Tag: Motley Fool Australia

The Tesoro Resources Ltd (ASX:TSO) share price is trading at record highs after surging more than 15% today. The positive move in Tesoro’s share price comes after the company reported exciting drilling results.

Highlights from Tesoro’s drilling results

Earlier today, Tesoro announced the company’s drilling results from its El Zorro Gold Project in Chile. The assay results were collected from channel and rock chip sampling at the Ternera and Drone hill sites.

The company reported that surface mineralisation was identified at the Ternera site, with the surface gold footprint being extended to 800 metres in length and up to 300 metres in width.  Tesoro also noted strike extensive vein hosted mineralisation at the Drone Hill site.

Highlights of the drilling report included 8 metres at 5.56g/t gold, including 2 metres at 19.98g/t gold at Ternera and 1.2 metres at 12.70g/t gold at Drone Hill.

Tesoro’s management noted the results would increase the scale of surface mineralisation at the El Zorro site, while also prompting further expansion.

What does Tesoro do?

Tesoro is a mining exploration and development company with projects in the Coastal Cordillera region in Chile. The region hosts multiple copper and gold mines, with much of the area remaining unexplored due to the nature of mining concession ownership in Chile.

Via its in-country network, Tesoro has secured the rights to scale gold projects in the region, with the company holding the rights to 80% of the El Zorro Gold Project. Last week, the company announced that it had expanded its land position at the El Zorro project by 360% following 156 new concessions.

Tesoro also noted that the company’s operations had not been affected by the COVID-19 pandemic, with activities at El Zorro continuing as normal.

Foolish Takeaway

The Tesoro share price is trading near record highs after hitting an intra-day high of 20.5 cents earlier today.

More reading

• Woolworths provides update on the impact of COVID-19 restrictions
• 3 high quality blue chip ASX 200 shares to buy
• I don’t normally buy ETFs, but I would invest in these 2
• Why the Redbubble share price is trading higher today
• Earnings season: What to expect from the CSL FY 2020 result

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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I don’t normally buy exchange-traded funds (ETFs), but I would invest in the two I’m going to tell you about in this article.

ETFs are a great way to invest if you’re not sure about individual businesses during this difficult COVID-19 period. Over the long-term shares have a habit of rising in value as their earnings grow. So if you’re invested in many good businesses then as a group they’ll hopefully do quite well.

These are two ETFs I’d buy for my portfolio:

BetaShares Global Quality Leaders ETF (ASX: QLTY)

As the name suggests, this ETF is focused on quality. Quality can mean different things to different people. It could mean how reliable its earnings are. It could mean how fast the business is growing. Maybe quality refers to its profit margins.

The shares that make as holdings of this ETF rank highly on four attributes: return on equity (ROE), debt to capital, cashflow generation ability and earnings stability. I think if a business ranks well on all of those factors then it would count as high quality.

I think it’s fair to say that the businesses which have reliable earnings, good cashflow and manageable (or no) debt would be able to perform better than average during COVID-19. During better economic times these businesses may be able to generate better growth as well – leading to potential outperformance of the global share indices.

The ETF owns 150 shares from different regions and different sectors. Its top holdings are: Apple, Nvidia, Accenture, Adobe, Intuitive Surgical, Facebook, Intuit, L’Oreal, Cisco Systems and Unitedhealth.

It is invested in various industries but around 60% of it is invested in IT and healthcare businesses. These two sectors are capable of producing growth even if the economy isn’t firing on all cylinders.

The ETF was only launched by BetaShares in November 2018. Since then it has returned an average of 19.76% per annum. Past performance is not a guarantee of future performance, but it shows the types of returns that the underlying businesses can generate.  

BetaShares NASDAQ 100 ETF (ASX: NDQ)

Many of the best businesses in the world aren’t listed on the ASX. Many of them are actually listed on the NASDAQ, a stock exchange in the US.

The biggest technology businesses have changed the way we (and others around the world) live and are now heavily integrated into society. Apple, Amazon, Facebook, Alphabet (Google), Microsoft and so on – they all feature as major holdings within the ETF.

Look a bit further down the ETF’s holdings list and you’ll find more exciting technology growth shares like Tesla, Nvidia, Paypal, Netflix, Adobe, Intel and Broadcom.

COVID-19 is impacting many industries but technology seems to be one of the least affected sectors. Many businesses deliver their service digitally, so they’re not really susceptible to social distancing rules.

The reason why they’re not vulnerable to COVID-19 impacts is also one of the main reasons why they’re so profitable. Software can be replicated for virtually no extra costs after the initial development. The FAANG shares have very attractive gross profit margins.

The BetaShares NASDAQ 100 ETF has been a very strong performer over the short-term and long-term. Over the past year the ETF’s net return, after fees, was 35.5% to 30 June 2020. Over the past five years it has returned an average of 20.75% per annum.

Again, past performance doesn’t guarantee future returns. But the FAANG shares keep performing and as long as regulation doesn’t undo them then I think they can keep growing earnings impressively during the 2020s.

Foolish takeaway

I think both of these ETFs can produce long-term returns. At the current prices I’d probably go for the BetaShares quality ETF. The NASDAQ ETF is running hot recently and I think the US election could cause volatility for US shares.

More reading

• 3 ways to play the skyrocketing tech shares
• 1 ASX share to take advantage of the strong FAANG shares
• These could be outstanding buy and hold options for ASX investors
• These ASX ETFs could generate strong long term returns
• Here are easy ways to diversify your ASX portfolio

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The Redbubble Ltd (ASX: RBL) share price has jumped 3.85% today. With no specific company news, it looks to be trading higher because of its eCommerce platform, which provides independent artists a meaningful new way to sell their creations.  

Bumper growth in June

In the June update, Redbubble reported significant growth in revenue and earnings because of the acceleration in online activity in Q4 2020. Pleasingly, the group’s supply chain has managed the growth, and orders have been fulfilled within expectations. However, its operating expenses for April and May were tracking 7.7% above the first two months of Q3 (January and February) with a variable portion related to incremental volume increases. 

Redbubble is realigning its organisational structure by reducing headcount and related operating costs. Core initiatives include artist acquisition, activation and retention, user acquisition and transaction optimisation, and audience understanding and loyalty. As a result, $5.6 million in annualised savings is expected to be generated with a one-off cost of $2.1 million. 

April update positive too

The June update followed a similar positive update in April. For the 9 months ended 31 March 2020, marketplace revenue was $246 million. In comparison, in the prior corresponding period (pcp) revenue was $197 million. Its operating earnings before interest, taxation, depreciation and amortisation (EBITDA) was $6.8 million up from $4.9 million in the pcp.

Other announcements

In March this year, Redbubble appointed independent director Anne Ward as chair, replacing retiring chair Richard Cawsey. This was a part of a planned board renewal.  

Additionally, Martin Hosking was appointed interim CEO following Barry Newstead’s departure on 18 February 2020. He will serve until a permanent CEO is found. 

About Redbubble

Redbubble was founded in 2006. The group incorporates two global online market places, Redbubble.com and TeePublic.com. It sells products including apparel, stationery, housewares, bags, wall art and more.

The company helps artists profit from their creations. Artists can upload their designs to products, customers find and purchase, products are produced to order and shipped around the world. Ultimately, the customers get the product and the artist gets paid. 

The Redbubble share price has benefited from COVID-19 with a growth of 87.05% in the past year. The price is currently trading at $2.70, up 3.85% in today’s trade. 

More reading

• Why 5G Networks and these ASX shares just hit record highs
• These ASX eCommerce shares are riding the online shopping wave
• The Redbubble share price is up almost 500% from its low: Is it too late to invest?
• 2 ASX tech shares with stellar growth prospects

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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With earnings season now here, I have been looking at what analysts are expecting from many popular companies this month.

You can see previous earnings previews on Qantas Airways Limited (ASX: QAN) and Telstra Corporation Ltd (ASX: TLS) here and here, respectively.

Today I thought I would turn my attention to biotherapeutics giant CSL Limited (ASX: CSL).

What is expected from CSL in FY 2020?

CSL is scheduled to release its full year results for FY 2020 on 19 August 2020.

According to a note out of Goldman Sachs, its analysts expect CSL to report revenue of US$9,276 million and earnings before interest and tax (EBIT) of US$2,705 million. This represents year on year growth of 8.6% and 8%, respectively.

And on the bottom line, the broker is forecasting net profit after tax growth of 6.25% to US$2,141 million and earnings per share of US$4.56.

What else should you look out for?

Plasma collections will be an important topic for management to cover with this release. There are concerns that the pandemic is weighing on collections, which could lead to higher production costs for key therapies in FY 2021.

It is because of these concerns that the CSL share price is trading well off its 52-week high at present.

Goldman Sachs believes greater clarity on this topic could narrow a valuation deficit. (The broker has a buy rating and $326.00 price target on its shares.)

Goldman commented: “Contrary to some domestic peers, CSL is negatively exposed to spread of the virus in the US. As such, relative to the sector, CSL is at its cheapest level in >5 years. Whilst we understand the nature of the concerns, we incorporate them directly and believe the quality and growth profile still stacks up better than most.”

“In our view, a HSD+ growth profile remains intact, and the degree of underperformance has more than adequately incorporated the risks. We believe a -40% decline in collection from 1 Apr-31 Dec should only be considered a low probability tail risk event, and we look to the upcoming results season to provide insights.”

Should you invest?

I agree with Goldman Sachs on CSL and believe the recent share price weakness has created a buying opportunity for investors.

And with the worst-case scenario seemingly priced into its shares already, it looks like an opportune time to invest.

More reading

• Afterpay and Qantas were among the most traded shares on the ASX last week
• Buy these outstanding ASX 50 shares for strong potential returns
• Earnings season: What to expect from the Qantas FY 2020 result
• Why I would buy and hold CSL and these ASX healthcare shares
• Earnings season: What to expect from Telstra in FY 2020

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. 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 Reserve Bank of Australia (RBA) interest rate decision was exactly inline with what the market was expecting, but this doesn’t mean it didn’t offer any surprises.

Our central bankers kept interest rates steady at a record low of 0.25% this afternoon for the fifth straight month.

This is exactly what economists were predicting as the RBA indicated before that the rates are effectively at rock bottom.

ASX stocks unmoved

The S&P/ASX 200 Index (Index:^AXJO) was unmoved by the news as it traded 1.9% higher at the time of writing, while the Australian dollar firmed slightly to US71.3 cents.

Some traders had speculated that the RBA could go to zero or even turn to negative rates in the face of the latest stage four COVID-19 lockdown in Victoria. But this was unlikely.

However, there are four interesting takeaways from RBA Governor Philip Lowe’s statement that accompanied the rate decision.

RBA will buy bonds tomorrow

The one that stands out to me is the RBA signalling it will be jumping back into the secondary bond market.

The central bank hasn’t been intervening in the government bond market for a while, but it said it will do so tomorrow as the three-year sovereign bond yield is creeping above its 0.25% target rate.

The RBA seldom telecasts its intentions so specifically and the move is likely aimed at getting the yield down without having to lift a finger.

Low government bond yields will depress borrowing costs in Australia as all debt is benchmarked to government bonds.

Banks borrowing more from the RBA

The second noteworthy takeaway is that authorised deposit-taking institutions (ADIs), namely the banks, have been increasingly tapping the RBA for cash.

These ADIs have taken $29 billion from the RBA’s Term Funding Facility, up from $15 billion a month ago. The facility was set up to give banks cheap excess to funds that can be loaned out to consumers and businesses.

The RBA expects banks to increasingly use the funding facility, which should help alleviate margin pressure on the likes of Commonwealth Bank of Australia (ASX: CBA) and friends as we head into the profit reporting season.

Missing the mark

The third point of interest is that the RBA has effectively given up on trying to get inflation to return to its target band of between 2% and 3% for the next few years.

While the RBA believes that the worst of the COVID-19 fallout is behind us, the weak economic outlook will cap price rises for at least a couple of years – even in the bank’s bull case scenario.

What this means is that the RBA won’t be looking to lift interest rates for a long while as it acknowledged that our economy will need support for years.

Unemployment peak

Finally, the RBA is expecting the unemployment rate will peak at 10% in 2020 as output falls by 6% before growing by 5% in 2021.

However, it will take a few years before the unemployment rate “gradually” falls to 7%. It’s a pretty bleak outlook.

More reading

• Indiana Resources share price jumps to 3-year high on acquisition news
• ASX 200 jumps 2%: Big four banks rebound, Wesfarmers update, Afterpay rockets
• Will the Coles share price rocket higher again in August?
• Why the Reliance Worldwide share price is one to watch today
• Should you invest in Commonwealth Bank shares?

Motley Fool contributor Brendon Lau owns shares of Commonwealth Bank of Australia. Connect with me on Twitter @brenlau.

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 the time of writing, the Openpay Group Ltd (ASX: OPY) share price is up 16% to $3.77 after the company released an announcement advising it has formed a partnership with MSL Solutions Ltd (ASX: MSL).

What was in the announcement?

According to the announcement, Openpay signed a partnership with MSL Solutions that will allow customers to use Openpay when buying MSL’s golf and membership products. Member subscribers will be able to pay membership fees using Openpay’s platform.

The agreement will initially run for 3 years and Openpay’s partners will be excluded from offering buy now, pay later (BNPL) services to MSL’s customers in Australia.

Openpay’s agreement with MSL Solutions involves revenue sharing and Openpay will pay MSL an annual rebate of fees paid to Openpay by customers each year.

Openpay Chief Commercial Officer, Dion Appel stated;

“Openpay prides itself on creating partnerships that support our customer network; merchants and in this case, members. MSL is one of the leaders in the golfing and hospitality industry. We are proud to announce this exclusive partnership that will enable a smarter way for hundreds of gold clubs on MSL’s platform to offer Openpay’s buy now, pay later for the purchase of golf memberships. MSL has been an innovator in the golfing industry and we are pleased to have been selected to further solidify its position as an industry leader.”

About the Openpay share price

Openpay is a BNPL provider that offers services in Australia, New Zealand and the United Kingdom. The company partners with merchants to offer its payment platform in stores, in apps and online.

In July, Openpay announced a partnership with 1st Group Ltd (ASX: 1ST) to make its platform available to patients of medical practices within the MyHealth1st network. This partnership also included a revenue sharing agreement.

In the final quarter of the 2020 financial year, Openpay announced record growth with active customers up 141% relative to the prior corresponding period . The number of active merchants was also up 52% relative to the prior corresponding period. Openpay had total transactions of $62.6 million during the June quarter.

At 30 June, Openpay had $70,059,000 cash versus $45,559 at the end of the previous quarter.

The Openpay share price is up 1078% since its 52 week low of 32 cents. It has returned 204% since the beginning of the year. The Openpay share price is up 183% since this time last year.

More reading

• 3 quality ASX tech shares to buy in August
• Afterpay and Immuron were among the most traded shares on the ASX last week
• Latest ASX entrant mixes BNPL with eCommerce
• Is CommBank the BNPL killer?
• These BNPL shares have blown up since their IPOs

Motley Fool contributor Chris Chitty 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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Investment platform provider CommSec has just released data on the five most traded ASX shares on its platform from last week.

Once again, the buy now pay later sector was popular with investors. It provided two of the most traded ASX shares on the CommSec platform over the period.

They were joined by one of the big four banks, a biotech behemoth, and Australia’s leading airline.

Here’s the data:

Zip Co Ltd (ASX: Z1P)

This buy now pay later provider was the most popular share on the CommSec platform for a third week in a row. Zip Co shares accounted for 1.9% of total trades on the platform over the period, with 62% of these made by buyers. Despite this, it wasn’t enough to stop the Zip Co share price from falling 7% last week. Nevertheless, its shares were still up 70% year to date at the end of last week.

CSL Limited (ASX: CSL)

This biotherapeutics company’s shares were heavily traded last week. According to the data, approximately 1.8% of trades on the CommSec platform involved CSL shares. Although the CSL share price dropped 2.5% over the period, the vast majority of the action was from buyers. A total of 82% of trades were buy orders, which appears to indicate that investors believe its recent pullback is a buying opportunity.

Afterpay Ltd (ASX: APT)

Afterpay shares remain popular with CommSec customers. The buy now pay later giant’s shares accounted for 1.5% of trades on the platform last week. However, the buying and the selling was evenly split, with buyers accounting for 51% of trades. The Afterpay share price fell 2% over the period.

Westpac Banking Corp (ASX: WBC)

Investors were selling off the banks last week, which led to the Westpac share price falling 3.8% over the period. However, it looks as though CommSec customers saw this as an opportunity to pick up shares at a cheaper price. A total of 75% of Westpac trades were buy orders according to the data. Westpac shares accounted for 1.4% of total trades on the platform.

Qantas Airways Limited (ASX: QAN)

Finally, Qantas shares were heavily traded last week after coronavirus cases spiked in Australia. The airline operator’s shares accounted for 1.4% of trades on the platform over the five days. And despite a massive 82% of these trades being buy orders, the Qantas share price sank over 11% lower. This could be a sign that some investors believe Qantas shares have been oversold. Alternatively, it could be an example of investors trying to catch a falling knife.

More reading

• Earnings season: What to expect from the CSL FY 2020 result
• Zip Co share price surges 8.5% higher: Is it too late to buy shares?
• Buy these outstanding ASX 50 shares for strong potential returns
• 3 quality ASX tech shares to buy in August
• ASX 200 jumps 2%: Big four banks rebound, Wesfarmers update, Afterpay rockets

James Mickleboro owns shares of Westpac Banking. 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 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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The price of ASX gold share, EMetals Ltd (ASX: EMT), is up 15% in intraday trading and up 43.8% since last Friday 31 July.

The strong share price growth is being driven by the mineral resource exploration company’s positive drill results at its Twin Hills Gold Project in the Goldfields of Western Australia (WA).

According to the company’s report to the ASX today, EMetals has completed a 250-hole auger drilling program at Twin Hills. EMetals owns 100% of the project. The tenement covers an area of approximately 30 square kilometres.

EMetals reported drilling along almost 2 kilometres of prospective shear zone. It interprets the results to show numerous gold mineralised structures. These form an intersection south of the historical Twin Hills mine, which has recorded historical production of 1,100 tonnes of ore at an average grade of 23.6 grams per tonne.

The ASX gold share, with a current share price of 2.3 cents per share, has a market cap of $9.4 million.

A word from EMetals Director Mathew Walker

Walker is understandably pleased. He stated:

“The Company has decided to accelerate exploration activities at Twin Hills in response to favourable market conditions within the gold sector. Twin Hills is an exciting exploration Project with over 5 kilometres of prospective strike length adjacent to two excised historical high-grade gold mines. We are delighted that the recent auger geochemical program has validated our structural modelling and provided us with multiple ready to drill targets”.

Future plans

EMetals is now planning reverse circulation drilling to test the shear intersection target. The company is also expanding its auger drilling to the north, where it has identified multiple potential targets along a 5-kilometre prospective shear zone.

The company notes that, “Gold mineralisation is associated with banded, brittle-ductile shear zones conformable with the north-south trend of the region and contains quartz carbonate veining.”

More reading

• Earnings season: What to expect from the CSL FY 2020 result
• 4 things you need to know about the RBA’s rate decision today
• Openpay share price up 16% on partnership with MSL Solutions
• Afterpay and Qantas were among the most traded shares on the ASX last week
• Zip Co share price surges 8.5% higher: Is it too late to buy shares?

Motley Fool contributor Bernd Struben 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 Zip Co Ltd (ASX: Z1P) share price has been one of the best performers on the All Ordinaries index on Tuesday.

The buy now pay later provider’s shares were up as much as 8.5% to $6.27 at one stage today.

When its shares reached that level, it meant they were up an incredible 500% from their March low.

Why did the Zip Co share price rocket higher today?

Investors have been fighting to get hold of Zip Co and other tech shares on Tuesday after a very positive night of trade on the tech-heavy Nasdaq index.

The Nasdaq index stormed 1.5% higher on Monday night thanks to strong gains from the likes of Microsoft, Apple, and Netflix. This led to the famous index hitting a new record high.

Australian tech shares have not only followed their lead, but also made up for their poor performance yesterday.

At the time of writing the S&P/ASX 200 Information Technology index is up a sizeable 3.5%. It was up as much 4.4% earlier in the day.

But unlike the Nasdaq index, the S&P/ASX 200 Information Technology index is not trading at a record high. In afternoon trade it is around 3% off its highest levels. This could mean there’s still further gains ahead for our local tech stars.

Why is the Zip Co share price up 500% from its low?

Zip Co’s shares have been on fire over the last few months after many in the market incorrectly predicted the impact of the pandemic on the performance of buy now pay later providers.

There was a lot of doom and gloom around the industry, with some suggesting that sales would plummet and bad debts would spike.

This simply wasn’t the case and the shift to online shopping accelerated the adoption of the payment method without any material increase in bad debts.

For example, in FY 2020 Zip Co reported a ~64% year on year increase in transaction volume to $2.3 billion. This led to a 72% year on year increase in revenue to $161.2 million.

This was achieved with net bad debts of 2.24% at the end of the fourth quarter. While this was up from 1.63% a year earlier, it was nowhere near what some bearish analysts had predicted. Positively, leading indicators are pointing to net bad debts easing during the first quarter of FY 2021.

Also supporting the Zip Co share price was news of its expansion into the U.S. market via the acquisition of QuadPay. This will see Zip Co go head to head with rival Afterpay Ltd (ASX: APT) in the $5 trillion dollar market in FY 2021.

Post completion, Zip will have pro-forma annualised transaction volume of $3.2 billion, annualised revenue of $252 million, and more than 3.9 million customers.

Is it too late to invest?

I think Zip Co remains a great long term option for investors, especially if it can make a success of its expansion into the U.S. market.

Though, given the risks involved, I would suggest you limit any investment to just a small part of a diversified portfolio.

More reading

• 3 quality ASX tech shares to buy in August
• ASX 200 jumps 2%: Big four banks rebound, Wesfarmers update, Afterpay rockets
• If you invested $50k in these ASX shares 3 years ago, you’d be a millionaire today
• Afterpay share price higher despite falling short of share purchase plan target
• Should you invest in Commonwealth Bank shares?

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 ZIPCOLTD FPO. 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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The Recce Pharmaceuticals Ltd (ASX: RCE) share price traded nearly 15% higher this morning after the company announced positive oral data.

What new data has Recce released?

Recce Pharmaceuticals released an announcement earlier today which highlighted positive oral data for the company’s new antibiotic RECCE 435. The data relates to an independent efficacy study that assessed the oral dose-dependent efficacy of RECCE 435 in an animal model. According to the announcement, the data showed positive efficacy against Helicobacter plylori (H. pylori) in rats treated with RECCE 435.

H. pylori is a Gram-negative and antibiotic-resistant bacteria that infects the lining of the stomach and upper intestine. The bacteria was recently added by the United States Food and Drug Administration as a pathogen that has the potential to pose a threat to public health and has an unmet medical need.

The study involved treating 3 groups with varying doses of RECCE 435, with dose-dependent efficacy reported at all doses which resulted in significant reduction in bacterial load. The company’s management noted that the new data is encouraging and endorses further study into synthetic antibiotics in the treatment of deadly infections. As a result, Recce Pharmaceuticals is in discussion with world leading H. pylori experts to assess a potential commercial pathway.

What does Recce do?

Recce Pharmaceuticals is an Australian based biopharmaceutical company that aims at developing and commercialising new classes of synthetic anti-infectives to treat antibiotic resistant superbugs and emerging viral pathogens. The company’s antibiotics are unique as their potency does not diminish with repeated use, which is a failure of existing antibiotics used to treat resistant superbugs.

RECCE 327 is the company’s lead candidate which has been developed for the treatment of blood infections and sepsis that results from E.coli and S. aureus bacteria. In addition to the aforementioned RECCE 435, RECCE 529 is another candidate from Recce Pharamceuticals that is designed as an antiviral compound.  

Earlier last month, Reece Pharmaceuticals announced that the company had entered an agreement with US-based precision medicine company, Path BioAnalytics, for the study of its RECCE 327 and RECCE 529 antibiotics against SARS-CoV-2, which is the strain of coronavirus that causes COVID-19. In addition, the company noted that its candidate RECCE 327 has been accepted into the SARS-CoV-2 screening program between the CSIRO and Doherty Institute.

The Recce share price

Following its initial surge, the Recce share price has been sold off and is currently trading at $1.255 which is a 6.4% increase for the day. This came after the share price hit an intra-day high of $1.355 immediately following the announcement. The Recce share price is 269% up in year-to-date trading.

More reading

• 3 unloved ASX growth shares that could make you rich
• Why the Recce Pharmaceuticals share price just rocketed 31% higher to a record high
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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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