There are some growth-focused exchange-traded funds (ETFs) that are rated as buys by a Motley Fool investment service.

What are exchange traded funds?

As linked above, ETFs are investment vehicles that allow the investor to buy a whole group of businesses at once. With some of them you can buy a decent number of shares with one investment – 50 to 100 holdings. Other investments give exposure to thousands of businesses at once.

Some ETFs are focused are providing dividend income to investors like Vanguard Australian Shares High Yield ETF (ASX: VHY) and BetaShares S&P 500 Yield Maximiser (ASX: UMAX).

However, there are other ones that have more of a growth profile:

Betashares Nasdaq 100 ETF (ASX: NDQ)

This ETF gives investors exposure to 100 of the biggest businesses on the NASDAQ, which is a stock exchange in the US.

Many of the world’s biggest technology businesses are listed on the NASDAQ, which is apparent when you look at the ETF’s biggest holding exposures.

On 20 November 2020, its biggest positions were: Apple, Microsoft, Amazon, Alphabet, Facebook, Tesla, Nvidia and PayPal. There are also some other well-known technology businesses slightly down its holdings list such as Adobe, Netflix, Intel, Qualcomm and Broadcom.

Almost half of the holdings are in the sector ‘information technology’ with another 20% invested in communication services.

However, there are more than just technology shares on the NASDAQ. There are also businesses such as PepsiCo, Costco and Starbucks. Almost 20% of the ETF is invested in consumer discretionary shares.

The ETF has produced returns larger than the ASX in the past few years. Over the past year, the Betashares Nasdaq 100 ETF’s net return has been 34.6%. Over the past three years it has produced net returns of 25% per annum. In the past five years it has produced net returns of 19.8% per annum. Finally, since inception in May 2015 it has made net returns of 20.8% per annum.

Betashares Nasdaq 100 ETF has an annual management fee of 0.48% per annum. According to BetaShares, this ETF’s trailing 12-month distribution yield amounts to 2.6%.

This ETF is still rated as a buy by the Motley Fool Share Advisor service.

Betashares Global Cybersecurity ETF (ASX: HACK)

This ETF is focused on businesses that are looking to provide cybersecurity services to governments, businesses and other organisations.

Its top holdings include companies like Crowdstrike, Okta, Accenture, Zscaler, Cisco Systems, Cloudflare, F5 Networks, Palo Alto Networks, Leidos Holdings and Fireeye.

BetaShares says that with cybercrime on the rise, the demand for cybersecurity services is expected to grow strongly for the foreseeable future. This ETF includes global cybersecurity giants as well as emerging players, from a range of global locations.

More than half of the portfolio is invested to the sector of ‘systems software’, but it’s also invested in businesses focused on internet services and infrastructure, communications equipment, application software and aerospace and defence.

In terms of returns, the net returns haven’t been quite as high as the NASDAQ one, over the past year its net return has been 16.2%, over the past three years it has delivered average returns per annum of 18.3% and since inception in August 2016 it has delivered net returns of 16.8% per annum.

With a country allocation of 89.5% to the USA, the vast majority of the ETF is focused on American companies. However, there is allocation of more than 3% to Israel and the UK, 2% to Japan and 1.4% to France.

Betashares Global Cybersecurity ETF has an annual management fee of 0.67%.

This ETF is currently rated as a buy by the Motley Fool Pro service.

More reading

• 2 ETFs that ASX investors need to know about
• 2 ASX tech ETFs analysts rate as a ‘buy’ today
• 10 hottest (and coldest) Aussie ETFs right now
• 2 quality ETFs that are popular with ASX investors
• 2 tech ETFs generating big returns

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 BETA CYBER ETF UNITS and BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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.

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There are a lot of dividend shares for investors to choose from on the Australian share market. Which certainly is a blessing in this ultra low interest rate environment that we are living in.

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

BHP Group Ltd (ASX: BHP)

BHP is widely regarded as one of the highest quality miners in the world thanks to its long history, world class and low cost operations, and its significant growth opportunities. At present, the mining giant is benefiting greatly from favourable commodity prices. This is expected to underpin another strong full year result in FY 2021 and allow the company to reward its shareholders with more generous dividends.

According to a recent note out of Macquarie, its analysts have an outperform rating and $44.00 price target on its shares. The broker is also forecasting a ~$2.79 per share fully franked dividend. Based on the current BHP share price, this would mean a sizeable 7.5% dividend yield over the next 12 months.

BWP Trust (ASX: BWP)

BWP Trust is the largest owner of Bunnings Warehouse sites in Australia. At the last count, the company’s portfolio owned 68 stores. In addition to this, seven of the properties have adjacent retail showrooms that are leased to other retailers. Its portfolio currently has a value of approximately $2.5 billion, generates annual rent of $151.4 million, and boasts a 98% occupancy rate.

Bunnings has proven to be a great tenant in 2020. Due to the strength of the hardware retailer’s business, BWP has been able to collect rent as normal at a time when many other landlords have struggled with their collections. This allowed the BWP board to grow its distribution in FY 2020.

Analysts at UBS expect more of the same in FY 2021 and are forecasting an 18.3 cents per share distribution. Based on the current BWP share price, this will mean a yield of 4.3% for investors.

More reading

• Monadelphous (ASX:MND) share price higher on BHP and Rio Tinto contract wins
• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• How to turn $20,000 into $180,000 in 10 years with ASX shares
• China is a much bigger threat to the ASX bull run than COVID
• Can Magellan (ASX:MFG) prosper in a market dominated by Macquarie (ASX:MQG)?

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.

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It looks set to be another positive day of trade for the S&P/ASX 200 Index (ASX: XJO) on Tuesday after a third COVID-19 vaccine candidate was shown to be effective.

At the time of writing, SPI futures are pointing to the ASX opening the day 31 points or 0.5% higher this morning.

What is the new vaccine candidate?

Overnight British pharmaceutical giant AstraZeneca revealed that data from an interim analysis of clinical trials showed that its vaccine, AZD1222, had an average efficacy of 70% in protecting against COVID-19.

This follows recent updates by both Pfizer and Moderna which showed that their vaccines are 95% effective against the virus.

While 70% might not sound amazing, it is worth noting that the AstraZeneca vaccine, which is being developed in collaboration with Oxford University and is not-for-profit, was assessed over two different dosing regimens.

When trial participants were given a half dose, followed by a full dose at least one month apart, the vaccine showed an effectiveness of 90%. Whereas, when given as two full doses at least one month apart, the vaccine showed just 62% efficacy.

Pleasingly, no hospitalisations or severe cases of the disease were reported from trial participants.

Chief Investigator of the Oxford Vaccine Trial at Oxford, Professor Andrew Pollard, commented: “These findings show that we have an effective vaccine that will save many lives. Excitingly, we’ve found that one of our dosing regimens may be around 90% effective and if this dosing regime is used, more people could be vaccinated with planned vaccine supply.”

This sentiment was echoed by AstraZeneca’s Chief Executive Officer, Pascal Soriot.

He said: “Today marks an important milestone in our fight against the pandemic. This vaccine’s efficacy and safety confirm that it will be highly effective against COVID-19 and will have an immediate impact on this public health emergency. Furthermore, the vaccine’s simple supply chain and our no-profit pledge and commitment to broad, equitable and timely access means it will be affordable and globally available, supplying hundreds of millions of doses on approval.”

What now?

AstraZeneca will now immediately prepare regulatory submission of the data to authorities around the world that have a framework in place for conditional or early approval. It will also seek an Emergency Use Listing from the World Health Organization for an accelerated pathway to vaccine availability in low-income countries.

Management notes that it is making rapid progress in manufacturing with a capacity of up to 3 billion doses of the vaccine in 2021 on a rolling basis, pending regulatory approval.

Pleasingly, the vaccine can be stored, transported, and handled at normal refrigerated conditions for at least six months and administered within existing healthcare settings. This compares favourably to the Pfizer vaccine which needs to be kept at extremely cold temperatures.

The good news for Australia is that CSL Limited (ASX: CSL) is already manufacturing this vaccine

The biotech giant has separate contracts with AstraZeneca and the Australian Government to manufacture approximately 30 million doses of the AZD1222 vaccine candidate. The first doses are planned for release in the first half of 2021, pending the outcome of clinical trials and regulatory approval.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Is Transurban’s (ASX:TCL) grip on Sydney roads set to tighten?
• ASX 200 rises again on Monday
• Why Morgans just upgraded the Orica (ASX:ORI) share price to “buy”
• Is the US heading for a ‘double-dip’ recession?

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. 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.

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On Monday the S&P/ASX 200 Index (ASX: XJO) started the week on a positive note. The benchmark index rose 0.35% to 6,561.6 points.

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

ASX 200 poised to rise.

It looks set to be another positive day of trade for the Australian share market on Tuesday. According to the latest SPI futures, the ASX 200 is expected to open the day 31 points or 0.5% higher this morning. This follows a good start to the week on Wall Street, which in late trade sees the Dow Jones up 0.9%, the S&P 500 up 0.35%, and the Nasdaq up 0.1%.

Technolgy One full year results.

The TechnologyOne Ltd (ASX: TNE) share price will be on watch today when it releases its full year results. The enterprise software company has provided full year guidance for net profit before tax growth of 8% to 12% in FY 2020. This is expected to be driven by strong growth in its software-as-a-service (SaaS) business. In the first half it reported a 33% increase in SaaS annual recurring revenue (ARR) to $110.2 million.

Oil prices push higher.

Energy producers such as Oil Search Ltd (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) could be on the rise today after oil prices pushed higher. According to Bloomberg, the WTI crude oil price is up 1.2% to US$42.94 a barrel and the Brent crude oil price climbed 2.2% to US$45.95 a barrel. News that the AstraZeneca-Oxford University COVID vaccine is up to 90% effective gave prices a lift.

Gold price sinks on vaccine new.

Gold miners including Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a tough day after the gold price sank lower. According to CNBC, the spot gold price sank 1.95% to US$1,836.10 an ounce. AstraZeneca’s positive vaccine data weighed heavily on safe haven assets.

Nanosonics annual general meeting.

The Nanosonics Ltd (ASX: NAN) share price could be on the move today when it holds its annual general meeting. Although the infection prevention company only recently released a business update, it promised a more detailed one with the release of its AGM presentation. This could mean earnings guidance for the first half.

More reading

• Is Transurban’s (ASX:TCL) grip on Sydney roads set to tighten?
• ASX 200 rises again on Monday
• Why Morgans just upgraded the Orica (ASX:ORI) share price to “buy”
• Is the US heading for a ‘double-dip’ recession?
• G8 Education (ASX:GEM) share price rebounds after lawsuit news

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. 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.

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Although the Australian share market has recovered strongly in recent weeks and is close to moving into positive territory for the year, not all shares on the index have performed as positively.

Two ASX shares which are still trading materially lower than their 52-week highs are listed below. Are these beaten down shares in the buy zone?

Bravura Solutions Ltd (ASX: BVS)

Bravura Solutions is a leading provider of software products and services to the wealth management and funds administration industries. It is best known for its Sonata wealth management platform. This wealth management platform allows financial advisers to connect and engage with clients via computers, tablets, or smartphones. It is used by a number of large financial institutions.

The Bravura share price has come under pressure this year due to the negative impact of the pandemic on its performance and is down 45% from its 52-week high. Though, it is worth noting that the impact isn’t as great as its share price decline might indicate. Management has warned that its profits could be flat this year because of the crisis.

According to a note out of Goldman Sachs, its analysts think this is a buying opportunity. It recently reiterated its buy rating and put a $4.50 price target on its shares. It believes the company is well positioned due to its strong market position with its existing product offerings and its emerging microservices ecosystem strategy.

Telstra Corporation Ltd (ASX: TLS)

Although this telco giant’s shares have been strong performers this month, they are still some distance from their highs. On Monday, the Telstra share price ended the day at $3.08, which was 22% lower than its 52-week high.

This weakness has been driven by COVID-19 headwinds and concerns over the sustainability of its dividend. However, the latter concerns are now easing after the Telstra board revealed that it would do whatever it can to maintain its 16 cents per share dividend.

In addition to this, the company has recently announced plans to split its business into three separate entities. Management believes the restructure will allow Telstra to take advantage of potential monetisation opportunities for its infrastructure assets, which could create additional value for shareholders.

Goldman Sachs was a fan of this plan and reiterated its buy rating and $3.60 price target on the company’s shares. It has also reaffirmed its forecast for a 16 cents per share fully franked dividend in FY 2021 and beyond.

More reading

• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• 2 ASX dividend shares with huge yields
• Why the Telstra (ASX:TLS) share price can go even higher from here
• 2 ASX dividend shares to buy today for income
• Macquarie (ASX:MQG) picks best ASX stocks to buy for 2021 post-COVID recovery

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd and Telstra 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.

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Transurban Group (ASX: TCL) is Australia’s largest toll-road operator. By a long shot. The company is now the 10th largest company on the S&P/ASX 200 Index (ASX: XJO). Even though Transurban shares are down 1.3% today to $14.77, the company still has a market capitalisation of $40.5 billion.

Now Transurban is already a company with a market position of dominance. It owns or at least has stakes in 17 motorways around the country, as well as another 4 in the United States and Canada. The 17 Australian tollways are spread across Melbourne, Brisbane and Sydney. Transurban’s Brisbane roads include the Gateway and Logan motorways. Its Melbourne roads are the Western Link and the Southern Link.

But it’s Sydney that is the real crown jewel in Transurban’s portfolio. The company owns a stake in every single tolled-road across the city, with the exception of the Sydney Harbour Bridge and Tunnel roads.

That includes the M2, M7 and M5 motorways, as well as the just-opened NorthConnex tunnel, one of the longest and deepest road tunnels in the country, and the ‘missing link’ in the Sydney orbital network.

Transurban eyes WestConnex

But this grip on the city’s largest arterial roads could be set to tighten even further. According to reporting in the Australian Financial Review (AFR), the New South Wales government is preparing to put up its remaining 49% stake of the mammoth WestConnex road project up for sale. Transurban already owns the other 51% stake.

The AFR reports that the NSW government will split this 49% stake into 2 24.5% tranches. Transurban has been told by NSW that it will have to bid for the remaining tranches “at the same time as other investors”.

If Transurban is successful in acquiring the remaining tranches of Westconnex, its dominance of Sydney’s roads will be even more complete. WestConnex is the collective name for a series of 3 major motorways in Sydney. It involves an extension and widening of the existing M4 motorway (linking Sydney’s inner west with the Blue Mountains). It also involves duplication of the existing M5 tunnel (which has just been completed) as the M8 motorway. As well as a new motorway linking the M4 motorway with the M8 under Sydney’s inner west.

The AFR describes Transurban as “the most logical buyer” for the remaining 49 per cent WestConnex stake”, stating:

Transurban operates and has stakes in every other tollroad in Sydney (excluding the harbour crossings). It knows Sydney’s road network and traffic volumes better than anyone, and is a fearsome competitor when it comes to bidding for new or existing roads.

But we will have to wait and see if Transurban wins the bid. And is indeed willing to cough up the reported $9-10 billion that the 2 tranches are estimated to be worth.

More reading

• ASX 200 rises again on Monday
• Why Morgans just upgraded the Orica (ASX:ORI) share price to “buy”
• Is the US heading for a ‘double-dip’ recession?
• G8 Education (ASX:GEM) share price rebounds after lawsuit news
• Why ASX shares are in awesome shape vs overseas markets

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. 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.

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The Next Science Ltd (ASX: NXS) share price is falling today as the company announced a non-renewal agreement with 3M. The news has sent Next Science share price plummeting 9.24% to $1.13 during late afternoon trade. In comparison, the All Ordinaries Index (ASX: XAO) moved in the opposite direction, lifting 0.5% higher to 6,772 points.

What does Next Science do?

Based in Sydney, Next Science is a medical technology company developing and commercialising its Xbio technology. This patented product attacks biofilm structures by breaking metallic bonds that hold the extracellular polymeric substance together.

Bacterial biofilms are a leading cause of antimicrobial resistance. They can be found in almost all aspects of human health, industry and food production. With nearly 80% of all global bacterial infections associated with biofilm bacteria, Next Science aims to reduce the impact of biofilm-based infections.

What’s driving the Next Science share price lower?

Next Science advised that it has decided not to renew its distribution agreement with 3M for BlastX.

The deal was contracted for a term of 3 years, and required both parties to consider their future partnership by the year’s end. Being the second year of the agreement, Next Science and 3M opened discussions and decided not to renew the arrangement.

The company said that communication was ongoing as to how to transition BlastX back to Next Science in a timely manner. The plan will be to prioritise the continuous supply of BlastX and ensure no disruption to patient care. Next Science advised that it will update the market when further developments arise.

About the Next Science share price 

The Next Science share price has been a poor performer recently. Shares in the medical tech company have fallen from a 52-week high of $2.76 to $1.13 today. The drop represents a loss of more than 57% to investors who held onto their shares since February.

However, the company says elective surgeries have continued to increase from the second quarter to third. In addition, the company’s focus on driving market penetration of its SurgX product (sterile wound gel to reduce surgical site infection) may increase its revenue streams.

More reading

• Recce (ASX:RCE) share price shoots up 5% on new patent approval
• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• The Auroch (ASX:AOU) share price rocketed 11% higher today. Here’s why.
• Look out for the Auscann (ASX:AC8) and Cannpal (ASX:CP1) share prices post trading halt
• Why the Global Health (ASX:GLH) share price is surging up 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 Nexus Energy Limited. 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.

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The S&P/ASX 200 Index (ASX: XJO) went up another 0.3% today to 6,562 points.

Here are some of the highlights from the ASX:

Zip Co Ltd (ASX: Z1P)

Buy now, pay later business Zip released a trading update for the first four months of FY21.

Zip said that it continued to deliver record results across all regions.

The company said that its revenue in the 2021 financial year to date was $96.7 million, which was an increase of 91% compared to the prior corresponding period. The month of October saw revenue of $27.6 million.

When including Zip’s business segment, total revenue was $100.2 million, with $28.4 million of that generated in October.

Zip delivered record transaction volume in October of $401.1 million, which was 104% higher than the prior year. Zip’s transaction volume is now annualised at $4.8 billion.

Customer numbers increased 109% to 4.8 million and global merchants rose by 74% year on year to be more than 36,500.

Zip US, under the QuadPay brand, saw growth accelerate after the first quarter of FY21. October was a record across all key metrics with $160.6 million in transaction volume (up 200% year on year), $11.4 million in revenue and more than 2.5 million customers.

The company said that it became the first buy now, pay later business to launch a Chrome Extension, which will allow customers to pay later on any website utilising unique virtual card technology alongside a Google plug-in.

In Australia, monthly arrears – a forward indicator of future losses – reduced from 1.33% in June to 0.89% in October.

Larry Diamond, the CEO and managing director of Zip, said: “All regions are trading very strongly, and the US is now seeing more than 15,000 downloads per day.

“Whilst online trade is expected to be very strong this year, and Zip will enjoy its share, this season Zip expects to significantly lift its instore volumes. Our partnership with Visa and access to Apple Pay and Google Play wallets, unlocks everyday spend, providing our customers with more utility and choice. Zip is well on its way to becoming the first payment choice everywhere and every day.

The Zip share price went up 0.3% today.

Crown Resorts Ltd (ASX: CWN)

Casino business Crown announced how its operations will look with the latest Victorian changes to restrictions.

The ASX 200 casino business said that Crown Melbourne now has a total capacity limit of 1,000 patrons with a maximum capacity limit in each indoor space of the lesser of 150 patrons or the number permitted by the density requirement of one person per four square metres.

Crown is allowed to commence the operation of its table games. There must be physical distancing between patrons and there must be the deactivation of every second electronic gaming machine and electronic table game. There must be a COVID-19 marshal present. The entertainment complex must also have enhanced hygiene protocols.

The business expects to commence operating under these new directions from Wednesday, 25 November 2020. Crown Metropol Melbourne is expected to re-open on 1 December 2020.

The Crown share price went up around 1% in reaction to this news.

Ampol Ltd (ASX: ALD)

Ampol announced today the completion of its property transaction for net proceeds of $635 million. This was higher than the previous guidance of approximately $612 million because of lower than estimated transaction costs.

Management decided to launch an off-market buy-back of $300 million.

Ampol CEO and managing director said: “We have delivered on our stated 2019 plan to unlock value through network optimisation and I am pleased the completion of the property transaction will further strengthen our balance sheet while allowing us to return capital and released franking credits.”

The Ampol share price went up around 3% in reaction to this news.

More reading

• Why Morgans just upgraded the Orica (ASX:ORI) share price to “buy”
• Is the US heading for a ‘double-dip’ recession?
• G8 Education (ASX:GEM) share price rebounds after lawsuit news
• Why Ampol, Cann, Fortescue, & Mesoblast shares are surging higher
• ASX 200 up 0.7%; Zip trading update, Ampol buyback, IAG sinks

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 ZIPCOLTD FPO. The Motley Fool Australia has recommended Crown Resorts 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.

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The TPG Telecom Ltd (ASX: TPG) share price received a boost today after the Australian Competition and Consumer Commission (ACCC) announced that it will not oppose a proposed buyout offer of Amaysim from Optus. This surprising announcement has now opened the door for TPG to make a counter offer for Amaysim’s prized business.

The TPG share price jumped by 4.81% today to $8.07 following the announcement. 

What’s the background behind this

Optus had offered $250 million to Amaysim’s shareholders to purchase its business. The proposal had been submitted to the ACCC for review, before being given the green light today by the competition watchdog.

Today’s decision was seen to be significant by market analysts, especially since the ACCC had earlier tried to block a merger attempt between TPG and Vodafone – a case the ACCC lost in the courts. 

The news means that the door is now wide open for a takeover battle over Amaysim. Analysts are expecting TPG to make a counter offer with respect to Optus’ $250 million proposal – which many believe is too low.

The market also believes that the proposal from Optus is unorthodox – as it wants to only buy the 1.19 million Amaysim customers and not take over the entire business. This means that Amaysim management must use about $100 million of the proceeds to wind up the company, leaving shareholders with only $150 million. 

Amaysim shareholders are due to vote on the deal in January 2021.

Why the battle for Amaysim

Amaysim is by far Australia’s leading low-cost mobile network reseller, known as the mobile virtual network operators (MVNO). It has 1.19 million subscribers or about 35% of Australia’s MVNO market. The company’s 10-year wholesale contract is due to expire in June 2022, which prompted Optus to make the bid. 

Analysts at Goldman Sachs have said that TPG would get a 30% earnings per share uplift even if it bought Amaysim for double the price Optus is offering. The broker says that Amaysim’s 1.9 million customers would give TPG’s newly launched low-cost mobile network Felix a boost against its competitors. 

TPG share price in 2020

The TPG share price has lost almost 10% since it listed on the ASX in June this year. On the first day of trading, the TPG share price closed at $8.90. It dropped to $7 at the beginning of November, before regaining ground to today’s price of $8.07. The company commands a market price of $14.3 billion. 

More reading

• Government declares 2021 as ‘Year of 5G’

Motley Fool contributor Eddy Sunarto 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.

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The Mesoblast limited (ASX: MSB) share price was a very strong performer on Monday.

The biotech company’s shares finished the day a massive 17.5% higher at $4.28.

Why did the Mesoblast share price rocket higher?

Investors were buying the company’s shares again on Monday in response to a positive announcement at the end of last week.

That announcement revealed that the company has signed a major deal with pharma giant Novartis.

Novartis has signed an exclusive worldwide license and collaboration agreement for the development, manufacture, and commercialisation of Mesoblast’s mesenchymal stromal cell (MSC) product remestemcel-L.

The deal, which is focused on its treatment of COVID-19 Acute Respiratory Distress Syndrome (ARDS), will see Novartis pay US$50 million upfront and then upwards of US$1.25 billion in milestone payments to Mesoblast.

One broker that responded positively to this news was Bell Potter.

What did the broker say?

In a note released on Friday, Bell Potter said it believes this is a “fantastic deal” for Mesoblast and notes that it provides greater certainty in regard to the manufacturing and commercialisation of the product for COVID-19 ARDS.

In addition to this, it feels Novartis brings a lot to the table strategically. This includes expertise in respiratory indications and cellular therapy.

Where is the Mesoblast share price heading?

While the broker advised that it was reviewing its recommendation, as things stand, it has a (speculative) buy rating and $7.00 price target on the company’s shares.

Based on today’s Mesoblast share price, this price target represents 63% upside over the next 12 months.

However, given that its current forecasts don’t include any upfront royalties for COVID-19 ARDS, it notes that this deal represents immediate upside to its estimates. This could mean it bumps its valuation higher upon review.

More reading

• Why Ampol, Cann, Fortescue, & Mesoblast shares are surging higher
• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• Here are the 10 most shorted shares on the ASX
• These were the best performing ASX 200 shares last week
• ASX 200 ends flat on Friday

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.

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