Tag: Motley Fool Australia

The Osteopore Ltd (ASX: OSX) share price rocketed as much as 270% higher at one point today, after the company announced it has signed a distribution agreement that opens up the potentially lucrative US market.

Why is the Osteopore share price surging?

Earlier this morning, Osteopore announced that the company has signed a non-exclusive, 2-year agreement with established US market leader Bioplate Inc. The agreement will see Bioplate help Osteopore sell its patented 3D printed, bioresorbable products for cranial and neurosurgery procedures. The distribution agreement covers 6 states in the US market and Bioplate will cover all technical support requirements for Osteopore’s products.

The agreement with Bioplate is Osteopore’s first distribution agreement since the company’s IPO in 2019. Bioplate has over 20 years of experience in providing cranial fixation solutions and will provide Osteopore with an established network of health professionals, hospitals and health services in the US.

According to Osteopore, the graft substitute market is worth around US$4 billion, with sales of permanent implants estimated at over US$100 million annually. Osteopore believes that penetrating the US market is a key strategic objective, with US demand accounting for a large portion of the global demand.

What does Osteopore do?

Osteopore is an Australian and Singapore-based medical technology company that has commercialised a range of patented, 3D printed bioresorbable products. These 3D printed implants act as a scaffold for bone growth and can be used across various surgeries. As opposed to traditional bone grafts, Osteopore’s implants naturally dissolve over time, leaving only health bone tissue.

According to Osteopore, the company’s protective implants can reduce post-surgery complications by reducing the risk of secondary infections. All 3 of Osteopore’s products (Osteoplug, Osteomesh and Osteostrip) have received FDA approval in the US and are being sold to hospitals around the globe.

Earlier this year, Osteopore reported a 60% increase in revenue for the quarter ending March 2020. The company generated $321,00 in revenue for the quarter whilst also receiving approval from the Australian Therapeutic Goods Administration for several of its craniofacial products.

Foolish takeaway

Following a pause in trading mid-morning, shares in Osteopore resumed trading and are up more than 150% at the time of writing. The Osteopore share price hit an intra-day high of $1.49 earlier, representing a gain of more than 270% for the day.

More reading

• Is the Oil Search share price worth buying?
• Temple & Webster share price at an all-time high after capital raise
• Top brokers name 3 ASX 200 shares to sell right now
• Why the Kathmandu share price is up 11% today
• Why Afterpay, Bigtincan, Dicker Data, & NIB shares are racing higher

Motley Fool contributor Nikhil Gangaram 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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Oil Search Limited (ASX: OSH) is an LNG producer operating out of Papua New Guinea. The company has recently announced it will have reduced its workforce by 34% by the end of this calendar year. The impetus for this has been the dramatic and sustained reduction of oil prices. However, this is not the end of the story. No matter how you look at it, the Oil Search share price has had a terrible year so far.

2020 in review

Oil Search entered the new year with a new Managing Director, Dr Keiran Wulff. He replaced Mr Peter Botten, who led Oil Search for an amazing 25 years. During this time, Mr Botten took the company from $250 million in market capitalisation to around $11 billion.

In February this year, Oil Search announced that talks with the PNG government on the P’nyang Gas Agreement had stalled. This was a complex joint venture arrangement with Exxon Mobil Corporation and Santos Ltd (ASX: STO) which the company had been touting for several years.

Even though the project has not been entirely abandoned, the delay has already had a significant impact. As noted by Wood Mackenzie research director Angus Rodger:

“…From both a macro pricing and a contractor quality/pricing perspective, trailing in the wake of the biggest wave of new LNG supply the industry has ever seen is not ideal.”

In other words, Oil Search has already lost the window for enabling forward contracts to be written at prices to maximise profits.

Shortly after this disappointing development came the pandemic and associated restrictions in March. This was followed very closely thereafter by the Saudi/Russian oil price feud. 

By April, Oil Search had a new Managing Director, the loss of major revenue-generating infrastructure, and an oil price that was getting closer to the company’s rising production unit costs. It really doesn’t get much worse than this.

Oil Search’s response

In response to these headwinds, Oil Search has totally reshuffled its executive leadership team. There is a clear focus on efficiency, operational excellence, and leveraging technology. As a result, the company’s production costs are expected to be approximately US$10.50 per barrel of oil equivalent (BOE) as opposed to the USD$11 – $12 initially forecast. Moreover, all non-essential capital expenditure has been suspended or deferred in PNG. 

At the time of writing, the LNG spot price has just come off its lowest point for 25 years due to an oversupply and reduced demand resulting from warmer than usual winter temperatures. Oil Search does, however, only have less than 10% of its current production exposed to spot prices.

It was also able to raise US$700 million through a share placement. On 5 May, Oil Search was forecasting a liquidity of US$1.8 billion in cash and no near-term debt maturities.

Foolish takeaway

It is currently trading at a price to earnings (P/E) ratio of 11.08, however the Oil Search share price remains down 54% year to date. I feel the discipline the company has shown in managing its costs and curbing expansions has been impressive. So much so that I’m starting to think this could be one of the great turnaround companies of the year.

Nonetheless, I do think low LNG and oil prices will stick around a while longer, particularly with demand remaining low and coronavirus trends turning upwards. This could definitely put a dampener on the near to medium-term performance of the Oil Search share price. 

Having said that, investing in Oil Search today will get you a trailing 12 month dividend yield of 4.26%. I also think you will likely see some share price growth. Although it is hard for me to see it returning to its former price range until future significant reserves are planned to come online at a profitable price.

More reading

• 5 things to watch on the ASX 200 on Thursday
• These ASX 200 shares were the worst performers of FY20
• 5 things to watch on the ASX 200 on Wednesday
• Morgans picks the best FY21 ASX buys for the COVID-19 world
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Daryl Mather 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 Temple & Webster Group Ltd (ASX: TPW) share price surged almost 14% in today’s early trade. Shares in the online retailer rocketed after announcing the completion of its capital raise.

Why did Temple & Webster raise capital?

Earlier today Temple & Webster released an announcement informing the market that the company has successfully executed a $40 million share placement. The company placement of 7 million new fully-paid ordinary shares issued at $5.70 per share saw strong investor demand. 

The company raised new capital to increase financial flexibility and continue the structural shift online, despite being debt-free with around $30 million in cash. Temple & Webster management noted that the capital raise will allow the company to make further investments in its growth strategy, whilst also improving its technology, product and service offerings.

How has Temple & Webster performed during the pandemic?

In a brief business update released yesterday, Temple & Webster acknowledge that strong demand has continued into June with gross sales to the 28 June surging 130% year-on-year. In mid-June, the online retailer reported a 668% increase in year-to-date EBITDA of $7.1 million. Additionally, Temple & Webster reported a 68% increase in year-to-date revenue of $151.7 million.

Temple & Webster has thrived during the coronavirus pandemic with many shoppers switching to online channels during the lockdown period. The company noted strong operating leverage, reporting a 68% increase in active customers of 440,257 YTD, up from 335,000 at the end of December.

The company is confident consumers who started shopping online during the pandemic will continue shopping online, even when all stores reopen. As a result of changing consumer preferences and demographics, Temple & Webster looks to continue its sales growth by investing in longer-term initiatives.

Foolish takeaway

Temple & Webster is Australia’s largest online retailer of furniture and homewares, boasting more than 150,000 products for sale. The company is able to offer a broad product range thanks to its innovative drop-shipping model. This model allows products to be sent directly to consumers from suppliers.

Temple & Webster shares fell as low as $1.57 during the market sell-off in March but have rebounded strongly. At the time of writing the company’s share price is trading near all-time highs around $7.

More reading

• Temple & Webster share price quadrupled in FY20
• E-commerce is the COVID-19 success story. These businesses are the clear winners.
• These ASX retail shares are lockdown winners
• Short-sellers are stepping up their attack against these popular ASX shares
• Temple & Webster shares continue to grow despite coronavirus restrictions

Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group 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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On Wednesday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three ASX 200 shares that have just been given sell ratings by brokers are listed below.

Here’s why these brokers are bearish on them:

Suncorp Group Ltd (ASX: SUN)

According to a note out of Credit Suisse, its analysts have downgraded this insurance and banking giant’s shares to an underperform rating and cut the price target on them to $8.75. The broker believes Suncorp’s earnings growth will be challenging in the future and is forecasting lower than target return on equity. And while it has just announced a new operating model, it doesn’t appear overly convinced that this will be enough and is expecting further changes. The Suncorp share price is trading at $8.85 this afternoon.

Tabcorp Holdings Limited (ASX: TAH)

A note out of Goldman Sachs reveals that its analysts have retained their sell rating but lifted the price target on this gambling company’s shares slightly to $2.80. The broker has lifted its earnings estimates very slightly to reflect the new reseller agreement with Jumbo Interactive Ltd (ASX: JIN). However, it feels Tabcorp could have got a better deal. As a result, it sees no reason to make any changes to its rating and feels its shares are expensive at the current level. The Tabcorp share price is trading notably higher at $3.42 this afternoon.

Webjet Limited (ASX: WEB)

Analysts at Morgan Stanley have retained their underweight rating and $3.30 price target on this online travel agent’s shares. This follows the announcement of a $163.1 million convertible note offering which will be used to repay debt and fund potential acquisitions. While this will boost its liquidity, which has decreased markedly over the last few months, it isn’t enough for a change of rating. Morgan Stanley continues to believe Webjet’s shares are overvalued. The Webjet share price is fetching $3.59 on Thursday.

More reading

• ASX 200 up 0.9%: Citi lifts Afterpay price target, Webjet boosts liquidity
• Why De Grey, Resolute, Suncorp, & Webjet shares are dropping lower
• Fund managers have been snapping up Sonic and these ASX 200 stocks
• Down 32% in FY20, is the NAB share price a buy this year?
• Webjet share price on watch after boosting its liquidity

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited and Webjet 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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Kathmandu Holdings Ltd‘s (ASX: KMD) share price has surged 11% so far today on the back of its market update. Kathmandu is a retailer in Australia and New Zealand selling travel and outdoor adventure apparel and equipment. 

The surge in the Kathmandu share price comes with same-store sales growth returning to positive through stores re-opening, a shift to online shopping and a strengthened balance sheet with April’s equity raising. However, the group remains cautious about the demand over the medium-term given the potential of a second coronavirus wave.

Sales update pushes Kathmandu share price

For the 10 months ended 31 May 2020, total group sales were 15.1% below the comparable period last financial year. However, the group’s retail and online sales exceeded management expectations since stores began re-opening with the exception of airport stores which remain closed.

The increase in sales is a reflection of the easing of restrictions and has strengthened the group’s liquidity.

The group’s 2 businesses; Rip Curl and Kathmandu’s same-store sales were up 21% and 12.5% respectively for the last 6 weeks to 28 June 2020, adjusted for closed stores.

Pleasingly, online sales have made a material contribution to the increase seen in both businesses. This is in addition to a market update released in May reporting a surge in online sales. 

However, Kathmandu saw May wholesale sales impacted by COVID-19. Rip Curl global wholesale sales were 26% below the comparable 7-month pre-ownership period last financial year.

Successful equity raise

Kathmandu completed a successful NZ$207 million equity raising in April helping to strengthen its balance sheet. The group expects total liquidity in excess of $300 million at the end of this financial year. The business came to this expectation based on its assessment of the operating environment. 

Outlook

Kathmandu expects FY20 earnings-before-interest-taxation-depreciation-amortisation (EBITDA) to be above $70 million. Its gross margin is expected to be in the lower end of the 61%–63% target range. 

The group is concerned about the end to government stimulus measures, the second coronavirus wave currently experienced in Melbourne and the impact of foot traffic in tourist located stores.

Chief Executive Officer, Mr Simonet commented:

“Whilst we are pleased with the strong recovery in direct recovery in direct to consumer sales over the past six weeks, we remain cautious about the medium-term levels of consumer demand. We believe that some short term factors, including government support packages and pent up demand are underpinning current sales. The heightened uncertainty that currently exists is likely to persist…”

Similarly, in the May update, the group reported the closure of the store network had a material adverse impact on FY20 earnings.

More reading

• Why the Lovisa share price is at risk of falling further over the coming weeks

Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In early afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to record another solid gain. At the time of writing the benchmark index is up almost 1.1% to 5,997.3 points.

Four shares that are climbing more than most today are listed below. Here’s why they are racing higher:

The Afterpay Ltd (ASX: APT) share price is up 5% to $65.44. The catalyst for this gain has been a broker note out of Citi. Although the broker has retained its neutral rating on its shares, it has increased its price target by more than double to $64.25. The broker made the move after upgrading its earnings estimates.

The Bigtincan Holdings Ltd (ASX: BTH) share price is up 2% to 80.5 cents. Investors have been buying the artificial intelligence-powered sales enablement automation platform provider’s shares after it announced a new contract win. Bigtincan has signed a contract with Red Bull GmbH for a deployment of its software with a total contract value of $1.8 million over 30 months. It also includes an option to extend the agreement for a further 60 months.

The Dicker Data Ltd (ASX: DDR) share price has jumped 7.5% to $7.53. This follows the release of a half year update by the wholesale distributor of computer hardware and software. Dicker Data has recorded over $1 billion of unaudited revenue during the half, which represents an 18.3% increase over the prior corresponding period. Unaudited net profit before tax came in at ~$40 million for the six months. This represents a 25% jump on its profit before tax during the first half of FY 2019.

The NIB Holdings Limited (ASX: NHF) share price is up over 5% to $4.88. Investors have been buying the private health insurer’s shares after it responded to an announcement by APRA. The regulator has warned private health insurers to provision in FY 2020 for a presumed catch up in treatment and claims post-pandemic. This morning NIB confirmed that its forecast capital position remains well ahead of regulatory requirements, internal targets, and allows for APRA’s announcement.

More reading

• ASX 200 up 0.9%: Citi lifts Afterpay price target, Webjet boosts liquidity
• What’s next for WAAAX shares?
• Dicker Data share price surges higher after revealing strong first half profit growth
• NIB share price storms higher on market update
• Bigtincan share price jumps 18% on Red Bull deal

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 BIGTINCAN FPO. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended BIGTINCAN FPO and NIB Holdings 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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The ASX fashion retailers have bounced back from store closures with share prices and online sales surging. Here we take a look at how 2 ASX fashion retailers are recovering from the coronavirus pandemic.

City Chic Collective Ltd (ASX: CCX)

The City Chic share price is up 281% from its March low to $3.05, 14% below its $3.58 year high. The share price recovery saw City Chic joining the S&P/ASX 300 (ASX: XKO) last week. The plus-size clothing retailer closed Australian and New Zealand stores during the height of the coronavirus pandemic but has since reopened. During closures, City Chic benefitted from its high proportion of online sales, which account for two-thirds of global sales. Despite online already accounting for a large part of the business, Australian and New Zealand saw online sales growth of 57% during the store closure period.

City Chic quickly adjusted its product mix to better suit customer needs, recording strong buying of intimates, casual, and streetwear which has offset weakened demand for higher-end dressing. Increased promotions have been used to manage cashflows and inventory during the period of uncertainty, which means online gross margins have been lower. Positively, the company has finalised negotiations with landlords, agreeing to reduced rents during store closures and market appropriate rents going forward. Through agreements unable to be reached on post-COVID rents, 14 stores will close. The impact of these store closures is expected to be minimal as customers are directed to nearby stores and the online channel.

Mosaic Brands Ltd (ASX: MOZ)

The Mosaic Brands share price has gained 230% from its March low of 23 cents. The company is currently trading at 76 cents. Although this is an impressive gain, Mosaic Brands’ shares are still trading well below last year’s high of $3.06. The company closed stores in March but re-opened from mid-May. Through substantial work to accelerate the company’s digital offering during store closures, online sales increased by 80%. The company added more than 100,000 SKU’s and 20 categories during this period.

The ASX fashion retailer expects a FY20 EBITDA loss as a result of store closures and foot traffic declines. Mosaic expects second-half EBITDA loss to exceed the first-half of $32.7 million. The company cancelled its interim dividend following its earlier deferral announcement. Nonetheless, management expects the pandemic’s impact on its performance to be short-term, with a return to profit anticipated in FY21.

More reading

• This $1,000 small-cap strategy could earn you a 19% dividend yield
• E-commerce is the COVID-19 success story. These businesses are the clear winners.
• 3 top ASX growth shares to buy for FY21
• Share price winners and losers of the pandemic
• Coronavirus second wave potential could drive investment portfolio changes

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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At lunch on Thursday the S&P/ASX 200 Index (ASX: XJO) is on course to make it three days of gains in a row. The benchmark index is currently up 0.9% to 5,986.3 points.

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

Webjet boosts its liquidity.

The Webjet Limited (ASX: WEB) share price is dropping lower on Thursday after successfully pricing an offering of A$163.1 million convertible notes. The online travel agent’s Managing Director, John Guscic, explained that the offering was being undertaken to maintain a strong balance sheet as Webjet continues “to navigate the challenging operating environment caused by COVID-19.” Some of the funds may also be used for acquisitions in the future.

Big four banks on form.

The big four banks are on form again today and are playing a key role in driving the ASX 200 higher. At lunch all four banks are pushing higher, with the Westpac Banking Corp (ASX: WBC) share price leading the way. Its shares are currently up 1.4%. The laggard in the group is the Commonwealth Bank of Australia (ASX: CBA) share price with a gain of 0.6%.

Afterpay price target lifted.

The Afterpay Ltd (ASX: APT) share price is zooming higher on Thursday after being the subject of a positive broker note out of Citi. Although the broker has retained its neutral rating on its shares, it has lifted its price target materially. Citi has increased its price target by more than double to $64.25 after upgrading its earnings estimates.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Thursday has been the Afterpay share price with a gain of 6.5%. This follows the release of Citi’s broker note this morning. The worst performer on the index has been the NRW Holdings Limited (ASX: NWH) share price with a 4.5% decline. This is despite there being no news out of the mining services company.

More reading

• Why Afterpay, Bigtincan, Dicker Data, & NIB shares are racing higher
• Why De Grey, Resolute, Suncorp, & Webjet shares are dropping lower
• What’s next for WAAAX shares?
• Fund managers have been snapping up Sonic and these ASX 200 stocks
• Can the Afterpay share price climb another 150% in FY21?

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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 record its third consecutive gain. At the time of writing the benchmark index is up 0.95% to 5,991.2 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why these shares are dropping lower:

The De Grey Mining Limited (ASX: DEG) share price is down 2% to 98.2 cents. This appears to be a case of profit taking after a very strong gain this week. Prior to today, the gold-focused mineral exploration company’s shares were up over 13% week to date. Investors have been buying its shares following impressive drilling results at the Hemi prospect.

The Resolute Mining Limited (ASX: RSG) share price is down 3.5% to $1.17. Investors have been selling the gold miner after a pullback in the price of the precious metal overnight. The gold price dropped lower after the release of stronger than expected economic data. It isn’t just Resolute on the slide. The S&P/ASX All Ordinaries Gold index is down 0.7% at the time of writing.

The Suncorp Group Ltd (ASX: SUN) share price is down almost 1% to $8.78. This morning Credit Suisse downgraded the insurance and banking giant’s shares to an underperform rating and cut the price target on them to $8.75. It made the move after downgrading its earnings estimates following yesterday’s new operating model announcement.

The Webjet Limited (ASX: WEB) share price is down 3% to $3.47. This decline appears to have been driven by the online travel agent’s decision to boost its liquidity further. Webjet is doing this through an offering of 100 million euros (A$163.1 million) convertible notes due in 2027. Webjet’s Managing Director, John Guscic, explained: “This Offering supports our ongoing focus on maintaining a strong balance sheet as we continue to navigate the challenging operating environment caused by COVID-19.”

More reading

• ASX 200 up 0.9%: Citi lifts Afterpay price target, Webjet boosts liquidity
• Fund managers have been snapping up Sonic and these ASX 200 stocks
• Webjet share price on watch after boosting its liquidity
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 finishes 0.6% higher, Aussie house prices fall

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet 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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WAAAX shares were hammered in the March downturn. Since then, WAAAX share prices have recovered to varying degrees, with some seeing massive gains, while others have experienced more moderate share price recoveries. The coronavirus pandemic has had a mixed impact on these companies. Some, such as Afterpay Ltd (ASX: APT) have benefitted, while others, such as Appen Ltd (ASX: APX) have seen minimal impacts.

Let’s take a look at how WAAAX shares are performing and their outlook going forward.

WiseTech Global Ltd (ASX: WTC)

The WiseTech share price is up 77% from its March low of $10.48 but remains 36% below its high for the year of $29.44. The share price fell earlier this week when founder Richard White sold $46 million of WiseTech shares, cashing in on the share price recovery. WiseTech shares were trading as high as $38 last year before short-sellers took aim at the company, questioning its accounting methods. According to the Australian Financial Review, short-seller J Capital had previously estimated that insiders have sold $259 million worth of shares in WiseTech since it listed.

WiseTech had been reporting impressive rates of growth, driven by the company’s many acquisitions over recent years. In FY19 alone, WiseTech made 15 acquisitions across Europe, Asia, Australasia and the United States. In May, WiseTech announced it had agreed to replace cash earn-out payments with equity across 17 of its acquired businesses in order to strengthen its balance sheet and liquidity. Richard White has said the business continues to demonstrate resilience in the current environment. Digital transformations are expected to accelerate, driving demand for global technology and integrated platforms such as WiseTech’s CargoWise.

Afterpay Ltd 

The Afterpay share price has surged an incredible 600% since its March low of $8.90. Shares are currently trading at $62.24, surpassing previous highs. Demand for the buy-now-pay-later (BNPL) provider’s solutions has actually increased with the coronavirus-linked economic downturn. Last month Afterpay reached 5 million active customers in the US, with 1 million new customers joining the platform during the 10 weeks to 20 May. More than 15,000 US retailers are offering, or are in the process of offering, Afterpay to customers, with the company processing $2.4 billion in the year to Q3 FY20, a 354% increase over the same period in FY19.    

Tencent Holdings Ltd (HKG: 0700) became a substantial shareholder in Afterpay in May, giving a vote of confidence to the business model. Tencent’s Chief Strategy Officer, James Mitchell said Afterpay’s service “Aligns so well with consumer trends we see developing globally….we look forward to a deep and long-term business partnership between Tencent and Afterpay.” Afterpay has continued to grow throughout the pandemic, with March the company’s third-highest underlying sales month on record.

Altium Limited (ASX: ALU)

The Altium share price has gained 31% since its March low of $24.67 and is currently trading at $32.30. Although the share price has yet to regain its 2020 high of $42.63, the company is predicting growth in revenue over the full year, albeit at a level below recent analyst consensus. Historically, Altium closes a significant amount of its second-half business in the last 2weeks of June. As announced last week, this June the run-rate has been impacted by the recent lockdown in Beijing and COVID-19 infection rates in the United States.

Altium is seeing strong seat growth through its offering of extended payment terms to support customers during COVID-19. This will get the company close to or just surpass the key target of 50,000 subscribers. This strategy will, however, have a revenue impact. Although Altium is expected to deliver solid revenue growth it is set to land marginally behind recent analyst consensus. A market update of headline sales and revenue results for FY20 is expected early this month.

Appen Ltd 

The Appen share price has gained more than 100% since its March low of $17.14. Appen shares have surpassed previous highs and are currently trading at $34.45. The pandemic is expected to have a negligible impact on the company based on currently available information. Appen has also affirmed its full-year FY20 guidance. Revenue plus orders in hand for delivery were $350 million at May 2020. Full-year underlying EBITDA for the year ending 31 December 2020 is expected to be between $125 million–$130 million.

Appen operates in the high growth artificial intelligence space, providing essential data for AI development and maintenance. Global spending on AI systems is predicted to reach $97.9 billion in 2023, up from $37.5 billion in 2019. This gives a compound annual growth rate of 28.4% for 2018–2023. Appen grew revenue by 47% in 2019 thanks to strong organic growth. Existing customers are underpinning revenue growth with increased demand for existing and new projects. Appen has also made substantial investments in sales and marketing in FY20 to lay the foundation for future growth.

Xero Limited (ASX: XRO)

The Xero share price has gained 54% from its March low of $58.75. The share price has now surpassed previous highs to trade at $91.35. The accounting software company reported strong financial results for the New Zealand financial year ended 31 March 2020. Operating revenue grew 30% to NZD$718.2 million with subscriber numbers growing 26% to 2.285 million. Annualised monthly recurring revenue grew 29% to $820.6 million as a result of the increase in subscriber numbers. Xero saw its first full-year NPAT of $3.3 million in FY20. This was an improvement of $30.5 million from a $27.1 million loss in FY19.

While the WAAAx share performed strongly in FY20, New Zealand’s FY21 early trading has been impacted by COVID-19. Xero is vulnerable to the current economic downturn, due to holding many small and medium business customers.

CEO Steve Vamos said:

“Many of our customers and partnerships are having to adapt the way they operate while investing enormous effort to survive this difficult time. Helping them is our immediate priority.”

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

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