The JB Hi-Fi Limited (ASX: JBH) share price has been one of the strongest performers on the S&P/ASX 200 Index (ASX: XJO) over the last 12 months.

Since this time last year the retailer’s shares have gained a sizeable 52%. This strong form has continued on Thursday, with the JB Hi-Fi share price hitting a record high of $46.30 earlier today.

Investors appear confident that the company will deliver a strong full year result when it hands in its report card on 17 August.

Ahead of the results release, I thought I would take a look to see what the market is expecting from the company.

What is expected from JB Hi-Fi in FY 2020?

According to a note out of Goldman Sachs, it expects JB Hi-Fi to deliver group sales of $8,026.6 million in FY 2020. This is 2.1% ahead of the company’s guidance of $7,860 million and up 13.1% year on year.

In respect to earnings, the broker is forecasting earnings before interest and tax (EBIT) of $519.6 million or $502.5 million on a pre-AASB16 basis. This represents impressive year on year growth of 34.8%.

What will be the drivers of this growth?

The JB Hi-Fi Australia business is expected to contribute EBIT of $408.6 million for the year. Goldman expects this to be driven by like for like sales growth of 13%, the addition of three new stores, and a 100-basis point increase in its EBIT margin.

Elsewhere, the broker is forecasting The Good Guys business to deliver EBIT of $115.9 million. This will be a 51.9% increase on the prior corresponding period. Goldman expects this to be driven by a 12% increase in like for like sales and EBIT margin expansion of 115 basis points.

Not all of its businesses are expected to deliver earnings growth. Goldman Sachs expects the JB Hi-Fi New Zealand to drag on its performance slightly with a $5.4 million loss.

Should you invest?

Goldman Sachs appears to believe the JB Hi-Fi share price has peaked now and has given it a neutral rating with a $44.40 price target.

It prefers rival Harvey Norman Holdings Limited (ASX: HVN) and has a buy rating and $4.60 price target on the retailer’s shares. This compares to its current share price of $3.58.

More reading

• Don’t be blinded by gold fever…consider these ASX dividend shares instead
• JB HiFi and 1 other quality ASX share to buy right now
• 3 ASX dividend shares I like ahead of the August earnings season
• 2 off the grid ASX retail shares for higher returns
• Extended jobkeeper: Which ASX shares to buy?

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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The Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price rallied 9.6% in morning trade before pulling back to a gain of 0.9% at the time of writing. The rise in the Paradigm share price came after the company reported pain reduction in osteoarthritis patients being treated under a United States FDA (Food and Drug Administration) expanded access program (EAP).

Osteoarthritis is caused by joint damage and is most often experienced by older people. It is a leading cause of disability and impacts 30 million men and women in the US alone. 

The US EAP is a compassionate-use pathway for investigative treatments where there is no comparable or satisfactory therapy options outside clinical trials. However, this is monitored by the FDA and requires the cooperation of the healthcare organisation.

Update

In the update, Paradigm reported a 65% pain reduction in patients with osteoarthritis 12 weeks following the initiation of treatment with company’s product, ‘Zilosul’. This was using the ‘WOMAC Pain Subscale’. The WOMAC Pain Subscale is a self-administered measurement tool used to assess the severity of pain.

Pleasingly, patients in the program reported improvements in pain felt whilst performing common daily tasks such as walking, using stairs, sitting and standing. Patients also reported a reduction in night pain.

Additionally, patients reported tolerance to the treatment with no adverse side effects reported. Patients also released testimonials regarding their satisfaction with the program. The company has released videos featuring professional NFL players detailing their experiences with osteoarthritis caused by joint injuries sustained during their careers. 

Furthermore, Paradigm believes if replicated in a confirmatory Phase 3 clinical study, Zilosul would provide an alternative to the current treatments of moderate to severe osteoarthritis pain. At present, the treatment is NSAIDs (nonsteroidal anti-inflammatory drugs) and Opioids which have undesirable side effects.

CEO comments

Paradigm’s CEO and Interim Executive Chairman, Paul Rennie said “This is a fantastic outcome not only for Paradigm as our first treatment of a cohort of patients in the US under an FDA approved program, but also for all patients that have participated in the program”. He went on to say “We are very encouraged with the EAP results which were reported at 12 weeks, with the same pain scoring system Paradigm (we) will use in its Phase 3 clinical trial…”.

About the Paradigm share price

Paradigm was listed on the ASX in August 2015. Its focus is on repurposing pentosan polysulphate sodium (PPS). A key feature of PPS is its anti-inflammatory and tissue regenerative properties. 

Additionally, injectable PPS is not currently registered in Australia however it is registered in four of seven major global pharmaceutical markets.

Presently, the Paradigm share price is trading at $3.27 which represents a gain of .93% in today’s trade. 

More reading

• 4 exciting ASX biotech shares surging higher today
• 3 ASX medical shares to hold for the long term
• Stock of the day: Paradigm Biopharmaceuticals share price climbs 6% on clinical data
• Why Afterpay, ELMO, Oil Search, & Paradigm shares are racing higher

Motley Fool contributor Matthew Donald 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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You’ve likely heard that Australia has just entered a period of historic deflation.

Despite what you may be reading in some financial headlines, that’s not all bad news. Far from it…

According to the latest data from the Australian Bureau of Statistics (ABS) the Consumer Price Index (CPI) fell 1.9% in the June 2020 quarter. “This was the largest quarterly fall in the 72-year history of the CPI,” said chief economist for the ABS, Bruce Hockman.

This brings the annual inflation rate to -0.3% for the year through the end of June.

The record price falls were largely due to the government providing free child care and plummeting petrol prices. Rents also headed lower. Not surprisingly, the price of cleaning and maintenance products bucked the trend, gaining 6.2%. Hand sanitiser, anyone?

Why deflation isn’t the Hydra it’s made out to be

I’ll avoid a deep dive into the deflation debate and just skim the surface here.

You’ll most often hear deflation is bad because consumers will put off spending money today if they know they can get the same item cheaper tomorrow.

In a world of hyper-deflation, where prices are falling by, say, 10% each day, that may be true. But if prices are falling by 0.3% per year that’s hardly going to keep you from buying that new couch or pair of running shoes.

No nation in the world has ever experienced anything approaching hyper-deflation. And I’ll stick my neck out and say none ever will.

So why is the Reserve Bank of Australia so focused on its 2–3% inflation target?

The simple answer is debt. According to the Australian Debt Clock, total government debt now stands at over $1.17 trillion dollars. With an inflation rate of 3%, the real value of that debt will fall to ‘just’ $585 billion in 24 years without having to pay back a cent.

Enough said.

Here’s the good news

Not only will the cash in your wallet hold its value — or even gain a bit — in a deflationary scenario, but the real returns (inflation-adjusted) of your stock holdings will gain as well.

The even better news for equity investors is that the latest deflation numbers indicate interest rates should stay at record lows for a long time yet. And the share markets tend to love low interest rates. Beyond that, we can expect continued quantitative easing (QE) from the Reserve Bank of Australia, which also helps fuel equity prices.

But not all ASX shares will benefit equally. In fact, some are likely to suffer.

2 ASX shares to avoid

In general, I’d tread carefully around property developers and real estate investment trusts (REITs) in the current environment. Their time will come again, but many are facing stiff headwinds.

The latest statistics from the ABS show that rents across Australia fell during the last quarter. That marks the first quarterly fall since 1972.

The first ASX share I’d steer clear of is Stockland Corporation Ltd (ASX: SGP). Stockland owns residential, industrial and retail properties, along with retirement homes.

It was a great stock to own in 2019, gaining more than 38%. But 2020 has been a different story, with the share price down more than 30% so far this year. And with a gloomy mid-term outlook for the Aussie property markets, I believe it could have a good bit further to fall from its current share price of $3.22.

The second ASX share I’d avoid is Scentre Group (ASX: SCG). Scentre owns and operates Westfield shopping malls in both Australia and New Zealand. The impact of COVID-19 saw it suspend its interim dividend distribution. And the Scentre share price has already tumbled more than 47% this year.

There’ll be a time to revisit Scentre. But I don’t believe now is that time.

2 ASX shares to buy

It’s no secret the technology sector has, on average, outperformed the broader market this year.

Many tech shares will be resilient in today’s mildly deflationary environment. After all, the price of most electronic goods, and the parts inside them, tend to get cheaper over time regardless. And with remote working, shopping and even dating likely to be a growing trend in the decade ahead, here are 2 ASX shares that are well placed to benefit.

First, Altium Limited (ASX: ALU). The company, with a market cap of $4.3 billion, specialises in electronic printed circuit boards. These are crucial to the growth of the burgeoning 5G market and every kind of smart device you can imagine.

Altium hasn’t fully recovered from its steep plunge in February. The share price is still down 3.6% year-to-date. But at its current price of $33.12, I think it could go a lot higher in the months ahead.

The second ASX share you should consider adding to your portfolio, in my opinion, is Appen Ltd (ASX: APX). Appen, with a market cap of $4.4 billion, provides data to improve artificial intelligence systems, a market with sky-high growth potential.

The Appen share price is up 63.8% since 2 January, but I believe it could have much further to run.

More reading

• Invest $5,000 into these ASX shares immediately
• WAAAX or FAANG? Which ASX tech shares to buy in 2020
• Are ASX tech shares the only way to protect your portfolio against the coronavirus?
• 3 of the best ASX tech shares to buy and hold until 2030
• WAAAX shares see mixed recovery from COVID-19

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Scentre 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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On Wednesday, the Motley Fool received commentary from Saxo Capital Markets by Australian Market Strategist, Eleanor Creagh. The commentary included some grim predictions which could be particularly relevant to the share prices of ASX banks such as National Australia Bank Ltd. (ASX: NAB) and Commonwealth Bank of Australia (ASX: CBA) as well as gold miners such as Newcrest Mining Limited (ASX: NCM).

The risk of a double dip recession

According to Eleanor Creagh, there are risk factors that could see Australia enter a double dip recession.

She suggested that Australian Bureau of Statistics data showed that the jobs rebound seen in June is stalling. This is consistent with a flattening of the recovery curve which means that the economy’s rebound after lock downs earlier this year may be starting to wane and that economic growth could be going sideways rather than upwards. Ms Creagh also suggested that there is a considerable degree of uncertainty surrounding the economic recovery, especially as the economic boost resulting from early superannuation withdrawals fades.

According to the commentator, consumer confidence is also stalling as Melbourne has moved back into lock downs and New South Wales is suppressing smaller coronavirus outbreaks.

The market strategist stated;

“To maintain the trajectory of the recovery and avoid the ‘double dip recession’, confidence amongst businesses and consumers is critical in upholding investment, spending, and jobs and re-asserting a self-sustaining trajectory for economic growth and the labour market.”

She also called for ongoing government stimulus, stating;

“The economy did not enter this crisis from a position of strength and amidst signs the recovery is already beginning to plateau the priority of ongoing fiscal support remains.”

A double-dip recession would mean that the current economic recovery would turn around and the economy would once again begin shrinking. This could be bad news for the big banks including NAB and the Commonwealth Bank of Australia.

NAB raised $3.5 billion from shareholders in May in order to strengthen its capital buffer, along with maintaining a modest dividend. This bank has a significant commercial loan book and could face headwinds if consumer confidence dries up and businesses see lower revenue, which could lead to loan defaults. The NAB share price rose 1.56% on Wednesday to $18.18 as APRA changed its recommendation regarding payment of dividends. APRA had previously warned banks against paying dividends but has now downgraded its advice to recommend payment of reduced dividends. The NAB share price is up 37.8% since its 52 week low of $13.20, however, it is down 36.52% since this time last year.

Commonwealth Bank of Australia also faces risks if there is a double dip recession. This bank is Australia’s biggest lender and had almost $760 billion in loans on its balance sheet at the end of the 2019 financial year. A double dip recession could hit CommBank significantly as it sees more borrowers unable to repay their business loans, consumer loans and mortgages. The CommBank share price was up 1.11% on Wednesday to $73.01. Its share price is up 36.62% from its 52 week low of $53.44, however, it has dropped 12.46% since this time last year.

The outlook for gold mining shares

Eleanor Creagh pointed out that yields on government bonds, after inflation, have collapsed. In addition, the United States dollar index has fallen, showing a weaker US dollar. She pointed out that as geopolitical uncertainties and fear around the pandemic remain elevated, gold has rallied – breaking through its 2011 high and reaching a new record high. The writer suggests that part of the reason for this is that yields after inflation on government bonds are now below zero.

According to the commentator, moves by the US federal reserve to support the US economy are putting upward pressure on the gold price, which she predicts may reach as high as $2000 in spot trading. However, she suggests it is likely that gold has reached a temporary top in the short term. She believes it is likely that long-term prices will increase after a short-term decline as central banks become more and more influential.

The commentator stated;

“Gold has a growing importance within cross-asset portfolios and although tactically, the run higher may be stretched and due for a period of consolidation, long term demand for gold remains.”

This could be good news for miners with low costs that could easily work through a short-term pullback in gold prices. It could also have long-term implications for the share prices of gold miners such as Newcrest Mining. 

Newcrest had an all inclusive statutory cost of $878 per ounce in the June quarter of 2020. This means that it can likely still make a significant profit per ounce even if gold prices temporarily fall. Additionally, if the strategist’s prediction for long-term gold prices is accurate, Newcrest could see significant benefit from a higher gold price in the future. The Newcrest share price was down 0.8% on Wednesday to $36.06. It has also fallen a further 1% so far today and is currently trading at $35.70. The Newcrest share price is up 74.5% from its 52 week low of $20.70 and is up 1.62% since this time last year. 

More reading

• ASX 200 jumps 0.7%: Fortescue impresses, Macquarie’s tough Q1, big four banks rise
• Here are the dividends this broker thinks CBA and the big four will pay in 2020
• ASX 200 drops 0.2%, APRA boosts big 4 ASX banks
• ASX big banks stocks outperform even as APRA caps dividends
• APRA eases dividend restrictions, ASX bank shares rally

Motley Fool contributor Chris Chitty 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 IOOF Holdings Limited (ASX: IFL) share price has dropped by 5.88% at the time of writing, following a business update by the company for the fourth quarter of the 2020 financial year.

What was in the announcement?

According to the announcement, IOOF’s funds under management, advice and administration (FUMA) grew to $202.3 billion at 30 June, an increase of 3.4% during the fourth quarter of the 2020 financial year.

IOOF’s financial advice business had net outflows of $93 million compared to outflows of $853 million in the prior corresponding period (pcp).

The company’s portfolio and estate administration had net inflows of $398 million, excluding early release of superannuation, compared to inflows of $561 million on pcp.

IOOF’s investment management business had a net outflow of $51 million, compared to $181 million on pcp. Its pension and investments business had net outflows of $183 million, excluding early release of super.

The company paid out $743 million in the early release of superannuation from 20 April to 30 June 2020.

Commenting on IOOF’s FUMA result, CEO Renato Mota stated:

The Milestone of over $200 billion in FUMA is testament to IOOF’s increased scale and the benefits of the diversification of our business. The transformative acquisition of the P&I business contributes to our business model resilience and will be important as we look to a  post  COVID-19 recovery and supporting long-term growth in FUMA and earnings.

The recent recovery in equity markets has been the major contributor to the $6.7 billion uplift in FUMA and pleasingly, we have continued to attract strong flows into our platforms. That said, the impacts of the COVID-19 pandemic are continuing.  Our advisers are seeing first-hand client concern and uncertainty around macro-economic conditions. This client sentiment is particularly apparent through withdrawals associated with the Early Release of Superannuation scheme and subdued flows in Financial Advice.

IOOF expects to report underlying net profit after tax of around $128 million to $130 million for the 2020 financial year. Underlying net profit after tax from continuing operations is expected to be $123 million–$125 million.

About the IOOF share price

IOOF is an Australian financial services company with a history dating back to 1846. It offers superannuation, financial advice, investment management and trustee services. 

In July, IOOF announced that a class action brought against the company in relation to a breach of superannuation directors duties was dropped, with no payment made to those bringing the claim.

The IOOF share price is up 82.35% since its 52-week low of $2.72, however, it is down 37% since the beginning of the year. The IOOF share price is down 15.01% since this time last year.

More reading

• Why IOOF, IGO, Janus Henderson, & Qantas shares are dropping lower

Motley Fool contributor Chris Chitty 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 worst performer on the S&P/ASX 200 Index (ASX: XJO) on Thursday has been the Sandfire Resources Ltd (ASX: SFR) share price.

In afternoon trade the copper producer’s shares are down a disappointing 7.5% to $5.14.

Why is the Sandfire share price sinking lower?

Investors have been selling the miner’s shares following the release of its fourth quarter and full year update this morning.

Sandfire actually had its strongest quarter of the year in the fourth quarter. Copper production came in at 19,313 tonnes and gold production reached 13,541 ounces. This was a 7.7% and 44.8% increase, respectively, on its third quarter production.

Another positive was its ultra-low C1 costs for the quarter. Sandfire recorded C1 costs of 51 U.S. cents per pound, down 31% on the third quarter. Management advised that its reduction in C1 costs was due to a combination of record copper production, record gold production, and lower currency.

For the full year, copper production came in at 72,238 tonnes and gold production totalled 42,263 ounces. This was achieved with C1 costs of 72 U.S. cents per pound.

This ultimately led to Sandfire reporting unaudited FY 2020 revenue of $657 million, up 10.9% year on year. The miner finished the year with group cash and deposits of $291 million.

What about FY 2021?

Given this strong finish to the year, investors may have been hoping for more of the same in FY 2021.

Unfortunately, Sandfire’s guidance shows that this will simply not be the case. Which I suspect is the reason for the heavy selling today.

Management expects copper production to reduce to between 67,000 and 70,000 tonnes in FY 2021. The same is expected for its gold production, with management guiding to 36,000 to 40,000 ounces over the 12 months.

But perhaps worst of all, management is expecting its C1 costs to increase at least 25% to between 90 U.S. cents and 95 U.S. cents. That means a double whammy of lower production and higher costs, which is what no mining company shareholder wants to see.

In light of this, I can’t say I’m surprised to see the Sandfire share price tumbling notably lower today.

More reading

• 3 latest ASX 200 stocks to be downgraded by top brokers today
• ASX 200 jumps 0.7%: Fortescue impresses, Macquarie’s tough Q1, big four banks rise
• Fortescue’s share price in focus as it beats guidance on record quarterly shipments
• 2 top ASX dividend shares to buy for income in 2020
• Rio Tinto’s capital return crashes by half on $2.5 billion dividend payout

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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The Genworth Mortgage Insurance Australia (ASX: GMA) share price has plunged 6.23% at the time of writing today, after the insurer reported its half-year results.

After reporting a $90.0 million net loss after tax, Genworth has advised it will not pay an interim dividend for 1H20.

What are the key statistics?

I’ve summarised some key financial metrics from Genworth’s results below:

• Gross written premium up 30% to $239.3 million
• Net earned premium up 2.2% to $150.8 million
• Net claims incurred up 26.6% to $101.1 million
• Insurance loss of $128.1 million compared to $77.3 million profit, largely driven by $194.5 million of acquisition costs
• Statutory net loss after tax of -$90.0 million compared to an $88.1 million profit in 1H19.
• Underlying net loss after tax of -$85.5 million versus $43.1 million in 1H19 net profit
• Basic earnings per share came in at -21.8 cents versus 20.6 cents in 1H19.
• Net assets down 8.0% from 1H19 to $1.41 billion.
• Loss ratio increased to 67.0%, up from 54.1% in 1H19.

What did management have to say?

CEO Pauline Blight-Johnston said Genworth’s first half performance reflected “sound fundamentals” and set the company up well to manage the impacts of COVID-19.

A deferred acquisition cost writedown of $181.8 million (pre-tax) hit the company’s bottom line. So too did a $35.5 million increase in loss reserving for the year ahead.

Volume numbers were strong, with new insurance written in its lenders mortgage insurance business up 8.1% to $13.5 billion.

Strong housing market growth in major capital cities (pre-COVID) and the record low-interest rate environment were cited as strong supporting factors.

Those low rates weren’t all good news, however, with 1H20 annualised investment return coming in at 1.7% in 1H20, down from 2.6% p.a. in 1H19.

As at 30 June 2020, 81% of Genworth’s $3.2 billion investment portfolio was in cash and high investment grade fixed interest securities.

What about the capital position?

The $90 million net loss after tax has dropped the Genworth share price by more than 6% today.

However, the insurer’s balance sheet and regulatory capital position remains strong.

Genworth reported a regulatory solvency ratio 1.77 times the prescribed capital amount, well above the board’s target 1.32 to 1.44 times range.

Genworth’s credit rating was also recently affirmed by Standard & Poor’s at ‘A-‘ with Fitch revised from ‘A+’ to ‘A’.

COVID-19 outlook

The Genworth share price is on the move today after kicking off the August earnings season a little early. 

The insurer did report increased estimation uncertainty because of the coronavirus pandemic. 

This uncertainty is driven by disruption to businesses, the expected downturn in gross domestic product (GDP) and the effectiveness of government and central bank measures to support the economy.

Genworth also noted an anticipated increase in future claims “due to the economic impacts of COVID-19”.

How has the Genworth share price performed this year?

The Genworth share price has fallen 55.3% since its full-year earnings result on 5 February and is down 52.3% for the year.

That compares to a 9.7% decline in the S&P/ASX 300 Index (ASX: XKO) over the same period.

That 4 February price has proven to be the high point for the insurer’s share price in the year to date.

Prior to this morning’s market open, the Genworth share price was trading at $1.84 per share. It’s now trading at $1.74 per share (at the time of writing). The company’s price to earnings (P/E) ratio is 6.04 with a market capitalisation of $709.52 million.

More reading

• Results: Marley Spoon share price surges 40% on market update
• Value stocks to rise on strong A$ and broker picks the cheapest ASX stocks to buy today
• 3 tips for investing in ASX 200 shares for beginners
• How to invest $10,000 in ASX 200 shares for growth and dividends
• 3 reasons to buy Vanguard Australian Shares Index ETFs

Motley Fool contributor Ken Hall 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 S&P/ASX 200 Index (Index:^AXJO) big 33% surge in the past four months pushed a number of stocks beyond good value. Broker have just downgraded their recommendations on a number of these outperformers.

The latest clutch of downgrade candidates come from the resources sector after they released their latest quarterly production and profit updates.

Brokers have used this as a trigger to downgrade their recommendations on these stocks after their solid run.

Quality holding but little upside

The most notable is the Rio Tinto Limited (ASX: RIO) share price with Morgans dropping its rating on the stock “hold” from “add”.

Australia’s largest iron ore miner posted its half year result yesterday evening. While Rio Tinto’s earnings were ahead of the broker’s estimates, its interim dividend disappointed.

The miner’s first half underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of US$9.6 billion was ahead of the US$9.0 that Morgans was forecasting. But operational cash flow was weaker than expected.

“As a result RIO announced an interim ordinary dividend of US$1.55ps (53% payout ratio) with no special dividend, which fell short of our US$1.74ps estimate,” said the broker.

But Morgans still regards the stock as a worthy core holding for investors and its 12-month price target on Rio Tinto is $107 a share.

Fool’s gold

Meanwhile, JP Morgan downgraded its recommendation on the IGO Ltd (ASX: IGO) share price following the release of its quarterly production report.

The nickel miner’s joint-venture gold project, Tropicana, is the key reason why the broker cut its rating on IGO to “neutral” from “overweight”.

“We had been expecting a weaker production year but costs were significantly higher than us with ~$560/oz relating to stripping and $65/oz to [underground],” said the broker.

“The significant [year-on-year] increase costs/stripping has snuck up on us. We are not sure if it’s an investment in the future of the past.”

JP Morgan lowered its price target on the stock to $5.45 from $6.10 a share.

Lost its shine

The broker also lowered its call on the St Barbara Ltd (ASX: SBM) share price to “neutral” from “overweight”.

The gold miner’s Gwalia project is to blame with management forecasting production of 175,000 to 190,000 ounces in FY21 at a cost of $1,435 to $1,560 an ounce.

Further, St Barbara also gave a soft guidance for Gwalia for FY22 and FY23, which is significantly weaker than what JP Morgan was expecting.

The broker dropped its price target on the stock to $3.60 from $4.40 a share.

More reading

• ASX 200 jumps 0.7%: Fortescue impresses, Macquarie’s tough Q1, big four banks rise
• Why IOOF, IGO, Janus Henderson, & Qantas shares are dropping lower
• Fortescue’s share price in focus as it beats guidance on record quarterly shipments
• K2Fly share price on watch after update
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Brendon Lau owns shares of Rio Tinto 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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The Mesoblast limited (ASX: MSB) share price is pushing higher on Thursday following the release of its quarterly update.

At the time of writing the shares of the global leader in allogeneic cellular medicines for inflammatory diseases are up 1.5% to $3.71.

What did Mesoblast announce?

During the fourth quarter Mesoblast reported cash receipts of US$2.1 million. These were from royalties it received from JCR Pharmaceuticals for the sales of TEMCELL in Japan for the treatment of acute Graft versus Host Disease (aGvHD).

This was not enough to offset its operating costs during the quarter, leading to a net cash usage of US$19.6 million for the three months ended 30 June 2020.

But thanks to its US$90 million (A$138 million) capital raising in May, Mesoblast finished the quarter in a very strong financial position. At the end of June the company had cash on hand of US$129.3 million (A$188.4 million).

It also notes that over the next 12 months it may have access to an additional US$67.5 million through existing financing facilities and strategic partnerships.

Remestemcel-L update.

In addition to its finances, the company provided investors with an update on its lead product candidate remestemcel-L.

This promising product has two major milestones on the horizon, which could make or break Mesoblast’s financial year.

Mesoblast’s Chief Executive, Dr Silviu Itescu, commented: “Remestemcel-L has two imminent major milestones, the interim analysis in the ongoing Phase 3 trial of remestemcel-L in COVID-19 patients with acute respiratory distress syndrome and the FDA advisory committee panel review of our submission for potential approval of RYONCIL (remestemcel-L) in children with steroid-refractory acute graft versus host disease.”

“Together with the upcoming Phase 3 read-outs in chronic heart failure and back pain, these key milestones will take the Company into the most significant period in its history,” he added.

According to the release, the independent Data Safety Monitoring Board (DSMB) has set a date for early September to complete the first interim analysis of the Phase 3 trial of remestemcel-L in ventilator-dependent COVID-19 patients with moderate to severe acute respiratory distress syndrome (ARDS).

The trial’s first 90 patients will have completed 30 days of follow up during August, after which the DSMB will perform an interim analysis review of the safety and efficacy data.

At that point, the DSMB will inform Mesoblast on whether the trial should proceed as planned or should stop early.

Given that there are currently no approved treatments for COVID-19 ARDS, the primary cause of death in patients infected with COVID-19, this will no doubt be closely watched by investors.

More reading

• 3 junior ASX healthcare shares with explosive growth potential
• ASX 200 drops 1.1%: Big four banks fall, Resolute rockets, Afterpay tumbles
• Why Afterpay, BHP, Cann, & Mesoblast shares are tumbling lower
• Why Mesoblast might be the best ASX healthcare growth share to own right now
• 4 exciting ASX biotech shares surging higher today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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At lunch on Thursday the S&P/ASX 200 Index (ASX: XJO) has followed the lead of U.S. markets and is charging higher. The benchmark index is currently up 0.7% to 6,050 points.

Here’s what has been happening on the market today:

Fortescue impresses.

The Fortescue Metals Group Limited (ASX: FMG) share price is pushing higher today after its fourth quarter update impressed the market. During the fourth quarter Fortescue shipped 47.3 million tonnes (mt) of iron ore, bringing its FY 2020 total shipments to 178.2mt. This means the miner outperformed the top end of its guidance of 177mt. It is also a 6% increase on the prior year. In FY 2021, management is aiming to ship 175mt to 180mt.

Big four bank rise.

It has been a reasonably positive but subdued day for the big four banks. Although the big four are all pushing higher, they are underperforming the ASX 200 index. The Commonwealth Bank of Australia (ASX: CBA) share price is the best performer in the group with a 0.45% gain. Earlier today Goldman Sachs released its revised estimates for the big four’s dividend payments in FY 2020.

Macquarie update.

The Macquarie Group Ltd (ASX: MQG) share price is pushing higher after the release of its first quarter update at its annual general meeting. The investment bank advised that it has been impacted by mixed trading conditions during the first quarter. As a result, its operating profit during the quarter was slightly down on the prior corresponding period. No guidance was provided for the full year due to the uncertain global economic outlook.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Thursday has been the WiseTech Global Ltd (ASX: WTC) share price with a 5% gain. A number of tech shares are pushing notably higher today following a positive night of trade on the tech-heavy Nasdaq index. The worst performer has been the Sandfire Resources Ltd (ASX: SFR) share price with a 7% decline. The copper miner’s FY 2021 guidance appears to have disappointed investors.

More reading

• 3 latest ASX 200 stocks to be downgraded by top brokers today
• Why Afterpay, Fortescue, Marley Spoon, & Splitit shares are racing higher
• Here are the dividends this broker thinks CBA and the big four will pay in 2020
• Fortescue’s share price in focus as it beats guidance on record quarterly shipments
• Macquarie share price on watch after Q1 update

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of WiseTech Global. 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 jumps 0.7%: Fortescue impresses, Macquarie’s tough Q1, big four banks rise appeared first on Motley Fool Australia.

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