Tag: Motley Fool Australia

The Afterpay Ltd (ASX: APT) share price has risen by 12.19% from Monday to Thursday this week. This company has pioneered the buy now pay later (BNPL) sector in Australia. It currently has a market cap of ~$13 billion and has spawned a large number of clones trying to replicate its success. 

The BNPL companies entered a raging bull market after weeks of consecutive good news announcements and large gains. The market has realised ‘pay later’ is here to stay. Openpay Group Ltd (ASX: OPY) saw its share price rise by 160% from Monday to Thursday, followed by all BNPL companies on the ASX.

Where does the Afterpay share go now?

I believe a good growth-share should have a chance of returning 10 times the initial investment. From initial share price to today the Afterpay share price has risen by an amazing 1,669%. Yet, I don’t think it is still a good growth share. For it to rise another 10 times or 1,000%, it would need to have a market cap over $130 billion. I just don’t think it is going to happen.

CSL Limited (ASX: CSL) did it, but CSL also has a lot of unique products and intellectual property, creating a massive barrier to entry. Afterpay has no barrier to entry, an array of smaller competitors both local and international and faces the Australian market entry of Klarna, which is 5% owned by Commonwealth Bank of Australia (ASX: CBA).

While I don’t necessarily think the companies below are better than Afterpay, I do believe they are more likely to see large scale growth in their share price. 

Sezzle Inc (ASX: SZL)

Many commentators often compare Zip Co Ltd (ASX: Z1P) favourably with the Afterpay shares. However, I prefer Sezzle. Sezzle is ASX-listed but headquartered in the United States. As such, it is a native company in the prized market for BNPL companies. Sezzle is focussed squarely on the Gen Z and millennial markets. It reaches them via its merchants primarily.

The company increased its users and its merchants tenfold between 2018 and 2019. Today it has a network of 1.3 million users and 14.9 thousand merchants.

EML Payments Ltd (ASX: EML)

EML payments is a fintech company more diverse than the Afterpay share. Its core business is selling gift cards at supermarkets. This is a high-margin revenue stream which the company continues to grow via acquisition of Prepaid Financial Services in Ireland.

However, they are also one of the great enabling firms of the fintech sector. Its product, EML ControlPay is the payments engine behind many of the world’s surging BNPL companies. These include Zip Co, Italian BNPL company Scalapay, and Sezzle. If this continues they will be receiving benefits of the BNPL marketplace across many companies and many countries.

Foolish takeaway

I am very confident both of these companies can increase their market caps tenfold. In the case of EML, that would mean a market cap over $10 billion. In the case of Sezzle, a market cap over $2.5 billion. I would be happy to own either of these shares. 

More reading

• Why Appen, CSL, Openpay, & Zip Co shares are tumbling lower
• Is today’s BHP, NAB or Afterpay share price a good investment?
• Why today might be a good day to buy NAB and Westpac shares
• Could the Openpay share price signal a wider boom for BNPL?
• 3 small cap ASX tech shares that could be stars of the future

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

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June means the financial year is drawing to a close and it’s a good opportunity to boost your super.

Let’s dive into some good reasons to think about topping up your retirement accounts this month.

Why you should try to grow your super in June

There’s a couple of arguments in favour of trying to grow your super. For one, you could be getting ‘free money’ from the Federal Government, depending on your income level.

The Aussie government will contribute up to $500 to your super fund when you boost your super by $1,000 on an after-tax basis.

To take advantage of this, you need to make sure you meet the eligibility requirements. This includes having a super balance under $1.6 million and a total income less than $38,564. You can also receive a progressively lower government contribution amount if your income is between $38,564 and $53,564.

This means you could potentially grow your super by a total of $1,500 in June. It’s hard to beat a 50% instant return on investment, even if you won’t reap the benefits until you reach the preservation age.

With the S&P/ASX 200 Index (ASX: XJO) falling lower in 2020, now could be a good time to get some superannuation units at a discount.

There’s also the potential to contribute on a before-tax basis. If you contribute before 30 June, you could lower your taxable income in FY20.

For instance, if you earned $50,000 during the year and have managed to save $13,000. You could potentially boost your super by $13,000, claim the tax deduction and make your taxable income $37,000 for the year.

That means your marginal tax rate would fall from 32.5 cents to just 19 cents. All of that while giving your retirement funds a big boost.

What’s the catch?

Of course, contributing additional funds to superannuation is not for everyone. There are always the potential regulatory risks (i.e. government changes) and the fact that your money is locked away for a long time.

However, if you’re looking for simple ways to reduce your tax this year, growing your super is a straight forward way to do it.

More reading

• We’re in recession. What does that mean for investors?
• 2 ASX shares better than the Afterpay share
• ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again
• Talisman Mining share price jumps 12% as drilling set to begin at Lucknow
• Why Appen, CSL, Openpay, & Zip Co shares are tumbling lower

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

The post Should you aim to grow your super in June? appeared first on Motley Fool Australia.

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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a subdued note. The benchmark index is currently down 0.35% to 5,970.8 points.

Here’s what is happening on the market today:

Big four banks push higher.

The big four banks are doing their best to drag the market higher. At lunch all four are trading notably higher than the market. Two of the best performers have been National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC). This is thanks partly to a broker note out of UBS this morning. Its analysts have upgraded both banks to a buy rating with $20.50 price targets.

Appen shares drop on insider sales.

The Appen Ltd (ASX: APX) share price has tumbled lower today after investors responded negatively to news of high levels of insider selling. The artificial intelligence company announced that Non-Executive Chairman, Chris Vonwiller, sold 2 million Appen shares on-market. Also selling shares was its CEO and Managing Director, Mark Brayan and Non-Executive Director, Bill Pulver. They sold 95,535 shares and 275,000 shares, respectively.

Qantas continues to soar.

It has been another positive day for the Qantas Airways Limited (ASX: QAN) share price on the ASX 200. After recording a 7% gain on Thursday, the airline operator’s shares are up a further 3.5% today.  Investors have been buying Qantas’ shares after it announced an increase in domestic flights for June and July. Subject to demand, by the end of July Qantas’ domestic capacity could be 40% of pre-pandemic levels. One broker that appears pleased with the news is Morgan Stanley. This morning it retained its buy rating and $5.20 price target.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Friday has been the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price with a 6% gain. The Qantas announcement appears to have given the airport operator a boost today. The worst performer is the Pro Medicus Limited (ASX: PME) share price with a 5% decline. Earlier this week UBS downgraded the company’s shares to a neutral rating on valuation grounds.

More reading

• We’re in recession. What does that mean for investors?
• Why Appen, CSL, Openpay, & Zip Co shares are tumbling lower
• 3 of the best ASX 200 tech shares for your watchlist
• The Kogan share price is surging higher following another positive business update
• Why Kogan, NAB, Qantas, & Sydney Airport shares are racing higher

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia owns shares of Appen 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.

The post ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again appeared first on Motley Fool Australia.

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The Talisman Mining Ltd (ASX: TLM) share price is racing higher today, up 12.25% to 11 cents on the back of a drilling and corporate update.

Talisman Mining is an Australian mineral development and exploration company focused on opportunities in base and precious metals.

The company’s key asset is the Lachlan Project within the Cobar/Mineral Hill region in New South Wales. Talisman believes there is significant potential for the discovery of substantial base metals and gold mineralisation within this land package.

Additionally, in August 2019, Talisman entered into a farm-in agreement with privately-owned Lucknow Gold in relation to the Lucknow Gold Project in NSW. The Lucknow Goldfield is located within the Macquarie Arc which hosts extensive gold and copper mineralisation, including Newcrest Mining Limited (ASX: NCM)’s Cadia-Ridgeway mine and Regis Resources Limited (ASX: RRL)’s McPhillamy’s project.

Before we dig into the announcement, it’s important to note that Talisman Mining sits at the smaller end of the ASX with a current market capitalisation of around $20 million.

What did Talisman Mining announce?

This morning, Talisman revealed that diamond drilling at the Lucknow Gold Project will begin this month. 

The planned diamond drilling will target an interpreted high-grade lode offset position at Lucknow where historic production was in excess of 400,000 ounces at grades of more than 100 grams per tonne (g/t) gold. 

Drilling was supposed to start in April but was postponed due to COVID-19.

Talisman also provided a corporate update this morning, revealing that exploration drilling and ongoing business development activities have resumed. As a result, the company has lifted a number of measures put in place from the beginning of April in response to the pandemic.

Accordingly, director fees have reverted to pre-COVID-19 levels and senior executives have returned to a full-time working week on pre-pandemic salaries. In addition, the company is expecting a staged return to work for its remaining workforce over the coming weeks, in line with anticipated workflows.

Talisman Mining shares are currently changing hands at 11 cents apiece and have a 4-week average turnover of $34,602 according to Market Index.

More reading

• We’re in recession. What does that mean for investors?
• 2 ASX shares better than the Afterpay share
• Should you aim to grow your super in June?
• ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again
• Why Appen, CSL, Openpay, & Zip Co shares are tumbling lower

Motley Fool contributor Cathryn Goh 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.

The post Talisman Mining share price jumps 12% as drilling set to begin at Lucknow appeared first on Motley Fool Australia.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to end the week with a day in the red. At the time of writing the benchmark index is down 0.4% to 5,968 points.

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

The Appen Ltd (ASX: APX) share price is down almost 4% to $29.31. This follows an announcement which revealed that several directors have been selling shares. The biggest seller was its Non-Executive Chairman, Chris Vonwiller. He offloaded 2 million Appen shares on-market for an average of $29.00 per share. This represents a total consideration of $58 million. The company’s CEO, Mark Brayan, also sold shares.

The CSL Limited (ASX: CSL) share price is down 4% to $283.02. The biotherapeutics company’s shares have come under a bit of pressure in recent weeks amid concerns that plasma collections could be impacted due to the pandemic. One broker that isn’t concerned is Citi. On Thursday it retained its buy rating and $334.00 price target on CSL’s shares.

The Openpay Group Ltd (ASX: OPY) share price has tumbled 13% to $3.05. The buy now pay later provider’s shares have come under pressure since completing an institutional placement on Thursday. Openpay raised $33.8 million through at a discount of $2.40 per share. These funds will be used to accelerate its growth in the UK and Australia and support further geographic expansion.

The Zip Co Ltd (ASX: Z1P) share price is down 7% to $5.53. This decline appears to be a case of profit taking after some very strong gains this month. Investors have been fighting to get hold of the payments company’s shares after it announced its expansion into the United States. It is moving into the $5 trillion market through the acquisition of New York-based QuadPay.

More reading

• 2 ASX shares better than the Afterpay share
• ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again
• Why the Appen share price could come under pressure today
• Could the Openpay share price signal a wider boom for BNPL?
• 3 small cap ASX tech shares that could be stars of the future

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 CSL Ltd. and ZIPCOLTD FPO. The Motley Fool Australia owns shares of Appen 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.

The post Why Appen, CSL, Openpay, & Zip Co shares are tumbling lower appeared first on Motley Fool Australia.

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ASX 200 tech shares could be the best way to grow your wealth over the coming years.

Technology businesses are able to grow much faster than normal businesses because their product is digital. You can “replicate” the product again and again for very little cost. It’s not the same as making, shipping and storing a table, food or anything else physical.

Here are three of the best ASX 200 tech shares for your watchlist:

Altium Limited (ASX: ALU)

Altium is a leading electronic PCB software business which provides software for engineers to design the devices and vehicles of the future. There’s going to be a lot more technology in our lives in the coming years and decades. Altium will play an important part in that.

The ASX 200 tech share has been one of the best performers over the past decade. It has been steadily growing its subscriber base, its profit margins and its cash balance.

It already has an impressive client list including Space X, NASA, Tesla, Google, Amazon, John Deere and many more.

Altium is aiming for market dominance with 100,000 Altium Designer subscribers by 2025. The long-term goal is more important than what goes on in 2020. Clients tend to stick with software once they’re using it. But shorter-term profit could be hampered by the coronavirus effects.

With everything that’s going on, I’m waiting for Altium’s share price to go under $30 before buying any more.

Xero Limited (ASX: XRO)

Xero is another top ASX 200 tech share. It provides users with very useful cloud accounting software. It has a lot of automation tools that are a big timesaver.

It’s a very compelling offering which is why Xero is growing subscribers across the world. New Zealand, Australia and UK are particularly strong markets for Xero.

Xero has such high gross profit margins that every new subscriber adds a lot to the overall business position. The monthly recurring revenue is an attractive feature.

Time will tell what COVID-19 does to Xero and its SME customer base in the shorter-term, but I think Xero has a very compelling offering. Particularly as a cloud-based product that can be accessed from anywhere.

The ASX 200 tech share could eventually become one of the ASX’s biggest businesses if it can keep expanding in the US and UK.

I’d want to wait for a share price under $80 before buying Xero shares.

REA Group Limited (ASX: REA)

REA Group has a very strong market position. It owns realestate.com.au, Australia’s leading property portal. If you want to try to get the best price for your property then you’ll probably use REA Group’s services.

I like REA Group as a diversified play on the property market without having to actually own a property to profit from property.

The ASX 200 tech share is rising again as conditions for property selling return to normal in Australia. There are some potential changes coming up that could cause more property transactions. The end of jobkeeper and a change to stamp duty could cause more properties to come into the market. Higher volumes would obviously be better for REA Group.

I’m also attracted to the idea that REA Group can grow a lot into the future with its stakes in international property sites in North America and Asia. But in the current conditions I’d wait for a share price under $100.

Foolish takeaway

Each of these ASX 200 tech shares have very compelling futures. But with the COVID-19 uncertainty I think we can be picky with our buying, even with how low interest rates are at the moment. That’s why they’re on my own watchlist right now, I’m waiting for a bit of a cheaper price. But for long-term buys I think they’d still be good ideas.

More reading

• The Kogan share price is surging higher following another positive business update
• Is the Westpac share price too high?
• The Xero share price just hit a record high: Is it too late to invest?
• Is today’s BHP, NAB or Afterpay share price a good investment?
• Why today might be a good day to buy NAB and Westpac shares

Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium and Xero. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 3 of the best ASX 200 tech shares for your watchlist appeared first on Motley Fool Australia.

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The Kogan.com Ltd (ASX: KGN) share price is surging higher this morning following another strong business update.

Kogan has provided the market with an update of how it has performed during the fourth quarter to date, in light of the coronavirus crisis.

The Kogan share price has been experiencing a very strong rally in recent months. Kogan shares dropped to a low of $3.45 in mid-March but closed yesterday at $11.40. That’s a massive 230% increase. The rally has been particularly strong since mid-May and appears set to continue based on morning trade today. At the time of writing, Kogan’s share price has already climbed nearly 9% since the market opened.

The S&P/ASX 200 Index (ASX: XJO) in comparison, has seen a much more modest recovery since the March crash.

Customer base and sales continue their upward trajectory

Kogan revealed today that its active customer base has continued on a strong growth trajectory. There were an additional 126,000 active customers added during May to now total 2,074,000. That’s an increase of 6.5%.

Gross sales for Kogan soared higher by more than 100% in the fourth quarter to date (April and May), compared to the equivalent period in 2019.

Kogan previously revealed to the market that the pipeline for new sellers in its Kogan Marketplace remains very strong. This is helping to boost the company’s strong sales momentum and, as such, the Kogan share price.

Profitability continues to climb

Kogan’s profitability also continues to improve. The company’s gross profit increased by more than 130% during April and May.

EBITDA growth was even more impressive. Adjusted EBITDA climbed by more than 200% in the prior two months, compared to the corresponding period.

When EBITDA is adjusted for the financial year to date, it grew by more than 50%. Also, a very impressive result.

Kogan’s strong growth during the last two month follows on from a very strong March quarter. The Aussie ‘etailer’ revealed back then a strong 30% increase in gross sales and a 23% jump in gross profit during the March quarter.

There has been a sharp increase in spending at online retail sites such as Kogan and Amazon since lockdown restrictions were implemented. With more Australians working from home, Kogan has been cashing in on strong demand for goods such as PCs and laptops. Also, other home office accessories as well as home fitness equipment have proven very popular with Aussies isolating at home. Whilst many companies have suffered significant revenue losses due to the COVID-19 crisis, the pandemic has largely been good news for the Kogan share price.

Where to next for the Kogan share price?

In more good news, Kogan also revealed today that it ended the month of May with $58.6 million of cash on its books. The company also has a debt facility which was drawn to $26.0 million. So, its cash position is fairly solid. As mentioned, Kogan’s share price is up by another massive 9% to be trading at $12.41. However, with such a strong rally since mid-March, I feel that Kogan may see some high share price volatility in the months ahead.

More reading

• 3 of the best ASX 200 tech shares for your watchlist
• Why Kogan, NAB, Qantas, & Sydney Airport shares are racing higher
• Is the Westpac share price too high?
• Is today’s BHP, NAB or Afterpay share price a good investment?
• Why today might be a good day to buy NAB and Westpac shares

Motley Fool contributor Phil Harpur owns shares of Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com 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.

The post The Kogan share price is surging higher following another positive business update appeared first on Motley Fool Australia.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is fighting hard to get into positive territory. At the time of writing the benchmark index is down 0.2% to 5,980.7 points.

Four shares that have not let that hold them back are listed below. Here’s why they are racing higher:

The Kogan.com Ltd (ASX: KGN) share price has jumped 9% to $12.42. Investors have been buying the ecommerce company’s shares after it released a business update. That update revealed that Kogan’s impressive customer, sales, and profit growth continued during the month of May. The company added 126,000 active customers during May. This helped more than double its sales and triple its operating earnings quarter to date.

The National Australia Bank Ltd (ASX: NAB) share price is up 2% to $19.28. The banking giant’s shares were given a big boost this morning by a broker note out of UBS. It has upgraded NAB’s shares to a buy rating with a $20.50 price target. It doesn’t feel that NAB’s outlook is as bleak as first feared.

The Qantas Airways Limited (ASX: QAN) share price has continued its positive run and is up a further 3% to $4.63. Investors have been buying the airline operator’s shares after it announced an increase in domestic flights for June and July. By the end of July, subject to demand, Qantas’ domestic capacity could be 40% of pre-pandemic levels. This morning Morgan Stanley responded to the news by retaining its buy rating and $5.20 price target. 

The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price has pushed over 4% higher to $6.36. This gain appears to have been driven by the aforementioned news out of Qantas. A quicker than expected recovery in domestic tourism would be a big positive for Sydney Airport and limit the cash burn it is currently experiencing.

More reading

• The Kogan share price is surging higher following another positive business update
• Is today’s BHP, NAB or Afterpay share price a good investment?
• Why today might be a good day to buy NAB and Westpac shares
• Qantas share price soars on plans to increase domestic flights
• These top ASX dividend shares could be perfect for income investors

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com 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.

The post Why Kogan, NAB, Qantas, & Sydney Airport shares are racing higher appeared first on Motley Fool Australia.

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The Vocus Group Ltd (ASX: VOC) share price has been an impressive performer over the last two and a half months.

Since the specialist fibre and network solutions provider’s shares fell to a 52-week low of $1.80 in late March, they have rallied a massive 73% to trade at $3.13 today.

Is it too late to buy Vocus shares?

The Vocus share price can still go a lot higher from here according to one leading broker.

A note out of Goldman Sachs this morning reveals that its analysts have reiterated their buy rating and $3.85 price target on the company’s shares.

This price target implies potential upside of 23% for its shares over the next 12 months.

Why is Goldman Sachs bullish?

According to the note, the broker was pleased to see Vocus reiterate its FY 2020 guidance and announce the refinancing of its debt on Thursday.

Vocus revealed that it expects its FY 2020 earnings before interest, tax, depreciation, and amortisation (EBITDA) to be in the range of $359 million to $369 million.

This compares to the EBITDA of $356 million that Goldman was expecting. It believes this is reflective of the resilience of telecom earnings.

Overall, the broker remains positive on its outlook and also on its valuation in comparison to rival TPG Telecom Ltd (ASX: TPM).

Goldman commented: “We stay Buy on Vocus with this update removing two key investor issues (i.e. refinancing & lack of guidance commentary) and helping to de-risk our positive investment view.”

“This is based on: (1) improving Enterprise earnings outlook, with a meaningful opportunity to partner with NBN Co.; (2) favorable valuation (vs. TPM and history); (3) significant infrastructure asset base, which we see as attractive in a low-rate environment,” it concluded.

Should you buy Vocus shares?

While my preference in the telco space remains Telstra Corporation Ltd (ASX: TLS), I think Vocus is a great option as well.

Times have been hard for the company over the last few years, but it finally appears to be on track now to deliver solid growth over the coming years. This could lead to the Vocus share price outperforming over the medium term.

More reading

• 5 things to watch on the ASX 200 on Friday
• The 10 shares that significantly move the ASX 200 index
• Telstra shares and 2 other ASX companies to buy in a low-interest rate world
• Why I would buy these outstanding ASX 50 shares right now
• ASX 200 hits 6,000 points: Westpac provide AUSTRAC update, Vocus reaffirms guidance

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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 Atomo Diagnostics Ltd (ASX: AT1) share price is charging higher this morning after expanding its COVID-19 testing partnership with a French biotech company.

Atomo Diagnostics is a medical device company that supplies rapid diagnostic test (RDT) devices to the global diagnostic market. Its RDT platforms simplify testing procedures and enhance usability for both professional users and untrained self-testers. The company has supply agreements in place for tests targeting infectious diseases such as HIV and COVID-19.

Atomo Diagnostics shares are fresh on the ASX scene after listing on 16 April 2020 at an issue price of 20 cents per share. At the time of writing, Atomo Diagnostics shares are changing hands at 34.5 cents per share – 9.52% higher for the day and 72.5% higher than the IPO price. The company’s market capitalisation is currently sitting just below $200 million.

What did Atomo Diagnostics announce?

After the market closed yesterday, Atomo revealed it has expanded its COVID-19 rapid test partnership with NG Biotech.

Under the existing agreement, Atomo has been supplying NG Biotech with its Galileo rapid test device for use in NG Biotech’s COVID-19 antibody tests. The initial order under the agreement was for 397,200 devices, with NG Biotech having the right to purchase up to 2.465 million devices.

To date, NG Biotech has ordered more than 1.5 million Galileo devices for testing in France. NG Biotech’s test has been CE Marked for professional use in Europe and results are obtained from a drop of blood in 15 minutes.

Under the expansion of the partnership, Atomo now has exclusive rights to market and distribute the COVID-19 antibody test in Australia, New Zealand, and a number of countries in South East Asia – subject to obtaining regulatory approvals in each jurisdiction. The test will be marketed and distributed under the brand ‘AtomoRapid COVID-19 (IgG/IgM)’ and Atomo will be the listed manufacturer.

The pricing arrangements with NG Biotech are limited to a price payable per unit only and do not include any license fees or royalties.

Atomo noted that the period of exclusivity is not currently limited and it is in the process of negotiating a definitive long-term supply agreement with NG Biotech.

What now?

Atomo will now progress regulatory applications within the relevant jurisdictions in the coming months. Based on an assessment of regulatory pathways, the company’s initial focus will be Australia, the Philippines, Hong Kong and Taiwan.

Commenting on the partnership expansion, Atomo’s co-founder and managing director John Kelly said:

“Atomo is delighted to have secured exclusive rights to market, as the listed manufacturer, the COVID19 test which NG Biotech has successfully launched in Europe with initial sales to the French Ministry of the Armies (Defence) and a number of public hospitals, following strong results in independent French clinical studies.”

More reading

• Is the Westpac share price too high?
• The Xero share price just hit a record high: Is it too late to invest?
• Is today’s BHP, NAB or Afterpay share price a good investment?
• Why today might be a good day to buy NAB and Westpac shares
• Qantas share price soars on plans to increase domestic flights

Motley Fool contributor Cathryn Goh 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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