Australia’s top brokers have been busy adjusting their estimates and recommendations again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX 200 shares are in the buy zone:

ELMO Software Ltd (ASX: ELO)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $9.00 price target on this HR and payroll software company’s shares. This follows the release of its full year results on Thursday. Although the broker notes that ELMO’s guidance for FY 2021 is a little softer than the market was expecting, it believes it is positive that it is actually in a position to provide guidance. Overall, it remains very positive on its long term prospects and retains its overweight rating. I agree with Morgan Stanley and feel the post-results pullback in the ELMO share price is a buying opportunity. Especially given its growth through acquisition plans.

Nick Scali Limited (ASX: NCK)

Analysts at Citi have retained their buy rating and lifted the price target on this furniture retailer’s shares to $9.80. According to the note, the broker believes that Nick Scali’s first half profit guidance of 50% to 60% growth may prove conservative. In addition to this, it believes the market is overlooking its strong balance sheet which could be used for acquisitions. I think Citi makes some great points and Nick Scali could be worth considering.

ResMed Inc. (ASX: RMD)

A note out of Morgans reveals that its analysts have retained their add rating and lifted the price target on this medical device company’s shares to $29.33. The broker notes that ResMed’s fourth quarter profit result was ahead of its expectations. This was driven by very strong ventilator sales due to the pandemic. And although it suspects that the first half of FY 2021 will be challenging, it appears optimistic that its outlook is very positive on the other side of the pandemic. Especially given its growing installed base and its large addressable market. I agree with Morgans and believe the recent weakness in the ResMed share price is a buying opportunity.

More reading

• Which 3 ASX tech shares are investing in long-term growth?
• ASX 200 down 0.45%: REA Group impresses, IAG profit slump, ResMed downgraded
• Why Australian Ethical, Northern Star, ResMed, & TPG Telecom are dropping lower
• The next ASX stocks to beat expectations during this reporting season
• ASX 200 rises 0.7%, ResMed result disappoints

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Elmo Software. The Motley Fool Australia has recommended Elmo Software and ResMed Inc. 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 Cromwell Property Group (ASX: CMW) share price is climbing today after ARA Asset Management Limited (ARA) added a sweetener to its hostile takeover bid. The Cromwell share price is currently trading 3.4% higher to 91 cents.

News of the takeover bid by Singapore-based ARA Management became public on June 23 when the Cromwell board strongly advised against the move.

Which companies are involved?

Cromwell is a diversified real estate investor and manager with operations on three continents and a global investor base. Cromwell has a market capitalisation of $2.3 billion. As of 31 December 2019 the company had a direct property investment portfolio valued at $3.2 billion and total assets under management of $11.9 billion across Australia, New Zealand and Europe.

ARA Asset Management is an Asia Pacific real assets fund manager with a global reach. As at 31 December 2019, the ARA Group managed SGD$88 billion in gross assets across 28 different countries. The ARA Group is headquartered in Singapore and boasts that its investors include some of the world’s largest pension funds, sovereign wealth funds, financial institutions, endowments and family offices.

How the takeover offer unfolded

Cromwell shares rallied on June 24 following news that ARA intended to acquire 29% of all Cromwell stapled securities in which it did not already hold an interest.  If successful, this would take ARA’s stake in Cromwell to 52.6%. Cromwell management was – and still is – strongly against any takeover.

On July 21, Cromwell responded strongly to ARA’s proportional bid telling investors to “ignore ARA’s opportunistic proportional takeover offer and misleading statements”. The company also said that ARA’s bidders statement contained “material omissions and failed to disclose their true intentions”.

However, it did conclude that ARA should not seize control without paying a premium. The latest offer has increased the amount ARA would pay.

ARA’s latest offer

Today, the Cromwell share price is on the rise after ARA  upped its offer for Cromwell shares by 4.4 per cent. This comes as it seeks to win over everyday retail security holders and lift its stake through market purchases in Cromwell.

It remains to be seen if Cromwell shareholders will accept the higher offer.  ARA has stated that in the absence of a competing proposal emerging, it will not increase its offer further.

The higher offer means the Singapore-based company has raised its bid by just $32 million, despite the overall bid being worth around half a billion dollars.

More reading

• Why I would buy and hold CSL shares today
• Tech shares drive rally as new research indicates BNPL share prices lofty
• Sezzle share price leaps 10% on oversubscribed share purchase plan
• Brokers name 3 ASX shares to buy right now
• Worley share price jumps on contract win and is my key pick in the sector

Motley Fool contributor Daniel Ewing 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 Worley Ltd (ASX: WOR) share price is defying the market sell-off after it won a new major LNG contract and as oil prices firmed.

Shares in the engineering services group jumped 0.7% to $8.70 in morning trade while the S&P/ASX 200 Index (Index:^AXJO) fell 0.5%.

Energy stocks are also doing well with the Brent crude benchmark inching up 0.3% to US$45.24 in overnight trade.

The Beach Energy Ltd (ASX: BPT) share price jumped 1.8% to $1.46, Santos Ltd (ASX: STO) share price added 0.8% to $5.78 and Woodside Petroleum Limited (ASX: WPL) share price gained 0.5% to $20.48.

Market underestimating Worley

Despite the contract win, the Worley share price continues to lag its peers through the COVID-19 market meltdown. And this spells opportunity in my book.

Management announced that it secured a master construction services agreement (MCSA) with Corpus Christi Liquefaction LLC, a subsidiary of Cheniere Energy, Inc.

Under this agreement, Worley will provide civil, structural, mechanical, instrument and electrical, HVAC and marine construction services to Corpus Christi LNG liquefaction facility. The facility has a nameplate export capacity of up to 13.5 million tonnes per annum of LNG.

Diversifying income base

The deal reflects Worley’s strategic plan to pursue more LNG Maintenance, Modification and Operations business, as outline in its Investor Day presentation in June.

This is to diversify the group’s customer base to make it less reliant on petroleum projects, which are at the mercy of volatile oil prices.

However, the worse of the oil shock sell-off is over and commodity forecasters believe the outlook is looking brighter for the sector.

Outlook for the energy sector is improving

Given the underperformance of ASX energy stocks to the broader market, some experts are urging investors to go overweight on these stocks.

In my view, Worley remains the favoured way of gaining leverage to this thematic. Its business should be less impacted by the spikes and crashes of the crude oil price – even though you wouldn’t know that given the way the stock is trading.

Is the Worley share price a buy?

This could in part reflect concerns that engineering projects hold unquantifiable risks. You only need to look at the legal stoush between contracting group Monadelphous Group Limited (ASX: MND) and Rio Tinto Limited (ASX: RIO).

Nonetheless, I believe too much bad news is priced into the Worley share price, and a recovery in the oil price, along with further contract wins, will help the stock re-rate in FY21.

More reading

• Which 3 ASX tech shares are investing in long-term growth?
• ASX 200 down 0.45%: REA Group impresses, IAG profit slump, ResMed downgraded
• Magellan share price falls despite strong July inflows
• Earnings: IAG share price on watch after 50% profit slump
• The next ASX stocks to beat expectations during this reporting season

Motley Fool contributor Brendon Lau owns shares of Rio Tinto Ltd. and WorleyParsons 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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ASX tech shares are outperforming the broader market in the wake of the coronavirus pandemic.

The S&P/ASX All Technology Index (ASX: XTX) is up 94% from its March low while the S&P/ASX 200 (ASX: XJO) has climbed 32% in comparison.

Investors seeking long-term growth often look to technology shares that invest in their own growth. Here are 3 overlooked ASX tech shares that are focused on growth for the long-term. 

ELMO Software Ltd (ASX: ELO)

Elmo Software offers cloud-based people management software which covers hiring, recruitment, on-boarding, performance, and learning.

Despite the impacts of COVID-19, Elmo Software grew annualised recurring revenue by 19.7% in FY20, driven primarily by organic growth from new and existing customers. CEO Danny Lessem said businesses increasingly recognised the benefits of cloud-based technologies to deliver workplace solutions. 

Elmo’s customer base grew to 1,682 organisations over FY20, an increase of 25.4%. Customer concentration remains low, with the largest customer representing less than 2% of annual recurring revenue. Elmo closed the financial year with a cash balance of $139.9 million, meaning it remains well-capitalised to continue to invest in both organic growth and strategic acquisitions. 

Nearmap Ltd (ASX: NEA) 

Nearmap provides high-resolution aerial imagery as a subscription service. This is used by a broad range of customers including governments, urban planning authorities, construction and engineering projects, and utilities providers. 

Nearmap will announce its full year results on 19 August, but in May advised that annualised contract value had exceeded $102 million. Although trading conditions became more difficult with the onset of COVID-19, Nearmap continued to grow its portfolio month-on-month across key industry segments. 

Nearmap implemented a number of cash management initiatives in April to preserve cash and strengthen the balance sheet without the need for additional capital. These initiatives mean Nearmap is on track to be cash-flow break even by the end of FY20. The company has also launched its latest product, Nearmap AI, which will allow it to penetrate more deeply into the large and expanding location intelligence market. 

Livetiles Ltd (ASX: LVT)

Livetiles supplies tools to corporate intranets and employee portals. Its technologies extend underlying Microsoft platforms such as Office365, adding enhancements which address common business needs and priorities.

The coronavirus pandemic has accelerated digital workplace software adoption, meaning solutions like those offered by Livetiles are becoming a “must have”. 

Livetiles now boasts over 1000 recurring customers across every industry vertical. The company is seeing strong growth in annualised recurring revenue, which grew to $53.8 million at 30 June 2020, a 34% increase year-on year.

Livetiles has a large and rapidly growing addressable market which it believes provides a $15 billion market opportunity. With digital workplace software adoption accelerating, the company has a strong medium to long-term outlook.

More reading

• Worley share price jumps on contract win and is my key pick in the sector
• ASX 200 down 0.45%: REA Group impresses, IAG profit slump, ResMed downgraded
• Magellan share price falls despite strong July inflows
• Earnings: IAG share price on watch after 50% profit slump
• The next ASX stocks to beat expectations during this reporting season

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

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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) has failed to follow the lead of U.S. markets and looks set to end the week with a decline. The benchmark index is currently down 0.45% to 6,014.5 points.

Here’s what is happening on the market today:

REA Group result impresses.

The REA Group Limited (ASX: REA) share price is pushing higher on Friday after investors responded positively to the property listings company’s full year result. Despite facing significant headwinds during FY 2020, REA Group battled through to deliver revenue of $820.3 million and EBITDA of $492.1 million. This was a 6% and 5% year on year decline, respectively. The company’s EBITDA was ahead of the analyst consensus estimate of $468 million.

Insurance Australia profit slump.

The Insurance Australia Group Ltd (ASX: IAG) share price has dropped lower today after the release of the insurance giant’s full year results. For the 12 months ended 30 June 2020, IAG reported a 5.2% increase in revenue to $18,576 million but a 49.6% decline in net profit from continuing operations to $439 million. A material narrowing in its insurance margins was responsible for the profit slump. No final dividend will be paid to shareholders.

Broker downgrades.

A couple of popular shares are dropping lower today after being downgraded by brokers. The ResMed Inc. (ASX: RMD) share price is lower after Morgan Stanley downgraded the medical device company to an equal-weight rating with a price target of $25.40. And the TPG Telecom Ltd (ASX: TPG) share price is also tumbling lower after UBS downgraded the telco to a sell rating with a lowered price target of $7.20.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Friday has been the Domain Holdings Australia Ltd (ASX: DHG) share price with a 5.5% gain. Investors have been buying its shares following the strong result release from rival REA Group. Going the other way, the worst performer is the Virgin Money UK PLC (ASX: VUK) share price with a 4% decline. Earlier this week the UK-based bank was downgraded to a reduce rating by analysts at Morgans.

More reading

• Worley share price jumps on contract win and is my key pick in the sector
• Which 3 ASX tech shares are investing in long-term growth?
• Why Australian Ethical, Northern Star, ResMed, & TPG Telecom are dropping lower
• Why Coca-Cola Amatil, REA Group, Redbubble, & Sezzle shares are storming higher
• Earnings: News Corp share price up 5% today despite posting major loss

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited and ResMed Inc. 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) is on course to finish the week with a day in the red. In late morning trade the benchmark index is down 0.45% to 6,015.6 points.

Four shares that have fallen more than most today are listed below. Here’s why they are dropping lower:

The Australian Ethical Investment Limited (ASX: AEF) share price has crashed 15% lower to $5.09. This follows an announcement by IOOF Holdings Limited (ASX: IFL) which revealed that it has sold down its stake in the ethical investment company. IOOF offloaded 14.2 million shares or 72% of its shareholding for a total consideration of $74.5 million. This represents an average of $5.25 per share, which was a 12.5% discount to Australian Ethical’s last close price.

The Northern Star Resources Ltd (ASX: NST) share price is down 2% to $1.97. A number of Australian gold miners have come under pressure today despite the gold price pushing higher overnight. At the time of writing the S&P/ASX All Ordinaries Gold index is down 1.5%.

The ResMed Inc. (ASX: RMD) share price has fallen 2% to $25.38. This appears to have been driven by a broker note out of Morgan Stanley this morning. Following the release of its full year results on Thursday, the broker has downgraded ResMed’s shares to an equal-weight rating with a reduced price target of $25.40. It made the move partly on valuation grounds after strong share price gains year to date.

The TPG Telecom Ltd (ASX: TPG) share price is down 2.5% to $8.04. The catalyst for this appears to be a broker note out of UBS this morning. Its analysts have downgraded the telco to a sell rating with a lowered price target of $7.20. It believes TPG’s shares are overvalued and shouldn’t be trading at such a premium currently. Especially given its upcoming special dividend payment.

More reading

• ASX 200 down 0.45%: REA Group impresses, IAG profit slump, ResMed downgraded
• Australian Ethical share price crashes 15% lower after IOOF selldown
• ASX 200 rises 0.7%, ResMed result disappoints
• ASX 200 up 0.6%: ResMed & Scentre tumble, big four banks rise
• Why Advance NanoTek, ELMO Software, ResMed, & Scentre shares are dropping lower

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. and ResMed Inc. 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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to end the week with a decline. At the time of writing the benchmark index is down 0.5% to 6,011.7 points.

Four shares that are not letting that hold them back are listed below. Here’s why they are storming higher:

The Coca-Cola Amatil Ltd (ASX: CCL) share price is up 2% to $8.51. Investors have been buying the beverage company’s shares after they were upgraded by analysts at Goldman Sachs. According to the note, the broker has upgraded Coca-Cola Amatil’s shares to a buy rating with a $9.30 price target. Goldman made the move largely on valuation grounds, noting that it trades at a significant discount to some consumer staples peers.

The REA Group Limited (ASX: REA) share price is up 3% to $114.55. This follows the release of a robust full year result by the property listings company this morning. REA Group battled through very difficult trading conditions to deliver revenue of $820.3 million and EBITDA of $492.1 million. This was a 6% and 5% year on year decline. Pleasingly, the company’s EBITDA was ahead of the analyst consensus estimate of $468 million.

The Redbubble Ltd (ASX: RBL) share price has zoomed 11% higher to $3.30. This morning the ecommerce company revealed that strong face mask demand had helped drive stellar revenue growth in FY 2020 and early in FY 2021. Redbubble recorded full year marketplace revenue of $368 million, up 43% on FY 2019’s marketplace revenue. Pleasingly, this strong form has continued in the first quarter. Redbubble’s marketplace revenue was $49 million in July, up a massive 132% on the prior corresponding period.

The Sezzle Inc (ASX: SZL) share price is up 5% to $7.53. This morning the buy now pay later provider announced the successful completion of its share purchase plan. Sezzle raised the $7.2 million it was targeting, but revealed valid applications totalling over $78 million. Combined with its placement, the company believes it is now well capitalised to accelerate its growth strategy.

More reading

• Earnings: News Corp share price up 5% today despite posting major loss
• Earnings preview: What to expect from the Coca-Cola Amatil half year result
• Redbubble share price on watch after COVID face mask demand drives sales surge
• REA Group share price on watch after robust FY 2020 result
• 5 things to watch on the ASX 200 on Friday

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia has recommended REA Group Limited and Sezzle Inc. 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 News Corporation (ASX: NWS) share price is on the rise this morning following the release of its fourth quarter and full year financial results. The News Corp share price was up 5% to $19.42 in mid-morning trade today, despite reporting a significant drop in revenues for FY 2020.

Revenues are down

News Corp reported full year total revenues of $9.01 billion for the 12 months to June 30 2020. This result was a significant 11% decline compared to the year prior.

The drop was mainly due to a 4% negative impact from the coronavirus pandemic and the divesture of New Corp’s News America Marketing division. The negative impact of foreign currency fluctuations as well as a reduction in revenues from the group’s Foxtel division also had an impact on the bottom line.

In contrast, growth subscription revenues from New Corp’s Dow Jones segment impacted positively on the company’s overall revenue growth.

News Corp recorded an overall net loss of $1.55 billion for the full year. This compared with an overall net income of $228 million in FY 2019. The net loss was largely attributed to $1.69 billion in non-cash impairment charges relating mainly to its Foxtel and North America Marketing segments.

Total EBITDA fell by 19% to $1.01 billion for the full year. News Corp estimated that the total negative impact from the coronavirus pandemic on total EBITDA amounted to between $55 million and $70 million.

Big impact on fourth quarter profits 

The coronavirus hit News Corp’s fourth quarter revenues particularly hard, dropping them by a very high 22%. Total Segment EBITDA fell even more sharply by 28%. The worst hit segment was News Media, which saw a 41% decline in revenue for the fourth quarter and an 18% drop for the full year.

Subscription Video Services also took a significant hit during the fourth quarter, due mainly to falling residential broadcast subscribers. Foxtel had subscribers totalling 2.777 million at the end of the financial year. This was a very sharp 12% decline on 12 months prior.

Digital Real Estate Services Revenues – attributable to News Corp’s part ownership in REA Group Limited (ASX: REA) –declined by 8% during the final quarter.

News Corp share price trends

The News Corp share price was hit during the early phase of the pandemic recording a 52-week low of $13.10 in early April. Since then the News Corp share price has made a partial recovery and is trading at $19.42 at the time of writing.

More reading

• Why Coca-Cola Amatil, REA Group, Redbubble, & Sezzle shares are storming higher
• REA Group share price on watch after robust FY 2020 result
• 5 things to watch on the ASX 200 on Friday
• The best blue chip ASX shares to buy today
• House prices are falling – which ASX shares are in the firing line?

Motley Fool contributor Phil Harpur owns shares of REA Group Limited. The Motley Fool Australia has recommended REA Group 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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