writing, the LiveTiles share price has fallen 3.8% to 25 cents.

Let’s take a look at the company’s performance for the last 3 months and what that means for the Livetiles share price.

Accelerated growth

For the quarter ending 30 September, LiveTiles reported a record result in cash receipts and accelerated growth.

Annualised recurring revenue (ARR) increased to $57.1 million, up 33% over the prior corresponding period (pcp). On a constant currency basis, ARR grew to $61.7 million, a jump of 44% over the pcp and 227% in the last 2 years.

Customer cash receipts also lifted to $12 million, up 41% over Q1 FY19. The strong result representing a fourth consecutive record quarter. This was underpinned by a surge in both direct and partner sales channels, despite the COVID-19 environment.

In addition, the compound annual growth rate (CAGR) of the average ARR per customer soared to $55,303. This reflected a 23% increase on the prior period and 9-fold jump in the last 5 years.

Net operating cash flow improved over 90% year-on-year, however a $800,000 loss was recorded.

LiveTiles said it was focusing on reducing its cash burn rate, and reconfirmed it would not seek to raise further capital.

The company noted it has a robust pipeline growth in the current quarter as it has refreshed its product portfolio. New contract wins include a high-profile global apparel retailer in the United States, and a consulting agency in France.

LiveTiles closed the quarter with a healthy cash balance of $34.6 million, enough to fund the business for the next 3 years.

COVID-19 response

As the COVID-19 impact is now better understood, the company is starting to see a return of confidence in buying levels.

Europe and the United States have rebounded, with its software relating to employee communications solutions, up 80% over the prior quarter.

In the last 6 months, investments have been made into product research and development to aim to capture new customers. Two new products are due to be released to the market, which will help executive teams in a post-COVID environment.

What did management say?

Commenting on the result, LiveTiles co-founder and CEO Karl Redenbach said:

We are pleased with our overall Q1 results, particularly when combined with our ongoing cost-discipline after reducing operating expenditures to preserve our balance sheet in Q4. Our annualised recurring revenue (ARR) has risen to $61.7 million on a constant currency basis, which is up 44% since last year and 227% in two years.

 As announced to the market on 23 October, Mr Redenbach said LiveTiles also secured its largest ever LiveTiles Intranet deal in Q1, a multi-year, multi-million-dollar deal with a major US apparel retailer:

The recognition from Gartner as one of the largest vendors by total deployments and revenue couldn’t underline LiveTiles’ position as an industry leader any more clearly.

Our sales pipeline continues to show accelerated growth from both direct and partner sales channels as companies around the world look to implement COVID-19 re-opening strategies by embracing digital workplace solutions.

We’re confident LiveTiles products will continue to gain traction and our growth will continue to accelerate with it.

More reading

• Why Afterpay, LiveTiles, PointsBet, & Santos shares are tumbling lower
• Why the Livetiles (ASX:LVT) share price has rocketed up 11% today
• Why the LiveTiles (ASX:LVT) share price is tumbling lower today.

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of LIVETILES FPO. The Motley Fool Australia has recommended LIVETILES FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post The LiveTiles (ASX:LVT) share price is falling today. Here’s why. appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3dZSqkr

In early afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to record a disappointing decline. At the time of writing, the benchmark index is down a sizeable 1.4% to 6,071.1 points.

Four shares that have not let that hold them back are listed below. Here’s why they are pushing higher:

Alcidion Group Ltd (ASX: ALC)

The Alcidion share price has risen 4% to 12.5 cents. Investors have been buying the healthcare technology company’s shares following the release of its first quarter update. Alcidion has had a strong start to FY 2021, with $4.8 million new contracted revenue sold in the first quarter. This was up 30% on the previous quarter and 92% on the prior corresponding period.

Blackmores Limited (ASX: BKL)

The Blackmores share price is up over 3.5% to $65.67 following the release of the health supplements company’s annual general meeting update. According to the release, management continues to expect profit growth in FY 2021. However, this will come predominantly from the second half of the financial year. The company also revealed that its restructuring is set to deliver $15 million of gross annualised savings from the second half.

Boral Limited (ASX: BLD)

The Boral share price is up 2.5% to $4.85. This morning the building products company released its annual general meeting presentation which included an update on its first quarter performance. Boral advised that its first quarter revenue was down 9% and its EBIT was down 5% on prior corresponding period. The company also revealed that it has agreed to sell its 50% interest in USG Boral to Knauf for US$1.015 billion.

CogState Limited (ASX: CGS)

The CogState share price has jumped a further 20% higher to $1.17. Hot on the heels of a major contract announcement on Monday, this morning CogState released its first quarter update. That update revealed contracted future revenue of $42.1 million, an increase of $2.7 million during the quarter.

More reading

• ASX 200 down 1.2%: Blackmores jumps, Bendigo and Adelaide Bank’s update, Zip sinks
• Boral (ASX:BLD) share price surges after announcing a US$1bn transaction
• Blackmores (ASX:BKL) share price on watch after AGM update
• 5 things to watch on the ASX 200 on Tuesday
• Why the CogState (ASX:CGS) share price is rocketing 36% higher 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 Alcidion Group Ltd. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia has recommended Alcidion Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why Alcidion, Blackmores, Boral, & CogState shares are pushing higher appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/37I7J0f

At lunch on Tuesday the S&P/ASX 200 Index (ASX: XJO) has followed the lead of international markets and is sinking lower. The benchmark index is currently down 1.2% to 6,081.5 points.

Here’s what is happening on the market today:

Blackmores jumps on AGM update.

The Blackmores Limited (ASX: BKL) share price is jumping higher today after the release of the health supplements company’s annual general meeting update. That update reveals that management continues to expect profit growth in FY 2021. Though, this will come predominantly from the second half of the financial year. Management also advised that its restructuring is set to deliver $15 million of gross annualised savings from the second half.

Bendigo and Adelaide Bank impresses.

The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price is pushing higher today following the release of a trading update. For the first quarter, the regional bank achieved total lending growth of 11% and residential lending growth of 16.1%. Management notes that these are both well above system growth. The bank also recorded a small increase in its net interest margin.

Gold miner updates galore.

Gold miners Evolution Mining Ltd (ASX: EVN), Northern Star Resources Ltd (ASX: NST), and Ramelius Resources Limited (ASX: RMS) shares are all trading lower following the release of their respective quarterly updates. Not even Ramelius revealing that it smashed its production and costs guidance was able to prevent its shares from dropping lower. The S&P/ASX All Ordinaries Gold index is down 1% at lunch.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Tuesday has been the Blackmores share price with a 4% gain. This follows the release of its annual general meeting update. Going the other way, the worst performer has been the Zip Co Ltd (ASX: Z1P) share price with a decline of over 5%. This appears to have been driven by a selloff of tech stocks today following a weak night of trade on the Nasdaq index.

More reading

• Boral (ASX:BLD) share price surges after announcing a US$1bn transaction
• Northern Star (ASX:NST) share price edges lower despite positive update
• Ramelius (ASX:RMS) share price lower despite smashing Q1 guidance
• ASX 200 slumps as second COVID-19 wave takes over US and Europe
• Why the Evolution Mining (ASX:EVN) share price is dropping lower

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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post ASX 200 down 1.2%: Blackmores jumps, Bendigo and Adelaide Bank’s update, Zip sinks appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/31KEWEh

The Boral Limited (ASX: BLD) share price is one of the best performing stocks on this dismal trading day thanks to a billion-dollar transaction.

Shares in the building materials supplier surged 4% to $4.92 in morning trade, making it the second best performer on the S&P/ASX 200 Index (Index:^AXJO).

In case you are wondering, the Blackmores Limited (ASX: BKL) share price is in pole position with a 6.8% rally.

But Boral shareholders won’t be complaining. The top 200 stock index tumbled 1.4% due to an aggressive resurgence of global COVID‐19 cases.

The billion-dollar Boral share price catalyst

Management excited the market after it announced a deal to sell 50% of USG Boral to Gebr Knauf KG for US$1.015 billion (~A$1.43 billion).

What may be more pleasing to investors is news that Boral has received multiple offers for its troubled US assets, reported the Australian Financial Review.

US asset sales in the pipeline?

Boral’s expansion into the US is a key reason why the stock has been underperforming and led to the ouster of the former chief executive Mike King.

But new boss Zlatko Todorcevski promised there will be no “fire sale” of its US assets even after the group took a $1.2 billion write-down of its Meridian Brick business.

Boral’s major shareholder Seven Group Holdings Ltd (ASX: SVW) would be pleased as it’s been agitating for the sale of the underperforming businesses.

Boral share price a target for takeover

It’s probably a little self-serving though as it’s an open secret that Seven Group would like to acquire Boral’s Australian assets. Any takeover would be easier without the deadweight from Boral’s US divisions.

However, any divestments in that market will have to wait till 2021. Management isn’t willing to enter into any serious negotiations while Todorcevski is still reviewing his restructuring plan for the group.

Expanding margins

Boral also provided a pleasing September quarter trading update. While group revenue fell 9% over the same period last year, earnings before interest and tax margins expanded to 9.5% from around 9%.

This meant group EBIT declined a more modest 5% over the first quarter of FY19.

This trend was consistent through all Boral’s divisions. Boral Australia reported 1QFY20 EBIT that was steady despite a drop in concrete, quarry and asphalt volumes.

Boral North America and USG Boral recorded slight increases in EBIT margins too.

Shareholders will be hoping this marks a turning point for the underperformer. Even with today’s jump, the stock is trading flat over the past year when the James Hardie Industries plc (ASX: JHX) share price and CSR Limited (ASX: CSR) share price are up 40% and 16%, respectively.

More reading

• ASX 200 down 1.2%: Blackmores jumps, Bendigo and Adelaide Bank’s update, Zip sinks
• ASX 200 slumps as second COVID-19 wave takes over US and Europe
• 5 things to watch on the ASX 200 on Tuesday
• 3 ASX stocks are outperforming today after brokers upgraded them to “buy”
• ASX 200 was mixed today, ends down 0.2%

Motley Fool contributor Brendon Lau owns shares of James Hardie Industries plc and Seven Group Holdings Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Boral (ASX:BLD) share price surges after announcing a US$1bn transaction appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2HvDG1c

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.

In a recent interview on Motley Fool Live, Motley Fool co-founder and CEO Tom Gardner recalled meeting Kendal Musk – the brother of Tesla (NASDAQ: TSLA) CEO Elon Musk. As Tom recalls, “He looked at me and he said, ‘I don’t know, I just learned. Don’t bet against my brother.’”

Tesla short-sellers are learning that the hard way (again) after Tesla shattered analysts’ expectations for the company’s third quarter results, which were released on Oct. 21 after market close. Here’s what investors need to know. 

By the numbers

Metric	Q3 2020	Q2 2020	Q3 2019	YOY % Change
Revenue	$8.8 billion	$6.0 billion	$6.3 billion	39%
Net Income	$331 million	$104 million	$143 million	131%
Adjusted EPS*	$0.76	$0.44	$0.37	105%
Operating Cash Flow	$2.4 billion	$964 million	$756 million	217%
Free Cash Flow	$1.4 billion	$418 million	$371 million	276%

*Adjusted Earnings Per Share, diluted (a non-GAAP measure). Data source: Tesla. Chart by author.

Those are impressive numbers, made even more impressive by the fact that they’re being posted in the midst of a US recession during which there are fewer drivers on the roads. When 39% revenue growth is the lowest percentage gain in your marquee figures, you know it’s at least a good report. For Tesla, the third quarter wasn’t just good: it was record-setting. 

Quarterly revenue set a new record high for the company, at $8.8 billion, which was expected due to the company’s strong delivery numbers. Another record is the $331 million in quarterly net income, which surpassed Tesla’s previous milestone of $311 million, set in third quarter 2018. For me, the most jaw-dropping figure is Tesla’s $2.4 billion in operating cash flow for the quarter, which is nearly double its previous quarterly record, set in fourth quarter 2017. 

Despite the company’s outperformance – EPS topped analysts’ consensus estimates by $0.20/share – shares closed up less than 1% from the previous day’s close. This could indicate that the expectation of big growth is already priced into the lofty valuation of Tesla’s stock. 

What Musk had to say

CEO Elon Musk, never one to understate his successes, started the earnings call by telling it the way he saw it: “All right. So, Q3 was our best quarter in history.”

He highlighted the company’s other initiatives, including the incremental advances in battery technology that Tesla showcased at its Battery Day, the beta release of Full Self-Driving mode, the continued buildout of the company’s manufacturing capabilities, and a projected increase in sales of Solar Roof, which he referred to as a “killer product”.

He also doubled down on the company’s stated goal of continuing to cut prices:

If the car is too expensive… and people don’t have enough money in their bank account, they simply can’t buy it no matter what the value proposition is. So it is important to lower the prices… I do not think we lack for desire for our product, but we do lack for affordability. 

The catch-22

Some analysts are concerned that, as the company grows sales of its lower-priced cars and pursues price cuts, it won’t be able to maintain its double-digit margin target. CFO Zachary Kirkhorn agreed with Musk on the need for affordability, but didn’t think it was mutually exclusive with margin growth:

If you just look at the journey of the company over the last 1.5 years, we have grown volumes and grown gross margins despite a number of price reductions over that period of time, and we have kept OpEx fairly stable during that period of time as well. 

We have to also continue to make progress improving the cost structure … and improve the value of the vehicles at the same time. So in addition to reducing the cost of the car, we’re making the cars better. And that’s the formula to sell the volume. That’s what we’re focused on.

One way to do this, according to Musk, is to bring as much manufacturing in-house as possible. “There’s in excess of a dozen start-ups effectively in Tesla,” Musk said, citing microchips, battery cells, superchargers, and autonomous driving as areas that other car companies outsource but Tesla doesn’t. “Tesla is absolutely vertically integrated compared to other auto companies or basically most any company,” said Musk. “We literally make the machine.

“Quite frankly, we would like to outsource less,” concluded Musk. “That would be great.”

What Q3 tells investors

The third quarter’s strong performance indicates that Tesla has finally turned the corner when it comes to profitability and cash flow generation from its passenger cars.

Interestingly, Musk and his management team didn’t even mention the Semi or Cybertruck until they were specifically asked about them by the analysts on the call. They only briefly mentioned the company’s often-overlooked energy storage products, Powerwall and Megacell. The primary focus of the earnings call – and the company – is clearly on its passenger cars. 

That’s probably good news for investors, since Tesla’s cars are in demand and selling well. Focusing on maximising their profitability and improving their affordability is probably going to give Tesla the biggest bang for its buck in terms of improving the (already-much-improved) bottom line. 

Tesla’s sky-high valuation should give new investors pause, but operationally, it seems to be on solid footing, and its impressive growth streak seems likely to continue. I wouldn’t place any bets against the company right now.

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

More reading

• Could Tesla deliveries surge 70% next year?
• Tesla Q3 trounces analyst estimates
• Tesla (NASDAQ:TSLA) earnings: What to watch
• 2 big challenges as Tesla (NASDAQ:TSLA) aims for a $25,000 car
• Is Tesla Inc (NASDAQ:TSLA) stock a buy ahead of earnings?

John Bromels owns shares of Tesla.  The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Tesla knocks Q3 earnings out of the park appeared first on Motley Fool Australia.

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

from Motley Fool Australia https://ift.tt/37LfiDw

In late morning trade the S&P/ASX 200 Index (ASX: XJO) has followed the lead of global markets and is sinking lower. At the time of writing the benchmark index is down a disappointing 1.1% to 6,088.2 points.

Four shares that are falling more than most today are listed below. Here’s why they are tumbling lower:

Afterpay Ltd (ASX: APT)

The Afterpay share price is down over 3.5% to $97.09. A number of tech shares are dropping notably lower today amid heavy selling on the Nasdaq index overnight. The tech-focused index dropped 1.6% on Monday night due to concerns over rising COVID-19 cases across the world. The S&P/ASX All Technology Index (ASX: XTX) is down 2.3% at the time of writing.

LiveTiles Ltd (ASX: LVT)

The LiveTiles share price has fallen almost 4% to 25 cents. This follows the release of the intranet and workplace technology software provider’s first quarter update this morning. At the end of the quarter, LiveTiles’ reported annualised recurring revenue (ARR) hit $57.1 million. While this was up 33% year on year, it was up just 6.1% on the prior quarter’s ARR.

PointsBet Holdings Ltd (ASX: PBH)

The PointsBet share price has dropped 3.5% to $10.59. Weakness in the tech sector appears to have offset the release of a very strong first quarter update. For the three months ended 30 September, the sports betting company reported turnover of $691.9 million, up 193% from the prior corresponding period. This was driven largely by its Australian business, which reported a 221% increase in turnover to $527.7 million.

Santos Ltd (ASX: STO)

The Santos share price is down almost 3% to $5.15. Investors have been selling Santos and other energy producer shares on Tuesday following a sharp pullback in oil prices overnight. Oil prices dropped notably lower amid concerns that rising COVID-19 cases could have a negative impact on demand for oil.

More reading

• PointsBet (ASX:PBH) share price on watch after explosive Q1 growth
• The Santos (ASX:STO) share price is up 3% on positive sentiment
• How did ASX buy now, pay later shares perform in the latest quarter? 
• Pointsbet (ASX:PBH) share price continues to excite investors
• ASX 200 Weekly Wrap: ASX snaps winning streak… just

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 LIVETILES FPO and Pointsbet Holdings Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended LIVETILES FPO and Pointsbet Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why Afterpay, LiveTiles, PointsBet, & Santos shares are tumbling lower appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/31M8O39