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The artificial intelligence (AI) boom is creating a ripple effect in the unexpected area of the industrial properties market.

AI applications require immense computational power to process vast amounts of data. The AI boom drives the need for more data centres due to the extensive data processing, storage, and real-time analysis requirements of AI technologies.

As AI continues to evolve and integrate into various sectors, the demand for advanced data centre infrastructure will only increase.

The trouble is that this will add pressure to the ongoing shortage of industrial properties near metropolitan areas, led by the consumer shift to online shopping.

Industrial property powerhouse Goodman Group Ltd (ASX: GMG) has been a major beneficiary, with its shares surging 74% over the past year.

But could Brickworks Limited (ASX: BKW) shares be a cheaper alternative to benefit from this industry trend?

Converting warehouses to data centres

Goodman Group boss Greg Goodman estimated a $50 billion opportunity in data centres in his recent interview with Australian Financial Review. Goodman Group aims to capture this golden opportunity with large-scale developments, as Goodman explained in the shareholder update:

We continue to develop large-scale, high value, data centres, and expand our global power bank to address growing data centre demand as AI usage and cloud computing expands.

This has led to optimism from analysts, with Citi expecting double-digit earnings growth.

After the recent surge, Goodman Group shares are trading at a price-to-earnings (P/E) ratio of 30x and a price-to-book (P/B) ratio of 3.2x based on FY25 estimates by S&P Capital IQ.

Brickworks as a cheaper alternative?

With that in mind, Brickworks shares might present a more affordable entry point for those looking to capitalise on this angle. Although Brickworks is not as prominently recognised as Goodman in the industrial property sector, the company has steadily built a substantial and growing portfolio.

Traditionally known for its building products, Brickworks has strategically diversified into the industry property sector through its joint ventures with Goodman Group.

Brickworks’ two joint ventures focus on developing and managing prime industrial real estate. This partnership leverages Goodman’s expertise and Brickworks’ strong land holdings, creating a robust platform.

Brickworks shares are trading at a P/E ratio of 19x and a P/B ratio of 1.1x on FY25 estimates by S&P Capital IQ, much cheaper than Goodman Group.

While Goodman Group remains a leader in the sector, Brickworks offers a diversified revenue stream from its building products business and its holding in other listed shares, providing additional stability.

For investors looking to capitalise on the industrial property boom at a more reasonable price, Brickworks could be a promising option in my view.

The post Are Brickworks shares about to benefit from an industrial property boom? appeared first on The Motley Fool Australia.

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• Are ASX REITs a good investment right now?

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

Three S&P/ASX 200 Index (ASX: XJO) shares could do a lot of the heavy lifting to help boost the benchmark index in the year ahead.

That’s according to the analysts at UBS, Morgan Stanley and Jarden Securities.

Here’s why the brokers are increasingly bullish on these big-name Aussie companies.

(Broker data courtesy of The Australian.)

Three ASX 200 stocks with boosted outlooks

The first ASX 200 share getting a broker upgrade is Lovisa Holdings Ltd (ASX: LOV).

Shares in the jewellery retailer are up 0.1% at the time of writing, trading for $33.29 apiece. That sees the Lovisa share price up an impressive 81% in 12 months. The stock also trades on a partly franked trailing dividend yield of 2.4%.

The Lovisa share price has now almost fully recovered from the sell-off in early June that followed the announcement that CEO Victor Herrero is stepping down on 31 May 2025. Herrero is seen as the driving force behind Lovisa’s strong growth.

But with John Cheston, currently the CEO of Smiggle, taking over the reins, confidence in the company’s growth potential looks to have returned.

While UBS has kept its neutral rating on Lovisa shares, the broker raised its price target by 18% to $32.50 a share. That’s well above the $29.74 that shares closed at on 4 June, though below the current share price.

The second ASX 200 share earning a broker upgrade is Treasury Wine Estates Ltd (ASX: TWE).

Shares in the global wine company are up 0.6% today, changing hands for $12.51 apiece. That sees the stock up 9% in a year. Treasury Wine shares also trade on a partly franked trailing dividend yield of 2.7%.

Treasury Wine shares have leapt 12.6% since market close on 30 May amid increasing enthusiasm for Chinese markets reopening to Aussie wine imports. The company also impressed a number of brokers with yesterday’s Penfolds update.

Jarden Securities envisions some more share price growth ahead. The broker raised Treasury Wine share to a buy rating with a $14.50 price target. That represents a potential upside of 16% from current levels.

Which brings us to the third ASX 200 share earning a broker upgrade, Woolworths Group Ltd (ASX: WOW).

Shares in the supermarket giant are up 2.0% today, trading for $33.67 apiece. That leaves the Woolies share price down 16% over 12 months. Woolworths shares also trade on a fully franked trailing dividend yield of 3.1%.

Woolworths shares could get a boost with the stage three tax breaks set to boost Aussie’s take home pay.

Morgan Stanley has a bullish outlook for the supermarket chain. The broker raised its rating to overweight with a $37.00 price target. That’s 10% above the current share price.

The post These 3 top ASX 200 shares just earned substantial broker upgrades. Here’s why appeared first on The Motley Fool Australia.

More reading

• Guess which ASX 100 stock has ‘high quality’ earnings and could rise 22%
• 5 things to watch on the ASX 200 on Friday
• Up 78% in a year, is it too late to buy Lovisa shares?
• Here are the top 10 ASX 200 shares today
• Treasury Wine share price tumbles on Penfolds China update

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 positions in and has recommended Lovisa. The Motley Fool Australia has recommended Lovisa and Treasury Wine Estates. 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 end the week with a small gain. At the time of writing, the benchmark index is up 0.1% to 7,777.4 points.

Four ASX shares that are rising more than most today are listed below. Here’s why they are pushing higher:

Botanix Pharmaceuticals Ltd (ASX: BOT)

The Botanix Pharmaceuticals share price is up 1.5% to 34 cents. This has been driven by news that the US Food and Drug Administration (FDA) has approved its Sofdra product as a prescription medicine used to treat primary axillary hyperhidrosis (excessive underarm sweating) in adults and children 9 years and older. Botanix notes that there are approximately 10 million people in the United States with primary axillary hyperhidrosis, with few effective treatments available for patients. The company also raised $70 million through an institutional placement at 30 cents per new share.

Strike Energy Ltd (ASX: STX)

The Strike Energy share price is up 2.5% to 22 cents. This morning, this energy producer announced that it has reached an agreement with Macquarie Group Ltd (ASX: MQG) for the refinancing of its existing debt package. This will allow the company to fund production upgrades, as well as pre-development and development costs across its Perth Basin portfolio of assets. Provision of the $153 million five-year financing package is subject to execution of the definitive financing documentation.

Talga Group Ltd (ASX: TLG)

The Talga Group share price is up 10.5% to 63 cents. This has been driven by news that the battery materials and technology company has entered into an earn-in agreement with lithium giant Sociedad Quimica y Minera de Chile S.A (NYSE: SQM). The agreement relates to the company’s Aero Lithium Project in Sweden. Under the binding agreement, Talga has granted SQM the right to sole fund exploration expenditure of up to US$19 million over the next 7 years for up to a 70% ownership interest in the project.

West African Resources Ltd (ASX: WAF)

The West African Resources share price is up almost 3% to $1.50. This morning, the gold miner advised that it has now fully drawn the US$265 million secured loan facility from Sprott Resource Lending Corp. and Coris Bank International SA. These funds will be used for the development of the company’s Kiaka Gold Project in Burkina Faso and other corporate purposes. Kiaka’s construction is now 50% complete, with 75% of costs now committed and fixed.

The post Why Botanix, Strike Energy, Talga, and West African Resources shares are pushing higher appeared first on The Motley Fool Australia.

More reading

• Botanix shares jump on FDA approval and $70m capital raising
• Here are the top 10 ASX 200 shares today
• Botanix Pharmaceuticals share price on watch amid FDA news and ‘transformative event’
• Guess which high-flying ASX All Ords stock was just halted ahead of a key FDA decision
• Why Bapcor, Botanix, Judo Capital, and Woodside shares are rising today

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 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.

S&P/ASX 200 Index (ASX: XJO) energy shares could be set for some longer-term tailwinds amid a looming national gas crisis.

Here’s how these top three ASX 200 energy shares are tracking at the time of writing on Friday:

• Woodside Energy Group Ltd (ASX: WDS) shares are up 0.7%
• Santos Ltd (ASX: STO) shares are up 1.7%
• Beach Energy Ltd (ASX: BPT) shares are up 1.5%

For some context, the ASX 200 is down 0.1% at this same time.

This comes as Australians are warned that a period of low winds has impacted wind power generation along the East Coast. Coupled with cold weather that’s seeing people turn up their heaters, the Australian Energy Market Operator (AEMO) cautioned that the eastern and southern states could face a gas crunch through September.

ASX 200 energy shares eyeing gas squeeze

The looming gas squeeze comes despite Australia sitting on enough on and offshore gas deposits to meet domestic needs for many decades to come.

But a range of state and federal restrictions have limited the ASX 200 energy shares from bringing that gas online. Domestic supply is also impacted by LNG exports.

“In the shorter term, … we need to have a balance of renewables and gas coming into the system. That’s a balance which other countries are pursuing,” shadow treasurer Angus Taylor said this week (quoted by The Australian Financial Review).

The government moved to assure Aussies that their lights and heaters won’t be going out this winter.

“Today’s [AEMO] notice is about a potential risk, not a risk that has eventuated. AEMO and the market are taking steps to ensure the risk is mitigated ahead of time,” a spokeswoman for Energy Minister Chris Bowen said.

Australian Pipelines and Gas Association chief executive Steve Davies pointed to the need for more supplies. Should that eventuate, it could offer some ongoing support for ASX 200 energy shares like Woodside and Santos.

According to Davies:

The extreme lows in renewable generation, particularly wind yields, have meant gas-powered generation has picked up a significantly larger load to keep the lights on and ensure electric homes can remain heated…

But you can’t have gas generation without supply.

Woodside seeks to avoid domestic shortfalls

Liz Westcott executive vice president of Australian operations at ASX 200 energy share Woodside, addressed the Energy Club WA on Tuesday.

Westcott said:

Cost-of-living pressures and the focus on energy security are contributing to growing public awareness of the importance of new gas supply…

It may mean a shift in expectations of our industry: to develop Australian natural gas resources in a timely fashion to avoid looming shortfalls. And in doing so, to support the economy and our community…

At a time when our society is increasingly polarised in a way that can stymie progress, we may have an opening here to work with various stakeholders to find common purpose and a commonsense approach.

In a statement on AEMO’s gas crunch warning, Woodside said it’s “taking steps to support the gas market in eastern Australia”.

According to the company, “We are working with the operator to maximise gas production from the Gippsland Basin and offering all available volumes to market.”

If the looming gas crisis tips the scales of public opinion and paves the way for new projects and streamlined approval systems, I can see some longer-term tailwinds emerging for ASX 200 energy shares.

The post ASX 200 energy shares smashing the benchmark amid national gas crisis appeared first on The Motley Fool Australia.

More reading

• 3 top ASX 200 stocks that could create lasting passive income into retirement
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• Own Woodside shares? Here’s how much your company paid in Aussie taxes in 2023
• 5 things to watch on the ASX 200 on Thursday

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.

Are you wanting to buy some blue chip ASX 200 shares for your portfolio?

If you are on the hunt for some quality names for your portfolio, then you may want to take a look at the shares listed below.

That’s because they have recently been named as top buys by a couple of Australia’s leading brokers. Here’s what they are saying about these companies right now:

QBE Insurance Group Ltd (ASX: QBE)

The team at Goldman Sachs is feeling very positive about this insurance giant and sees a lot of value in its shares right now.

This is due to the company’s positive exposure to the commercial rate cycle, improving performance in North America, and its undemanding valuation. It said:

QBE is a global commercial insurer with three main geographical operations across Australia Pacific, International (encompassing Europe) and North America. We are Buy-rated on QBE because 1) QBE has the strongest exposure to the commercial rate cycle. 2) QBE’s achieved rate increases continue to be strong & ahead of loss cost inflation. 3) North America on a pathway to improved profitability. 4) Valuation not demanding. 5) Strong ROE.

Goldman Sachs has a buy rating and $20.60 price target on QBE’s shares. This implies potential upside of 15% for investors over the next 12 months. The broker also expects 5%+ dividend yields in FY 2024 and FY 2025. This stretches the total potential return between now and this time next year to approximately 20%.

ResMed Inc. (ASX: RMD)

Bell Potter is very positive on this sleep disorder treatment company and believes it is well-placed for the future. Particularly given its expansion into the hospital and home care respiratory ventilation market and its ongoing investment in research and development (R&D). It said:

Since its creation in the late 1980’s, ResMed has been a leader in sleep therapy innovation, which has resulted in an installed base of over five million users globally. The OSA market is growing in the high-single digits and RMD is the largest player, ahead of Philips Respironics. RMD is also expanding in the hospital and home care respiratory ventilation market as well as in-house product development and invests 7% of its revenue into R&D.

Bell Potter has a buy rating and $36.00 price target on the ASX 200 blue chip share. This suggests that its shares could rise 13% over the next 12 months. A modest 1% dividend yield is also expected over the same period according to the broker.

The post Analysts say these strong ASX 200 blue chip shares are top buys today appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• QBE shares drop on half year update and strategic review
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• Top brokers name 3 ASX shares to buy next week

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

The Guzman Y Gomez (ASX: GYG) share price is taking a beating today.

Shares in the Mexican fast-food restaurant chain kicked off their first day of trading at noon yesterday, opening at $30.00 apiece.

That was more than 36% above the initial public offering (IPO) price of $22.00 a share.

Shares hit an intraday high of $30.99 before ending the day back at $30.00. That saw the company with a market cap of some $3 billion.

Today, the Guzman Y Gomez share price is under heavy selling pressure.

Shares were down 10% in earlier trade, swapping hands for $27.00 apiece. At the time of writing, shares are trading for $28.60, down 4.6%.

What’s happening with the Guzman Y Gomez share price?

It appears that shareholders who got into the IPO for $22.00 and lucky franchisees who bought shares at $18.00 are taking some profits on Friday.

Yesterday’s rally in the Guzman Y Gomez share price appears to have been largely driven by retail investors, anxious to get a slice of this potential growth story.

At the time of the IPO (and today), the Mexican fast-food franchise operates 185 restaurants across Australia.

Management expects the company will increase that footprint by 30 new outlets a year over the next few years, potentially boosting the expansion pace to 40 new outlets a year by 2030. By 2050, Guzman Y Gomez may run as many as 1,000 restaurants in Australia.

The company is also looking to grow overseas, with an eye on the lucrative United States markets. But it plans to move cautiously in that realm.

Commenting on yesterday’s 36% surge in Guzman Y Gomez stock, Cyan Investment Management’s Dean Fergie said:

I feel the whole price is a bit engineered, there’s not a lot of free float, so you’re not getting new buyers in there. And the people that are in there have an incentive to keep the share price high in the short term.

If you’re a big fund with a pile of money, you’re probably going to be buying a few shares to keep the price nice and high … so my cynical view is that until all the escrows are out and there’s a bunch of free float for the stock, I don’t know how relevant the actual price is for the long-term valuation.

Fergie has a good point on short-term valuations.

The company’s IPO has been long in the making, and investors shouldn’t read too much into these first few days of price action.

For the Guzman Y Gomez share price to rise over time, the company needs to keep costs in check, offer quality food at competitive prices, and deliver on its ambitious growth strategy.

The post Guzman y Gomez share price implodes 10% on ASX trading day 2 appeared first on The Motley Fool Australia.

More reading

• Would I be crazy to buy Guzman y Gomez (GYG) shares at $30?
• Why Bigtincan, DroneShield, Guzman Y Gomez, and Helia shares are racing higher
• Who owns Guzman y Gomez shares?
• Guzman y Gomez shares rocket 36% on IPO day
• It’s only a day until ASX investors can buy Guzman y Gomez shares

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.

KMD Brands Ltd (ASX: KMD) shares are ending the week deep in the red.

In morning trade, the ASX All Ords share is down 10% to a 52-week low of 35 cents.

Why is this ASX All Ords share crashing?

Investors have been hitting the sell button today after the Kathmandu owner released another disappointing trading update.

As a reminder, during the first half of FY 2024, group sales were down 14.5% compared to the same period last year.

According to today’s release, the company’s sales in the second half have improved since the end of the first half. However, they are still down compared to the prior corresponding period.

Investors appear particularly disappointed with the performance of the Kathmandu business. Management notes that it has experienced a slower than expected start to the key winter promotional period.

The first three weeks of the winter sale are 11.5% below last year and lower than the improving second half trend. This reflects significant weakness in New Zealand, with Australian sales down in line with current sales trends. They have also improved each week as it progresses further into the winter season.

One positive is that Rip Curl has started its peak summer trade in the Northern Hemisphere. Management notes that direct-to-consumer sales for the USA and Europe for the start of summer are showing positive single digit growth above last year and peak weeks are still to come.

However, Rip Curl and Oboz wholesale customers continue to reduce their inventory in response to the challenging consumer environment.

The sum of the above, is that second half group sales were down 8.4% through to the end of May. This reflects a 5.9% decline in Rip Curl sales, an 8.4% drop in Kathmandu sales, and a 21.8% fall in Oboz sales.

In light of this and based on the most recent sales trends across all brands, the company now expects underlying EBITDA to be approximately NZ$50 million for the full year. This will be down over 50% from NZ$105.9 million in FY 2023.

The ASX All Ords share’s managing director, Michael Daly, said:

With six weeks of peak trade still to come, we remain focused on optimising our Kathmandu winter and Rip Curl Northern Hemisphere summer results in a challenging consumer environment. We are seeing a prolonged impact of cost-of-living pressures on consumer sentiment globally but particularly in New Zealand, and we continue to respond tactically to competitive market dynamics. Alongside immediate trading priorities, our focus remains on tightly controlling operating costs, moderating working capital, and maximising cash flows.

The post Why is this ASX All Ords share crashing deep into the red on Friday? appeared first on The Motley Fool Australia.

More reading

• Analysts say these strong ASX 200 blue chip shares are top buys today
• Guzman y Gomez share price implodes 10% on ASX trading day 2
• Want to buy Nvidia but don’t have a US share account? Buy these ETFs instead
• Botanix shares jump on FDA approval and $70m capital raising
• Pilbara Minerals shares drop on major P2000 lithium expansion news

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

It’s the era of Nvidia Corp (NASDAQ: NVDA).

This week, the US tech giant has continued to dominate financial headlines. Yesterday, everyone was talking about how it became the largest company in the US stock market. This morning, the buzz is about its 3% overnight drop.

Nvidia shares have delivered impressive returns for its shareholders, surging 171% since January 2024, including a breathtaking 38% gain in the past month.

However, not everyone has direct access to US shares or feels comfortable navigating the complexities of investing in foreign markets, let alone dealing with the hassle of creating an international trading account.

This brings up an intriguing alternative: investing in exchange-traded funds (ETFs) that include Nvidia in their portfolios.

Let’s first hear what experts say about Nvidia’s future. Then explore ASX ETFs that offer the best exposure to the company.

What experts say about Nvidia shares

Analysts remain optimistic about Nvidia’s future. The company enjoys its leadership in graphics processing units (GPUs) and its expanding presence in artificial intelligence (AI).

The company’s recent advancements in AI technology have positioned it at the forefront of the industry, attracting significant attention and investment. Nvidia boasts over 80% market share in the important AI market keeping competitors at bay, as my colleague Keithen highlighted.

Despite lofty valuations, many predict the company’s growth to continue as it leverages its cutting-edge technology to explore new markets and opportunities.

Betashares Nasdaq 100 ETF (ASX: NDQ)

One ETF that stands out for providing excellent exposure to Nvidia is the BetaShares NASDAQ 100 ETF. This ETF tracks the performance of the NASDAQ 100 Index, which includes 100 of the largest non-financial companies listed on the NASDAQ stock market.

At present, Nvidia represents 8.7% of this ETF, making the NDQ ETF a great option for those looking to invest in Nvidia indirectly.

By investing in NDQ, you’re not only gaining exposure to Nvidia but also to other leading tech giants like Apple, Amazon, and Microsoft. This diversification helps mitigate the risks associated with investing in a single stock.

The NDQ ETF charges a management fee of 0.48%.

Other ASX ETFs with Nvidia shares

Other ASX ETFs that own Nvidia shares are Global X Semiconductor ETF (ASX: SEMI) and Betashares Metaverse ETF (ASX: MTAV), as my colleague James highlighted.

• Global X Semiconductor ETF has 13% of its net assets invested in Nvidia with a management fee of 0.45%
• Betashares Metaverse ETF has 8% of its net assets invested in Nvidia with a management fee of 0.69%

The Global X Semiconductor ETF has the highest exposure to Nvidia, with the rest invested in the eco-system of the AI industry. The constituents include semiconductor equipment makers like Taiwan Semiconductor Manufacturing and ASML Holding.

These are all market leaders in their respective fields, located in Taiwan and the Netherlands. This ETF might be more suitable for those seeking broader global exposure in the industry.

This ETF is up 68% over the past year.

The Betashares Metaverse ETF has a similar exposure to Nvidia with a higher management fee. This ETF is up 37% over the past year.

The post Want to buy Nvidia but don’t have a US share account? Buy these ETFs instead appeared first on The Motley Fool Australia.

More reading

• Thinking about buying Nvidia stock? Here’s why you might already own it
• Nvidia investors just got some bullish news
• Is Nvidia stock going to $200 in the wake of its 10-for-1 stock split?
• Can anyone topple Nvidia as the king of artificial intelligence investments?
• We see patterns everywhere. That’s not always helpful.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Kate Lee has positions in Microsoft and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Apple, BetaShares Nasdaq 100 ETF, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Amazon, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Botanix Pharmaceuticals Ltd (ASX: BOT) shares are ending the week on a positive note.

In morning trade, the clinical dermatology company’s shares are up 9% to a 52-week high of 36.5 cents.

Why are Botanix Pharmaceuticals shares rising?

Investors have been buying the company’s shares today in response to an announcement relating to its Sofdra product.

Yesterday, Botanix revealed that the US Food and Drug Administration (FDA) has approved Sofdra as a prescription medicine used to treat primary axillary hyperhidrosis (excessive underarm sweating) in adults and children 9 years and older.

This makes it the first and only new chemical entity approved by the FDA to treat primary axillary hyperhidrosis and presents a novel safe and effective solution for patients who have lacked treatment options for this socially challenging medical condition.

Botanix notes that there are approximately 10 million people in the United States with primary axillary hyperhidrosis, with few effective treatments available for patients. This gives it a large market opportunity to grow into.

Speaking of which, the company plans to launch its patient experience program in the third quarter of 2024. After which, it is anticipating its first revenue from Sofdra early in the fourth quarter of the year.

Botanix CEO, Dr Howie McKibbon, commented:

We are pleased to share this accomplishment with our dedicated Botanix team and dermatologist partners, patients who participated in the clinical studies and our shareholders who made this approval possible. This is a transformative event for Botanix as we transition from a development stage to a revenue generating dermatology company.

Capital raising

Following the FDA approval, Botanix decided to immediately launch a capital raising, which is now complete.

Management revealed that it has received firm commitments from a significant number of new leading Australian and international institutional investors at a 10.4% discount of $0.30 per new Botanix share. This has raised $70 million in gross proceeds.

The proceeds from the placement will be applied towards funding the launch of Sofdra in the United States. This includes funding its sales force and marketing infrastructure, as well as digital marketing costs and the telemedicine platform, manufacturing costs, as well as new quality assurance, pharmacovigilance and support services.

Botanix’s executive chairman, Vince Ippolito, commented:

We are extremely pleased to announce this significant Placement, following on from the successful approval of Sofdra by the FDA yesterday. We are grateful to our loyal base of shareholders for supporting us through the approval of Sofdra and we welcome our new institutional investors, as we enter this exciting commercial phase.

Botanix shares are up over 200% since this time last year.

The post Botanix shares jump on FDA approval and $70m capital raising appeared first on The Motley Fool Australia.

More reading

• Botanix Pharmaceuticals share price on watch amid FDA news and ‘transformative event’
• Guess which high-flying ASX All Ords stock was just halted ahead of a key FDA decision
• Why Bapcor, Botanix, Judo Capital, and Woodside shares are rising today
• Which ASX biotech shares are pioneering the future of medicine?

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

Pilbara Minerals Ltd (ASX: PLS) shares are falling on Friday morning.

At the time of writing, the lithium miner’s shares are down 2% to $3.13.

Why are Pilbara Minerals shares falling?

Investors have been selling the lithium giant’s shares following the release of the pre-feasibility study (PFS) for the expansion of production at the Pilgangoora Operation.

According to the release, the PFS determined that production capacity at Pilgangoora Operation could be expanded to more than 2 million tonnes per annum (Mtpa).

As a comparison, for the first three quarters of FY 2024, Pilbara Minerals has delivered production of 499.2 kt.

Management notes that the expansion, which will be named the P2000 Project, is expected to result in the first ten years of annual production averaging ~1.9Mtpa. After which, production of more than 2Mtpa is expected over the first six years after the ramp up.

It believes that P2000 would further extend Pilbara Minerals’ position as the largest pure-play lithium producer globally.

However, the timing of the P2000 Project will depend on the successful outcome of the next level of feasibility study, project approvals, and the market outlook at the time of the financial investment decision (FID).

What are the costs?

The company notes that P2000 would require construction of a new whole of ore flotation plant at Pilgangoora. This would come with an estimated capital expenditure of $1.2 billion (-20/+30% accuracy).

The new plant would complement existing processing flowsheets in use at the Pilgangoora Operation.

Management believes it would be well worth the cost. It estimates that the expansion will create significant shareholder value with a P2000 incremental net present value (NPV) of $2.6 billion and incremental internal rate of return (IRR) of 55%.

This is based on the assumption of a long term spodumene 6% price of US$1,500 per tonne.

Though, it is worth noting that Goldman Sachs estimates that the long term spodumene 6% price will be just US$1,150. At that level, based on its sensitivity chart, the NPV drops closer to $1 billion.

So, investors may need to decide whether the assumptions used for this expansion are too ambitious or not.

Pilbara Minerals has now commenced a feasibility study in relation to P2000. Outcomes are expected in the December quarter of calendar year 2025. A potential FID will follow this.

‘A strong value accretive project’

Pilbara Minerals managing director and CEO, Dale Henderson, was pleased with the PFS. He said:

The PFS demonstrates a strong value accretive project with an incremental NPV of $2.6B through this potential future expansion to the operation at Pilgangoora. This study follows the 35% reserve upgrade to 214Mt announced in August last year.

The growth of the reserve, and the optionality to incrementally expand production, further reinforces Pilgangoora’s position as a Tier 1 asset of global significance.

This expansion is expected to provide an average 1.9Mtpa production for the first 10 years and more than 2Mtpa over the first six years after ramp up. The scale benefits of this expansion will further build on Pilbara Minerals’ position as one of the major leading lithium suppliers globally.

Pilbara Minerals shares are down 37% over the last 12 months.

The post Pilbara Minerals shares drop on major P2000 lithium expansion news appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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.