The S&P/ASX 200 Index (ASX: XJO) is having another underwhelming session on Thursday. In afternoon trade, the benchmark index is down almost 0.2% to 7,756.1 points.

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

James Hardie Industries plc (ASX: JHX)

The James Hardie share price is down 2.5% to $47.22. This may have been driven by a broker note out of Citi this morning. Ahead of the company’s investor day event, the broker has reaffirmed its neutral rating and $53.40 price target. It appears to believe that trading conditions in the United States aren’t particularly favourable for the company at present. This may have spooked investors and caused fears that tomorrow’s event will contain some bad news.

Mader Group Ltd (ASX: MAD)

The Mader Group share price is down over 5% to $6.16. This has been driven by news that its founder and executive chair has sold down his stake. Luke Mader sold 9.75 million shares via a buyer-led share crossing at a discount of $6.15 per share. Mader Group advised that the buyer was a tier one global financial services company with over US$2 trillion in assets under management. Mr Mader remains the majority shareholder in the company, retaining 103,697,095 shares. This represents ~52% of Mader’s issued capital. In other news, Mader Group has reaffirmed its FY 2024 guidance for revenue of at least $770 million and net profit after tax of at least $50 million.

MMA Offshore Ltd (ASX: MRM)

The MMA Offshore share price is down 2% to $2.64. This morning, this marine and subsea services provider revealed that its suitor, Cyan, has increased its takeover offer by 10 cents per share to a total of $2.70 cash per share. This was just one cent ahead of where its shares were trading yesterday. This appears to indicate that investors were expecting an even greater offer from Cyan. However, this is where it stops. Cyan has declared the improved proposal as its best and final offer, in the absence of a competing proposal. Its offer continues to have the support of MMA Offshore’s directors.

WA1 Resources Ltd (ASX: WA1)

The WA1 Resources share price is down 8% to $18.96. This is likely to have been driven by profit taking following a whopping 27% gain on Wednesday. This was driven by news that its initial metallurgical testwork program on niobium mineralisation at the Luni deposit delivered strong results. Bell Potter was very pleased with the news and described it as a major de-risking event. It commented: “WA1 have passed a significant de-risking hurdle in confirming that niobium minerals from its Luni project can be concentrated via a two-stage floatation circuit with recoveries and concentrate grades in-line with dominant global producers.” The broker responded by reiterating its speculative buy rating and lifting its price target to $28.00.

The post Why James Hardie, Mader Group, MMA Offshore, and WA1 shares are dropping today appeared first on The Motley Fool Australia.

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• Why this ASX mining stock just got a huge broker upgrade
• Why Chrysos, Hansen Technologies, Pantoro, and WA1 Resources shares are pushing higher
• 2 ASX mining shares rocketing over 16% on big news
• Here are the top 10 ASX 200 shares today

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 Mader Group. The Motley Fool Australia has positions in and has recommended Mader Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you bought ASX copper shares late in 2022, congratulations!

On 20 October 2022, the red metal was trading for US$7,550 a tonne.

Amid surging demand and limited new supplies, the copper price then rocketed to near all-time highs of US$10,890 on 20 May.

Now there aren’t many pure-play ASX copper shares to choose from. At least, not on the larger end of the market.

Back on 20 October 2022, Sandfire Resources Ltd (ASX: SFR) was the only S&P/ASX 200 Index (ASX: XJO) miner to really fit that bill.

Since then we’ve had dual-listed, Canadian-based Capstone Copper Corp (ASX:CSC) join the ASX on 8 April 2024.

But if you wanted to stick to established, copper focused miners on the ASX in 2022, Sandfire was the way to go.

And what a run it had.

From 21 October 2022 through to 20 May 2024, the Sandfire Resources share price soared 203%.

With copper prices having since retraced to US$9,786 a tonne today, the Sandfire Resources share price has fallen 13% since 21 May.

So are the good times over for ASX copper shares like Sandfire Resources and Capstone Copper?

Chinese inventories could hit ASX copper shares

Well, over the shorter term, ASX copper shares could face some bumps in the road amid fast-building copper inventories in China.

According to Bloomberg data, copper inventories in Chinese warehouses are at the highest levels in four years.

With China’s struggling property markets and tepid industrial sector, manufacturers have been delaying new purchases amid the historically high copper prices.

“If you’re a copper manufacturer in China, then you have every incentive to run down your own stockpiles and hold off buying from the market because demand is OK but not stellar and global prices have surged,” David Wilson, commodities strategist at BNP Paribas said (quoted by The Australian Financial Review).

And ASX copper shares could come under more selling pressure if prices for the red metal continue to slide, as some analysts are cautioning.

“China has hit a soft patch,” Daniel Smith, head of research at London metals brokerage AMT said. He added that the copper price “could go back down to $US9,000 per tonne,” if funds turn bearish on the outlook for the metal and begin to short it.

The bigger global picture

All commodities are subject to cyclical price moves.

While the copper price could well retrace to US$9,000 per tonne, as Smith suggested, ASX copper shares are still eyeing significant long-term demand growth for the red metal.

According to Bloomberg Intelligence’s global head of metals & mining, Grant Sporre, and senior analyst Rob Barnett:

Global copper consumption is likely to be 2 million tonnes higher by 2030, with over half from the US, as power-hungry AI fuels data-centre capacity growth.

Powering data centres via copper-intensive renewables and reshored manufacturing is set to spur US needs (stagnant for a decade), lifting worldwide demand to above-trend 2.7% to 3% annual growth.

Citi also remains bullish on the outlook for copper.

“Citi’s global commodity team continues to highlight copper as their top pick,” Citi analyst Paul McTaggart said last week.

The broker recently lifted its 2025 forecast for the copper price to US$12,000 per tonne.

If Citi has that right, ASX copper shares like Sandfire Resources could again deliver some market-smashing gains.

The post Uh-oh! Are ASX copper shares about to hit a speed bump? appeared first on The Motley Fool Australia.

More reading

• What’s the outlook for ASX 200 mining shares in FY25?
• Why are these experts so bullish on ASX copper shares?
• Buy ’em now! Brokers name 3 ASX All Ords shares to add to your portfolio
• Are these beaten-up ASX shares too cheap to ignore?
• Here are the top 10 ASX 200 shares today

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bernd Struben 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.

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record another small decline. At the time of writing, the benchmark index is down 0.15% to 7,756.9 points.

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

Bigtincan Holdings Ltd (ASX: BTH)

The Bigtincan share price is up 12% to 11 cents. This morning, this tech company revealed that it received and rejected a new takeover offer. Bigtincan received a revised confidential, non-binding, incomplete and indicative offer from Vector Capital Management at an indicative offer price of 19 cents per share. The Bigtincan board advised that it has evaluated the revised proposal and, after consultation, views it as insufficient to engage with Vector and has formally rejected it. Bigtincan remains committed to executing its strategic plan and maximising shareholder value.

DroneShield Ltd (ASX: DRO)

The DroneShield share price is up 6% to $1.66. This follows news that the counter drone technology company has won a major new contract. DroneShield has received an order valued at $4.7 million from a new non-government Swiss international customer. The order will see the company provide the customer with multiple vehicle-based counter-drone (C-UxS) systems. The system will be powered by the DroneSentry-C2 command-and-control system, including its proprietary AI-based sensor fusion engine. The end user for this technology has not been named by DroneShield. However, it has been described as a high-profile Government agency.

Guzman y Gomez Limited (ASX: GYG)

The Guzman y Gomez share price is up 36% to $30.00. Investors have been fighting to get hold of this quick service restaurant operator’s shares following the completion of its IPO today. Guzman y Gomez listed on the ASX with a price of $22.00 per share. Following today’s gain, the company now has a market capitalisation of ~$3 billion. This means that its shares are changing hands for approximately 500x FY 2025 forecast earnings.

Helia Group Ltd (ASX: HLI)

The Helia Group share price is up 16% to $3.87. Investors appear to believe this lenders mortgage insurance provider was oversold yesterday following an update on its contract with Commonwealth Bank of Australia (ASX: CBA). Analysts at Macquarie believe the news is actually positive and expects Helia to become the sole provider of this insurance to the banking giant. As a result, they have upgraded its shares to an outperform rating with a $3.90 price target.

The post Why Bigtincan, DroneShield, Guzman Y Gomez, and Helia shares are racing higher appeared first on The Motley Fool Australia.

More reading

• Who owns Guzman y Gomez shares?
• Beaten-up ASX 200 stock rebounds 15%. Macquarie says more to come
• 2 ASX shares with big takeover updates today
• Guzman y Gomez shares rocket 36% on IPO day
• Why these 3 ASX 200 stocks just scored sizeable broker upgrades

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 Bigtincan, DroneShield, and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two ASX 200 bank shares have skyrocketed to multi-year high prices today amid an otherwise lacklustre day on the Australian share market.

National Australia Bank Ltd (ASX: NAB) shares reached a nine-year high of $36.42 earlier today.

The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price also soared to its highest level in almost five years at $11.39.

Meantime, the S&P/ASX 200 Index (ASX: XJO) is up 0.084% to 7,763.2 points at the time of writing.

There is no official news relating to either of these ASX 200 bank shares today. However, resetting price thresholds has been an ongoing trend among bank stocks in recent months.

All of the Big Four bank shares, along with Macquarie Group Ltd (ASX: MQG) and Bendigo Bank, have hit multi-year peaks in 2024. The Bank of Queensland Ltd (ASX: BOQ) is the only underperformer.

Australia’s biggest bank, Commonwealth Bank of Australia (ASX: CBA), reset its all-time high once again this week, reaching $127.99 per share on Tuesday.

All these price breakthroughs follow an extraordinary run of growth for ASX 200 bank shares that began in November 2023. That’s when the market began talking about the prospect of interest rate cuts in 2024.

The chart below shows what’s happened with ASX 200 bank shares since 1 November 2023.

Such a strong run of share price growth is quite unusual for ASX 200 bank shares.

Historically, bank stocks have been seen as better income investments than growth investments, with the exception of CBA and Macquarie. Check out how bank dividends have offset poor capital growth.

What do the brokers think of ASX 200 bank shares today?

Many experts think the ASX 200 bank shares have now overshot.

Goldman Sachs says some investors should consider locking in capital gains now. In a recent note, the broker said: ” … we now think a more negative view on the banks is appropriate …”.

The only Big Four ASX 200 bank share Goldman rates a buy is Australia and New Zealand Banking Group Ltd (ASX: ANZ), but it’s already trading above the broker’s 12-month price target of $28.15.

Dylan Evans from Catapult Wealth says ANZ shares are a hold for him, but says they’re the “best value of the major banks” because they’re trading on a more attractive price-to-earnings (P/E) ratio.

Let’s compare P/Es as they stand now.

According to CommSec data:

• Bank of Queensland shares have a P/E ratio of 10.74x
• Bendigo and Adelaide Bank shares have a P/E ratio of 11.62x
• ANZ shares have a P/E ratio of 12.62x
• Westpac Banking Corp (ASX: WBC) shares have a P/E ratio of 13.74x
• NAB shares have a P/E ratio of 15.4x
• CBA shares have a P/E ratio of 21.83x
• Macquarie shares have a P/E ratio of 25.04x

Curious about the outlook for the Westpac share price in FY25? Check out our article here.

The post 2 ASX 200 bank shares smashing new multi-year highs today appeared first on The Motley Fool Australia.

More reading

• Beaten-up ASX 200 stock rebounds 15%. Macquarie says more to come
• 5 things to watch on the ASX 200 on Thursday
• Own NAB shares? The bank just made an important crypto investment
• Here’s how much passive income I’d get if I invested $20,000 in Westpac shares now
• ASX 200 stock plunges 15% on CBA deal news

Motley Fool contributor Bronwyn Allen has positions in Anz Group, Commonwealth Bank Of Australia, and Macquarie Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Macquarie Group. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank and Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Guzman y Gomez Ltd (ASX: GYG) shares are off and trading, marking the finish line in the fast food company’s initial public offering (IPO) journey. Now, the real adventure begins — one filled with retail shareholders, ASX disclosures, and public financial reporting.

GYG shares are up 36% to $30.00 in afternoon trade.

You might wonder: Who are the burrito believers, the enchilada embracers, and the quesadilla crusaders? The people putting their money behind the Mexican-inspired fast-food joint growing into a more valuable company in the years to come.

No need to wonder. Let me spill the beans on Guzman y Gomez shares.

These investors are banking on a burrito-blitz

Ascribed a market capitalisation of around $2.2 billion, investors of GYG are hungry for growth. The valuation translates to an earnings before interest, taxes, depreciation, and amortisation (EBITDA) multiple of 32.5 times — a figure attracting plenty of scepticism.

Despite this, many existing shareholders held tight to their stakes throughout the IPO. An insatiable appetite of investors wanting in and insiders not giving up much meant the public offer was heavily oversubscribed — reportedly 20 times as much.

Now making its way onto the ASX, we know who the biggest investors are of this in-demand listing.

Shareholder	% ownership in GYG
TDM Custodial Services Pty Limited	28.23%
Barrenjoey Trevally No 1 Pty Limited	10.36%
Evan Jason Pty Limited (Marks Family)	7.41%
Aware Super Pty Ltd	6.07%
Gaetano Alfred Gerrard Russo	5.60%
RBH Pty Limited (Hazan Family)	4.47%
Stephen Craig Jermyn	3.76%
Richard Bell & Kate Bell	2.83%
HSBC Bank Australia Limited	2.76%
Mara Invest Pty Ltd (The Mara Invest)	2.28%

As shown above, the largest owner of Guzman y Gomez shares is TDM Custodial Services at 28.23%. Being a ‘custodial service’, this would be shares held by Sydney-based TDM Growth Partners on behalf of its clients.

Other notable holders in the top 10 are co-founders Steven Marks and Robert Hazan. The third largest holding is Evan Jason Pty Limited, denoted as ‘Marks Family account’. Meanwhile, Hazan lands sixth on the list through an investment held under RBH Pty Limited.

The top 20 investors hold 85.71% of shares in Guzman y Gomez.

Who else owns Guzman y Gomez shares?

With a further 14.29% (or 14.5 million shares) unaccounted for, who are the other investors?

It’s hard to know exactly. Shareholders outside the top 20 are not required to be disclosed to the public.

However, there’s a good chance that most of the remaining investors are the general public — people like you and me. After all, the fast-food company issued 11.1 million GYG shares as part of its IPO.

The post Who owns Guzman y Gomez shares? appeared first on The Motley Fool Australia.

More reading

• Guzman y Gomez shares rocket 36% on IPO day
• It’s only a day until ASX investors can buy Guzman y Gomez shares
• Why I’m planning to buy Guzman y Gomez shares and own for the long-term
• Is Guzman y Gomez stock too expensive?
• Who is investing in the Guzman y Gomez IPO?

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 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.

Coles Group Ltd (ASX: COL) shares are in focus after a report from consumer advocacy group Choice was released overnight.

Whilst not market sensitive in any way, the report analysed grocery prices at several supermarkets and supermarket chains, including competitors Woolworths Group (ASX: WOW) and Aldi Stores.

Choice was commissioned to do so by the Australian Government, amid rising inflation and cost of living pressures.

Coles shares are currently trading at $17.25 as I write, down less than 1%. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is slightly in the red.

Choice goes shopping

The report on grocery pricing from Choice found that Australians could be around 25% better off on groceries by shopping at Aldi compared to Coles and Woolworths.

Choice’s findings are based on the findings from undercover shoppers it sent to 81 supermarkets across Australia. These included Coles, Woolworths, Aldi, and some IGA stores. These shoppers recorded prices for a standardised basket of goods to determine which supermarket offered the best value.

Findings showed the average basket, consisting of 14 items at Aldi costs $51.51, while the same basket costs $69.33 at Coles and $68.58 at Woolworths.

This indicates just a 75-cent difference between Coles and Woolworths but a significant saving at Aldi, it says.

Ashley de Silva, CEO of Choice, stated, “Aldi is the best value when it comes to groceries across the nation”, according to The Australian Broadcasting Corporation.

The report also highlights that Aldi’s prices were more consistent across different locations, whereas prices at Coles and Woolworths showed more variation.

Choice also pointed out regional price differences, noting that areas without Aldi stores, such as Tasmania and the Northern Territory, faced higher grocery prices. Additionally, even in states like Western Australia, where Aldi is present, people pay about $1 more for the same basket of goods.

De Silva added:

One of the things that we saw is that Aldi’s prices across the stores that we visited were reasonably consistent, you get a bit more variation in Coles and Woolworths.

Impact on Coles shares

The supermarket giant acknowledged the report today, but said further analysis may be needed. “We welcome Choice’s contribution, however, it is unclear whether like-for-like products are being compared”, a company spokesperson said, per The ABC.

Bell Potter analysts are also constructive on Coles shares. According to my colleague James, the broker rated Coles a buy with a $19 per share price target.

Foolish takeaway

Coles shares are in focus amid the ongoing competition in the Australian supermarket sector. The Choice report brings certain advantages and disadvantages into the spotlight.

This could challenge Coles to show investors its value proposition. Time will tell. In the last 12 months, Coles’ share price has gone down over 7%, despite a 7% gain this year.

The post Coles shares flat as Choice report says competitor Aldi cheapest appeared first on The Motley Fool Australia.

More reading

• 3 of the best ASX 200 blue chip shares to buy now
• 3 reasons to be positive on ASX 200 shares in FY25 (and 3 to be wary)
• Where Aussies are spending their money, and the ASX shares that could benefit
• Why Telstra and these excellent ASX dividend stocks could be buys
• Buying Coles shares? Here are key metrics you’ll want to know

Motley Fool contributor Zach Bristow 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 positions in and has recommended Coles Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

There has been almost nothing but good news from Nvidia (NASDAQ: NVDA) over the past four quarters. Many investors might not recall that Nvidia’s revenue actually declined 13% year over year in the first quarter of its fiscal 2024 (which ended April 30, 2023).

Fast-forward to fiscal 2025’s first quarter, when revenue exploded higher by more than 260% year over year. In conjunction with that growth, the stock price has more than tripled in the past year, and investors continue to receive positive signs that the business will keep growing. The latest bullish news should have investors thinking Nvidia still has a long runway to increase sales in its data center segment.

AI spending soars

After such a huge jump in sales over the past year, some investors may be wondering if Nvidia’s revenue growth may have peaked. But recent news from its fellow tech company Broadcom suggests that the addressable market for artificial intelligence (AI) equipment is broad and still growing.

Broadcom supplies semiconductor solutions and infrastructure that AI requires. Its products include switching solutions, accelerators, server storage equipment, and on-site and cloud connectivity offerings.

Like Nvidia, Broadcom recently reported strong results for its latest quarter. Revenue from its AI-related products set a record, and made up a quarter of total sales as the top line increased by more than 40% year over year. But it’s something Broadcom CEO Hock Tan said during management’s conference call with investors that should make Nvidia investors more bullish.

Tan admitted that Broadcom wasn’t going to try to compete with Nvidia in its leading position as a supplier of graphics processing units (GPUs) to provide AI systems with computing power. He acknowledged, however, that Nvidia was increasingly becoming a competitor to Broadcom on the networking side. Nvidia’s next-generation Blackwell platform is just the first step. Speaking of Nvidia, Tan noted, “They are trying to create a platform that is probably end-to-end very integrated.”

That should make Nvidia investors confident that the AI spending being directed to the company can continue to grow for the foreseeable future.

What’s next for Nvidia?

It’s notable how much Nvidia has already dominated its competitors in reaping the investments that companies are making in data center computing power.

Now consider that there is yet another segment of Nvidia’s business with the potential to take a similar growth trajectory. Nvidia’s automotive and robotics segment has more than doubled its revenues over the last two years. While its automotive segment still contributes only a minor portion of total sales, self-driving technology is advancing and numerous automakers are already Nvidia customers.

Several Chinese electric vehicle (EV) makers, autonomous driving technology companies, and global automakers are using Nvidia’s Drive platforms. In its latest earnings report, Nvidia also noted that “an array of partners are using Nvidia generative AI technologies to transform in-vehicle experiences.”

Most recently, U.S.-based EV maker Rivian Automotive said it would be using Nvidia’s Drive Orin processors to increase computing power and improve the performance of its R1 platform vehicles.

Don’t ignore valuation

While the potential remains immense for Nvidia to grow sales and earnings, investors shouldn’t ignore the fact that some of that expected growth is already baked into the company’s current valuation. Some investors believe the stock has already risen beyond a reasonable valuation and is due for a major correction.

While earnings are up by more than 600% so far this year, the stock followed a similar trajectory. With a forward price-to-earnings ratio of about 50 and a price-to-sales ratio of nearly 30 based on this year’s projected revenue, Nvidia will need to deliver significantly more growth before the stock looks like a bargain again.

While there are realistic paths for that to occur, the stock’s rise could pause as the market waits to see what actually happens. The stock could even dip. Aggressive investors still might want to have Nvidia in their portfolios based on both its past successes and the potential for more. However, after its meteoric rise, this stock is a good candidate to buy in stages rather than deploying all the funds you plan to commit to it all at once. 

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

The post Nvidia investors just got some bullish news appeared first on The Motley Fool Australia.

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• Is Nvidia stock going to $200 in the wake of its 10-for-1 stock split?
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• We see patterns everywhere. That’s not always helpful.
• Nvidia shares reach world’s most valuable milestone. Where to now?
• Is it too late to buy Nvidia stock?

Howard Smith has positions in Nvidia and Rivian Automotive. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Broadcom. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Helia Group Ltd (ASX: HLI) shares experienced a strong rebound on Thursday, with the ASX 200 stock currently surging nearly 15% to $3.84 per share.

Yesterday, Helia was heavily sold off following reports Commonwealth Bank of Australia (ASX: CBA) was tendering a long-held contract with the company. It closed at $4.22 per share on Tuesday, before sliding back to $3.34 per share after Wednesday’s sell-off.

Today’s recovery rally follows an upgrade on the ASX 200 stock from analysts at Macquarie. This has potentially injected a dose of optimism into the beaten-up stock. Let me explain.

ASX 200 stock rebounds

The drop in the ASX 200 stock yesterday was triggered by news that CBA would run a tender for its lenders mortgage insurance (LMI) business. This is a contract it has long held with Helia.

This business also currently contributes about 53% of Helia’s gross written premium (GWP). Investors were understandably spooked yesterday, contributing to the downside.

However, Macquarie’s analysts suggest that Helia is well-positioned to win this tender once again. The investment bank noted that this is not CBA’s first tender, and historically, Helia has managed to retain its contracts.

“[W ]e think HLI would likely win the tender again and be the exclusive LMI writer, [for CBA}”, it said in a note, according to The Australian.

If the ASX 200 stock is successful, it could also secure Bankwest, the broker says. This could potentially boost its GWP by 9%.

Macquarie believes the financial impact of losing the contract would be minimal in the short term. The current contract expires at the end of 2025, with revenue impacts not expected until 2027.

The firm’s research of recent tenders of similar variety also “suggests with multiple LMI providers generally chose the provider they did the most business with”.

Other brokers weigh in

Goldman Sachs also weighed in on the situation in a note yesterday. According to the firm, the tender process with CBA is not a new challenge for the ASX 200 stock. “We note that this is the second time in three years that HLI’s Supply and Service contract with CBA has been put up for RFP,” it stated.

There should be very limited impact on near-term earnings as HLI will continue to earn GWP from the existing CBA contract until its expiry on 31-Dec-25..

Since successfully winning the last RFP, we understand that HLI has increased the levels of its technology integration with CBA, having largely rebuilt its technology interface.

This perspective aligns with Macquarie’s view that any potential financial impact would be felt much later, giving Helia time to adjust.

Goldman has a neutral rating on the ASX 200 stock with a $4.53 per share price target.

Conclusion

Today’s rebound in this ASX 200 stock shows that investors are keeping an eye on the tender process. In the last 12 months, Helia shares have held a 13% gain.

The post Beaten-up ASX 200 stock rebounds 15%. Macquarie says more to come appeared first on The Motley Fool Australia.

More reading

• Why these 3 ASX 200 stocks just scored sizeable broker upgrades
• 5 things to watch on the ASX 200 on Thursday
• Why Beach Energy, Core Lithium, Helia, and Red 5 shares are dropping today
• ASX 200 stock plunges 15% on CBA deal news
• CBA, DroneShield, and these ASX stocks just hit 52-week highs

Motley Fool contributor Zach Bristow 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 Goldman Sachs Group and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.