The Telix Pharmaceuticals Ltd (ASX: TLX) share price is having a very strong session on Thursday.

In morning trade, the radiopharmaceuticals company’s shares are up 15% to a new record high of $20.16.

Why is the Telix Pharmaceuticals share price rocketing?

The catalyst for this strong gain has been the release of a very positive announcement this morning relating to its United States business.

According to the release, the company stands to benefit from proposed changes announced by the Centers for Medicare & Medicaid Services (CMS).

These proposed changes are for the Hospital Outpatient Prospective Payment System (OPPS) rule to improve payments for diagnostic radiopharmaceuticals for Medicare patients in the United States, facilitating continued patient access after transitional pass through payment status expires.

Management notes that under the proposed changes, diagnostic radiopharmaceuticals, including its Illuccix product, will continue to be paid separately by the CMS for traditional Medicare Fee for Service patients in the hospital outpatient setting following the expiry of transitional pass-through payment status.

Another positive is that this would also apply to new diagnostic products being developed by Telix, if and when they are approved.

Why is this important?

Currently in the United States, the costs associated with diagnostic radiopharmaceuticals are packaged together into the payment for the nuclear medicine tests (scans).

The CMS is proposing refinements to this policy to improve the accuracy of overall payment amounts by paying separately for any diagnostic radiopharmaceutical with a per day cost greater than US$630.

The CEO of Telix Americas, Kevin Richardson, was pleased with the proposed changes and appears to believe it could be a boost to Illuccix demand. Richardson commented:

Telix welcomes the proposed rule, which will facilitate more equitable and reliable access to advanced imaging for all patients and support physicians to prescribe the most clinically appropriate solution. We commend the vision of CMS and the coalition, along with patient groups, for raising awareness about the necessity to reform the payment system to enhance patient outcomes and access.

Telix is committed to continued innovation in the field of radiopharmaceutical diagnostics to provide new solutions to further patient access, especially for underserved patient populations and in areas of high unmet clinical need.

Following today’s gain, the Telix Pharmaceuticals share price is now up a whopping 82% since this time last year. To put that into context, a $10,000 investment a year ago would have grown to become just over $18,000 today.

The post Why is the Telix Pharmaceuticals share price rocketing 15% to a record high? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Telix Pharmaceuticals. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Telix Pharmaceuticals. The Motley Fool Australia has recommended Telix Pharmaceuticals. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Artificial intelligence might be creating a costly problem. If it comes unstuck, a few ASX shares could win from the AI fallout.

The recent stratospheric rise of artificial intelligence has attracted investors far and wide. It’s not hard to understand why… the share price of AI-enabler Nvidia Corp (NASDAQ: NVDA) has rocketed 211% in one year.

In times like these, it’s worth taking a step back to reflect. While pondering, I stumbled upon a perceptive blog by Sequoia Capital partner David Chan. In it, Chan unpacks the pin that may pop the AI bubble.

Money for nothing?

Data centre revenue is Nvidia’s largest source of revenue, stemming from the AI boom.

During the trailing 12 months, the chip designer racked up US$79.8 billion in revenue. It’s safe to say these data centres — such as Microsoft Azure, Amazon Web Services, and Google Cloud Platform — are spending a huge chunk of money on AI-capable hardware.

Nvidia’s annualised revenue from its data centre segment is expected to reach US$150 billion by the fourth quarter. According to Chan’s analysis, graphics processing units (GPUs) — Nvidia’s hardware — account for about half of a data centre’s operating cost.

The Sequoia Capital partner then explains that the end users, i.e., companies using AI compute, need to make a return on their spend. Assuming a 50% gross margin, end users need to generate $600 billion in revenue from AI products for the $150 billion outlay to be worthwhile, as shown in the summary below.

Where’s the problem?

According to Chan, OpenAI generates most of the AI revenue, totalling $3.4 billion. Other startups also make some money, but none surpass $100 million per year.

Chan assumes the tech giants will be able to make about $10 billion annually from AI features. Even then, a $500 billion difference exists between required AI revenue and expected — what Chan calls a ‘$500 billion hole’.

Excess AI supply could boost these ASX shares

If a massive overestimation of AI demand eventuates, where might the opportunities be?

Imagine processing power in a data centre as akin to a hotel room. When you have more rooms than guests, the logical move is to drop prices until all rooms are filled — it’s better to make $50 per night than $0.

I suspect data centres will do the same if they have more hardware than needed.

Some ASX shares might benefit from underwhelming AI demand. I believe companies with significant cloud costs would reap the rewards of a data centre glut.

Think companies like REA Group Ltd (ASX: REA), WiseTech Global Ltd (ASX: WTC), and Xero Ltd (ASX: XRO). These companies depend on data centres to host data and run functions on behalf of their customers.

According to accounting firm EY, cloud hosting costs ‘account for 6% to 12% of [software as a service] revenue and constitute a sizable portion of their cost of goods sold (COGS). Therefore, it stands to reason that companies reliant on the cloud could see margins widen if data centre costs plunge.

The post Which ASX shares could soar if AI falls into a $500 billion hole? appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia, REA Group, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. The Motley Fool Australia has recommended Nvidia and REA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The WA1 Resources Ltd (ASX: WA1) share price has returned from its trading halt with a thud.

In morning trade, the niobium explorer’s shares are down 12% to $16.65.

Why is the WA1 share price crashing?

Investors have been hitting the sell button today after the company’s management decided to take advantage of its meteoric share price to raise funds.

According to the release, WA1 Resources has received firm commitments for a placement of 3.5 million new fully paid ordinary shares to raise $60 million before costs.

The company will be raising these funds at a placement price of $17.00 per new share, which represents a 9.8% discount to where the WA1 share price last trade. It also represents an 11.8% discount to the 10-day volume weighted average price.

Why is the company raising funds?

The company advised that the funds raised from the placement will primarily support activities at the impressive Luni deposit and the broader West Arunta Project.

This includes ongoing mineral resource and extensional drilling, process testwork and flowsheet development, permitting, and project development activities. It also notes that the placement will support other exploration, administration/corporate costs, and general working capital.

WA1’s managing director, Paul Savich, was pleased with the success of the placement. He commented:

This Placement will support the Company’s efforts to increase momentum and continue to unlock the full value of the Luni discovery. The strong demand from new and existing institutions around the world reflects the quality of the recent Mineral Resource estimate, its tier-1 location and the significant potential for future growth.

Savich also revealed that the company is undertaking further drilling at Luni, which could increase the already massive mineral resource. He adds:

Two drill rigs are currently operating at Luni to increase confidence in, and extend, the Mineral Resource, along with providing further samples for metallurgical testwork. This placement will also allow the Company to accelerate its project development workstreams and expand exploration activities across the greater tenement package.

Despite today’s pullback, the WA1 share price remains up 220% since this time last year. This has been driven by excitement over its Luni deposit.

In its quarterly activities update, the company points out that its “MRE highlighted Luni as the world’s most significant niobium discovery in more than 70 years and one of Australia’s major critical minerals deposits.”

The initial inferred mineral resource contains 200 Mt at 1.0% Nb2O5 with a high grade subset of 53 Mt at 2.1% Nb2O5 (at a 0.25% Nb2O5 lower cut-off). It notes that this confirms the tier-1 scale and grade of Luni.

The post Why is the WA1 share price crashing 12% today? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.

The Netwealth Group Ltd (ASX: NWL) share price is pushing higher on Thursday.

In morning trade, the investment platform provider’s shares are up 2% to $22.37.

This leaves its shares just a fraction short of a new record high.

Why is the Netwealth share price rising?

Investors have been bidding the company’s shares higher today in response to the release of its fourth quarter update.

According to the release, Netwealth’s funds under administration (FUA) increased $3.3 billion or 3.9% during the three months ended 30 June. This $3.3 billion increase comprises FUA net inflows of $3.8 billion (up 38.7% on third quarter inflows) and negative market movement of $0.5 billion.

This took Netwealth’s total FUA to a record of $88 billion, which represents a 25% or $17.7 billion increase year on year. This comprises FY 2024 FUA net inflows of $11.2 billion and positive market movement of $6.5 billion.

Also growing during the quarter was the funds under management (FUM). At the end of June, Netwealth’s FUM was up $0.8 billion quarter on quarter to $20.5 billion. This represents FUM net inflows of $0.9 billion.

Netwealth’s Managed Account balance was $17.6 billion at the end of June. This is up $4 billion or 29.4% year on year. Managed Account net inflows were $0.8 billion for the June quarter, increasing by $0.4 billion or 129.2% on the prior corresponding period.

What else did it report?

One thing that could be holding back the Netwealth share price today is its commentary on fees and margins. It said:

Positive market movements of FUA contribute to higher admin fee revenue, however, the impact is significantly diluted due to the structure of tiered administration fees and fee caps. In addition, many ancillaries are unimpacted by market movement. These factors when combined with the lower cash percentage, have resulted in a reduction in average revenue bps for the year, particularly in 2HFY2024.

No earnings updates or guidance was provided with this release. As a result, investors will have to wait for the company to announce its full year results next month to see what impact the above has had on its profitability for the year.

As a reminder, during the first half of FY 2024, Netwealth reported a 20% increase in total income to $123.3 million and a 28.3% lift in net profit after tax to $39.3 million.

The Netwealth share price is 62% over the last 12 months.

The post Netwealth share price higher on record quarter appeared first on The Motley Fool Australia.

More reading

• Why is the Telix Pharmaceuticals share price rocketing 15% to a record high?
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Netwealth Group. The Motley Fool Australia has positions in and has recommended Netwealth Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Fortunately for growth investors, there are a lot of quality options for them to choose from on the Australian share market.

Two ASX 200 growth shares that have been rated as top buys by brokers are listed below. Here’s what they are saying about them:

Neuren Pharmaceuticals Ltd (ASX: NEU)

The first ASX 200 growth share that could be a buy according to brokers is Neuren Pharmaceuticals.

It is a biotechnology company that is busy developing treatments for rare diseases of the central nervous system. This includes its second drug candidate, NNZ-2591, which is in phase 2 development for multiple neurodevelopmental disorders. To date, positive results have been achieved in clinical trials in Phelan-McDermid syndrome and Pitt Hopkins syndrome.

It is NNZ-2591 that most excites analysts at Bell Potter and underpins its bullish view on the company. It commented:

Our positive outlook on the stock is driven largely by the company’s second asset, called NNZ-2591, currently preparing to start Phase 3 clinical trials in CY25. In the last six months, NNZ-2591 reported highly encouraging Phase 2 data in two rare diseases. NEU will once again have first-to-market opportunities in these two rare diseases, assuming future Phase 3 trials are successful. While short-term news will continue to be impacted by Acadia’s commercialisation of NEU’s first drug, called Daybue, we maintain our BUY recommendation for investors who have a longer 2 to 3-year investment horizon.

Bell Potter has a buy rating and $28.00 price target on its shares. This implies potential upside of 45% for investors.

ResMed Inc. (ASX: RMD)

Analysts at Morgans think that this sleep disorder treatment focused medical device company could be an ASX 200 growth share to buy.

It notes that weight loss drugs have been weighing on sentiment. However, the broker doesn’t believe investors should be overly concerned. Particularly given how large and underserved the sleep disorder breathing market is. Its analysts commented:

While weight loss drugs have grabbed headlines and investor attention, we see these products having little impact on the large, underserved sleep disorder breathing market, and do not view them as category killers. Although quarters are likely to remain volatile, nothing changes our view that the company remains well placed and uniquely positioned as it builds a patient-centric, connected-care digital platform that addresses the main pinch points across the healthcare value chain.

Morgans has an add rating and $34.11 price target on its shares. Based on its current share price of $28.39, this suggests that upside of 20% is possible for investors over the next 12 months.

The post These top ASX 200 growth shares could rise 20% to 45% appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

I’m a big fan of buying cheap ASX shares when it seems like they have been oversold.

We don’t know what share prices will do next, but investing in a good business at a much cheaper valuation can give us a good margin of safety.

One of the most important elements of buying beaten-up stocks is choosing ones with a fair chance of rebounding in the future. Ideally, we don’t want to choose stocks that will keep going down forever and have no hope of a turnaround.

I like stocks that are looking to grow their operations, even during uncertain times such as now. The two ASX shares below look cheap to me.

Accent Group Ltd (ASX: AX1)

As we can see on the chart below, the Accent share price has declined by around 25% since April 2023.

I think that’s a large and appealing decline. Retail conditions have definitely weakened over the last couple of years, but I don’t believe it’s going to be difficult for Accent and other ASX retail shares forever.

Retailers regularly go through economic cycles as households tighten (and sometimes loosen) their financial belts. That’s why I think periods of volatility can be an opportunity to invest in an ASX stock like this.

This business acts as a distributor for a number of global shoe brands including Ugg, Skechers, Henleys, Hoka and Vans. It also owns some of its own businesses including The Athlete’s Foot, Glue Store, Stylerunner, Platypus and Nude Lucy.

The company planned to open at least 20 new stores in the second half of FY24 across both its core banners and new businesses. Further store openings in future years could be helpful for scale benefits. It’s also working on growing its digital sales.

Why is it a cheap ASX share? According to the estimates on Commsec, it’s trading at just 11x FY26’s estimated earnings. It is also projected to pay a grossed-up dividend yield of 11.2% in FY26.

Centuria Industrial REIT (ASX: CIP)

This is the largest Australian-based pure real estate investment trust (REIT) focused on industrial properties. It’s benefiting from the limited availability of commercial property in our capital city locations. Strong rental growth is helping offset the pain of higher interest rates.

It recently acquired another data centre for its portfolio for $39 million, which is leased to Fujitsu. Data centres now make up 12% of the REIT’s portfolio, worth $456 million.

Centuria Industrial said demand for AI and cloud-based solutions is driving data centre growth as businesses and consumers continue to rapidly adopt these technologies.

Is it a cheap ASX share? The business reported it had net tangible assets (NTA) of $3.89 at 31 December 2023. With the Centuria Industrial REIT share price falling by 15% since mid-March 2024, it’s now trading at a 22% discount to the December 2023 NTA.

The post 2 cheap ASX shares near their lows I’m thinking of buying now appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Accent Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Now could be the time to pounce on one small cap ASX stock if your risk tolerance allows for it.

That’s the view of analysts at Bell Potter, which believe this speculative stock could have a “lucrative opportunity” in the United States.

Which small cap ASX stock?

The small cap in question is Genetic Signatures Ltd (ASX: GSS).

Genetic Signatures is a specialist molecular diagnostics (MDx) company that is focused on the development and commercialisation of its proprietary platform technology, 3base.

It notes that it designs and manufactures a suite of real-time Polymerase Chain Reaction (PCR) based products for the routine detection of infectious diseases under the EasyScreen brand. Its current target markets are major hospitals and pathology laboratories undertaking infectious disease screening.

What is the broker saying about Genetic Signatures?

Bell Potter notes that the small cap ASX stock recently announced that the US Food & Drug Administration (FDA) has cleared its EasyScreen Gastrointestinal Parasite Detection Kit and GS1 automated workflow’ for marketing and sale in the United States.

The broker has described this as a transformational milestone. It commented:

The first FDA clearance for GSS in June 2024 was a transformational milestone for the company, allowing commercialisation into the USA, the largest molecular diagnostics market globally (~40% of global sales). The FDA-cleared test, called the ‘Gastrointestinal Parasite Detection Kit’, is differentiated from US competitors by its broader coverage of 8 pathogen targets compared to only ~3-4 covered by existing multiplex tests.

Bell Potter thinks that the company’s test has a good opportunity to with market share in the United States given how it is a more efficient, accurate and profitable option for users. It adds:

The limited coverage from existing tests means conventional microscopic examination – referred to as ova and parasite (O&P) tests – are still widely used in the US, with ~5.5 million O&P tests performed annually. O&P tests involve the time-consuming, labour-intensive, inaccurate process of visually examining stool samples under a microscope to identify parasites. O&P tests have turnaround times of 2-4 days with minimal profits for labs at reimbursement of ~US$20/test, whereas GSS’ product is covered by existing reimbursement codes at US$263/test, therefore providing a more efficient, accurate and profitable replacement to O&P tests.

Speculative buy

In light of the above, the broker has retained its speculative buy rating on the small cap ASX stock and lifted its price target to $1.10 (from 75 cents).

Based on its current share price of 73 cents, this implies potential upside of 50% for investors over the next 12 months. It concludes:

FY25 is set to be a positive year for GSS following the appointment of a globally experienced CEO and improved balance sheet post the recent capital raise. First US sales are expected in 1H FY25 and Aus sales should revert to growth following the TGA’s clearance of the revised respiratory test in April. We have updated our forecasts and valuation following the trio of announcements in June and maintain our BUY (speculative) recommendation. We increase our valuation to $1.10 (from $0.75) and see comfortable room for upside to the current ~$119m enterprise value.

The post Buy this small cap ASX stock with a ‘lucrative opportunity’ appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.