Tag: Motley Fool

Are you looking for dividend shares to buy? If you are, then you might want to look at the ASX 200 shares listed below.

Here’s why these ASX dividend shares could be in the buy zone in July:

Westpac Banking Corp (ASX: WBC)

The first ASX 200 dividend share that could be in the buy zone is Westpac.

Australia’s oldest bank has been tipped as a buy by analysts at Citi. Partly due to its plan to target a reduced cost base of $8 billion by FY 2024, the broker sees Westpac “delivering the strongest EPS growth in the sector” in the coming years. This could bode well for dividend payments.

In fact, Citi is forecasting fully franked dividends of 123 cents per share in FY 2022 and 155 cents per share in FY 2023. Based on the current Westpac share price of $20.16, this will mean yields of 6.1%, 7.7%, respectively.

The broker also sees plenty of upside for the bank’s shares, with its buy rating and $29.00 price target.

Woolworths Group Ltd (ASX: WOW)

Another ASX 200 dividend share that could be in the buy zone is this retail giant.

Woolworths recently released its third-quarter update and revealed strong sales growth that was ahead of the market’s expectations. This and its positive start to the fourth quarter went down well with the team at Goldman Sachs. Pleasingly, its analysts expect this positive trend to continue over the coming years. It said earlier this week:

We forecast [a sales] CAGR of 6.6% and underlying NPAT of 14.1% over FY22-24e, with key driver being market share gain of AU Foods business at comp sales growth of FY23/24 8.8% and 6.6% respectively driven by effective cost-price pass through and additional mix improvement with relatively stable volume growth.

In respect to dividends, Goldman Sachs is forecasting fully franked dividends per share of 96 cents in FY 2022 and $1.18 in FY 2023. Based on the current Woolworths share price of $37.16, this will mean yields of 2.6% and 3.2%, respectively.

Goldman has a buy rating and $40.50 price target on its shares.

The post Analysts name 2 ASX 200 dividend shares to buy now appeared first on The Motley Fool Australia.

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More reading

• $264 million! The 10 highest-paid CEOs on the ASX
• ‘Pretty attractive’: Expert reveals 3 ASX shares to buy right now
• Here are the top 10 ASX shares today
• ASX 200 supermarket shares lead as household spending jumps
• Are falling BNPL shares pushing the ASX banks higher today?

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. 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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If you’re searching for growth shares to buy, then it could be worth considering the two listed below.

Here’s why experts are saying that these ASX growth shares are in the buy zone now:

Readytech Holdings Ltd (ASX: RDY)

The first ASX growth share to look at is Readytech. It owns a portfolio of enterprise software businesses across several market verticals such as higher education and local government.

The team at Goldman Sachs note that these businesses operate in market niches that are under-served by both large and small enterprise software competitors. This has been supportive of growing recurring revenues and very low levels of churn.

Its analysts commented:

In our view, RDY will continue to grow mid-teens organically while making accretive acquisitions (such as IT Vision), with profitability underpinned by solid software metrics including low churn at ~3% and high LTV/CAC.

RDY serves defensive end markets (e.g. higher education, local government) and has high recurring revenue (>85%) which should protect the company’s earnings profile in an economic downturn.

Goldman Sachs has a buy rating and $4.60 price target on ReadyTech’s shares.

ResMed Inc (ASX: RMD)

Another ASX growth share that has been rated as a buy is ResMed. It is a sleep treatment focused medical device company with an industry-leading portfolio of products.

Citi is a fan of the company and notes that the company has announced plans to expand its growing software business into Europe via the acquisition of Medifox Dan for US$1 billion. It also highlights that ResMed’s shares are trading on lower than average multiples, potentially creating a buying opportunity for investors.

Our FY23-24E EPS increases by <1% and Target Price reduces to $34.50 (from $35.50) as a result of incorporating Medifox Dan acquisition into our forecasts. RMD is currently trading at PE of ~28x FY24E, below historical avg of ~32x.

Maintain Buy. This is RMD’s third major acquisition in the SaaS segment after Brightree (Apr’16) and MatrixCare (Nov’18). ResMed paid US$800m or ~19x EBITDA for Brightree and ~US$750m or 25x EBITDA for MatrixCare. The Medifox Dan acquisition should allow RMD to expand its SaaS business footprint outside the U.S.

Citi has a buy rating and $34.50 price target on ResMed’s shares.

The post Experts name 2 ASX growth shares for investors to buy now appeared first on The Motley Fool Australia.

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More reading

• Broker names 2 more blue chip ASX 200 shares to buy in July
• What’s the outlook for ASX 200 healthcare shares in FY23?
• Why did the ResMed share price finish down in FY22?
• 4 ‘quality’ ASX shares to buy in scary times: expert
• Here’s how ASX healthcare shares performed in FY22

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Readytech Holdings Ltd and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. The Motley Fool Australia has recommended Readytech Holdings Ltd. 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 finished the day almost 11% higher at $3.29 on Wednesday.

Investors bid up shares in the online homewares retailer on no news. Nonetheless, today’s gain is welcome following a period of heavy downside for the company.

The Temple and Webster share price is now trading almost 70% lower this year to date.

In broader market moves, the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) also closed 1.18% higher today.

Let’s see what might have been going on today.

Temple & Webster shares spike on Wednesday

Investors were constructive on cyclical shares today with the Consumer Discretionary benchmark catching a bid.

A good chunk of the index finished either flat or in the green. For Temple and Webster, investors bid the company up on a volume more than 216% of the share’s four-week trading average.

With no news coming from the company, it could be that investors were bottom fishing in the consumer discretionary space in search of bargains.

Cyclical shares such as Temple & Webster have been beaten down in 2022 amid a broad market selloff and softening economic data from the US.

Recently, the US consumer confidence index fell to a 16-month low, as concerns over inflation and economic recession loom.

Recent data needs more clarification

Meanwhile, the Westpac-Melbourne Institute Index of Consumer Sentiment fell 3% in July, down to 83.8 from 86.4 in June.

The index has slipped almost 20% from December and has kept declining every month to July, Westpac found.

However, consumer spending has “likely continued to increase” in Australia during FY22 into FY23, according to Focus Economics.

This is “supported by accumulated savings, as suggested by a tight labor market in April and May and retail sales growth in April,” it says.

“The economy looks set for a healthy expansion this year. Solid labor market dynamics, pent-up spending and faster wage growth should feed household spending.”

So, despite underlying fears of inflation or recession, investors look to be handling Temple & Webster shares accordingly.

The post Temple & Webster shares price jumps 11% after hitting recent lows appeared first on The Motley Fool Australia.

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More reading

• Does the FY23 outlook make ASX retail shares look like bargains?
• Why are these 2 ASX ecommerce shares hitting two-year lows?
• Why I think the Temple & Webster share price is on sale right now
• Temple and Webster shares tumble 8% amid bleak US consumer confidence
• Where to find value in growth? Here are 2 ASX shares I’d buy in July

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. 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 Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP) share prices finished in the red today.

Rio Tinto and BHP shares fell 1.37% and 1.44% respectively. For perspective, the S&P/ASX 200 Index (ASX: XJO) jumped 0.23% today.

So what went on with the Rio Tinto and the BHP share prices?

Tough day for commodity prices

Rio and BHP are both copper and iron ore producers among other metals. In global markets overnight, copper fell to US$3.3 a pound. This is the lowest level in 20 months, according to data from trading economics.

COVID-19 BA.5 sub-variant lockdowns in China, the “top consumer” of copper, also appeared to weigh on investors’ minds.

In a research note today, ANZ economist Madeline Dunk said copper “led” the base metals sector lower. She added:

Expectations of another increase in inflation rose ahead of the release of US CPI data. This was exacerbated by further lockdowns in China.

Copper ended the session down more than 3% to hit its lowest level since November 2020.

Goldman Sachs analysts also cut their price target on copper, according to mining.com. Analyst Nicholas Snowdown cited factors including the dollar and global energy squeeze, according to the publication.

Meanwhile, iron ore prices also plunged to US$107.50 per tonne, down 4.44%. China is also a major importer of iron ore. Fears of weaker demand from China appear to have driven down the price.

Share price snapshot

The Rio share price has shed nearly 27% in the past year and lost 6% year to date.

Meanwhile, the BHP share price has lost 18% in the past year and 0.09% year to date.

Both Rio and BHP are big dividend payers, as my Foolish colleague James has highlighted recently.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has shed nearly 10% in a year.

The post Why did the Rio Tinto and BHP share price struggle today? appeared first on The Motley Fool Australia.

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More reading

• Analyst names 3 reasons to be bullish on the BHP share price
• $264 million! The 10 highest-paid CEOs on the ASX
• Investors were seeking out ASX shares in June. Here’s why
• Here’s the outlook for the Rio Tinto share price in FY23
• Where is the BHP dividend heading through to FY25?

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

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ASX lithium shares were the darling child of the commodity sector throughout FY22, with prices for the battery metal reaching all-time highs.

Despite a bearish note from Goldman Sachs on its outlook for lithium, prices have remained buoyant. Plus, there’s still talk of lithium demand outweighing supply for some time into the future.

Below is a graph showing some of the best and worst-performing ASX lithium shares of FY22.

Let’s consider them more closely.

Core Lithium (ASX: CXO)

The Core Lithium share price was one of the ASX’s top performers in FY22, posting a triple-digit gain.

The company executed a binding agreement with the electric vehicle juggernaut Tesla last financial year, driving investors’ interest in the share.

The agreement sees Core supply 110,000 tonnes of lithium spodumene concentrate to Tesla from the company’s Finnis project in Northern Territory.

Core Lithium also received final assays from the Finnis project in May and advised that resource drilling had commenced at tenements on the site.

The share has traded down in recent weeks but has still managed to record a 289% gain for the past 12 months.

Pilbara Minerals Ltd (ASX: PLS)

Shares of Pilbara Minerals were also strong performers in FY22. The company’s quarterly results were a standout, with Pilbara noting it had upped production by 54% over the three months to June 2022.

Moreover, its recent Battery Metals Exchange (BMX) saw a lithium price of US$7,000 per dry metric tonne in a digital auction.

This was underscored by strong demand and a “continued healthy outlook into the foreseeable future”, Pilbara management noted.

The share has a buy rating from Ord Minnett, with its analysts valuing Pilbara Minerals shares at $3.50 each. That’s a healthy 48% upside on today’s closing price of $2.36.

IGO Ltd (ASX: IGO)

Diversified miner IGO saw substantial gains in FY22 but these were pared back towards the end of the financial year.

The company’s share price reached a 52-week high of $15 on 4 April and has been trending lower ever since.

After completing its Western Areas Transaction, investors were still keen to sell the company’s shares. They now trade back in line with September 2021 levels.

As such, the IGO share price is down 15% year to date after a bullish run in FY22.

Despite this, it still remains 14% higher for the past 12 months and is well above the returns of the benchmark S&P/ASX 200 Index (ASX: XJO) which dropped around 10%.

Analysts at Macquarie reckon IGO is a buy and value the company at $17 per share. That’s well above its closing price today of $9.72.

Mineral Resources Ltd (ASX: MIN)

At the other end of the spectrum, Mineral Resources left investors searching for more in FY22. The company’s share price started the year at $63.01 and ended at around $46.

It’s trading down 25% in the past 12 months with its most recent downtrend starting on 30 May.

Following the release of the bearish note on the lithium industry from Goldman Sachs, many lithium shares – including Mineral Resources – were swept away.

Gains quickly dried up in the sector but several players were able to either withstand or recover from the slump.

Yet, for Mineral Resources, not so much. It continued to trade south and hasn’t regained support since.

It is down 22% in the past month, extending its losses to 21% this year to date.

The post 3 ASX lithium shares that flew in FY22, and 1 that sank appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX shares today
• Why has the Pilbara Minerals share price shot up 5% today?
• How did the Core Lithium share price gain 300% in the 2022 financial year?
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• $264 million! The 10 highest-paid CEOs on the ASX

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

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The Chalice Mining Ltd (ASX: CHN) share price finished in the green on Wednesday after a positive update from fellow miner Venture Minerals Ltd (ASX: VMS).

Chalice Mining shares closed 3.66% higher at $3.68 apiece, after hitting an intraday high of $3.70.

Let’s take a look at what was released to the ASX earlier today.

Chalice Mining earns majority interest in South West Project

Investors rallied up the Chalice Mining share price after the company received a 51% stake in Venture Minerals’ South West Project.

According to the Venture Minerals announcement, Chalice Mining received results from its recently completed auger soil geochemistry program at the site, identifying two new Ni-Cu-PGE target areas.

Ni-Cu-PGE stands for a number of different minerals. These are nickel (Ni) and copper (Cu) while PGE represents ‘platinum group elements’. These consist of: palladium (Pd), iridium (Ir), osmium (Os), rhodium (Rh), and ruthenium (Ru).

The new targets are supported by underlying geology that is said to be consistent with the presence of ultramafic rocks.

Furthermore, it contains coincident and untested airborne electromagnetic and magnetic anomalies at the Thor target – a 20-kilometre-long magnetic anomaly within the South West project.

Following the auger soil geochemistry program and recently completed maiden drilling program, Chalice Mining met its $1.2 million expenditure requirement to attain a 51% interest.

Should management choose to spend another $2.5 million on exploration activities by July 2024, the Chalice interest will increase to 70%.

Venture Minerals managing director Andrew Radonjic commented:

I am very pleased with the progress made to date at Thor. With Chalice now having met their 51% expenditure milestone ahead of schedule, Venture looks forward to working with Chalice in the future on our South West project.

Chalice Mining share price summary

Over the last 12 months, Chalice Mining shares have dropped almost 50% and are down 60% year to date.

The company’s share price reached a 52-week low of $3.37 in late June before rebounding higher.

Chalice Mining commands a market capitalisation of roughly $1.38 billion.

The post What had the Chalice Mining share price glowing today? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX shares today
• Why is the Chalice Mining share price racing higher today?
• Top broker says the Chalice Mining share price can rise almost 200%
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX shares today

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

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CSL Limited (ASX: CSL) shares continued their recent climb today, up 0.38% to $293.81 at the market close.

The ASX biotech behemoth is up by more than 11% in the past four weeks. That performance is well beyond the S&P/ASX All Ordinaries Index (ASX: XJO), which is down about 1% over the same period.

Let’s take a look at what’s behind this share price movement for CSL.

Is the CSL share price rising on momentum?

CSL hasn’t released any price-sensitive news to the market since 12 May. So it’s certainly not company news that is motivating ASX investors to buy the blue-chip share.

However, CSL has attracted plenty of broker backing over the past month. Perhaps this has inspired new investor confidence.

In addition, the CSL share price has been weak for a while and remains well off its pre-COVID highs.

It was always only a matter of time before investors bought back into CSL, as the impact of COVID dies down.

After all, CSL is the epitome of quality and a quintessential blue-chip darling on the ASX. It’s currently the third-largest company in the ASX 200 with a market capitalisation of $141 billion.

So, maybe investors have decided now is the time?

What are the brokers saying about CSL?

My Fool colleague James reports today that Morgan Stanley has retained its overweight rating on CSL with a share price target of $312. Macquarie also says buy with the same price target.

Citi also has a buy rating with a more ambitious share price target of $330 for CSL.

Citi analysts commented:

With plasma collections now back to pre-pandemic levels, we expect the market to shift its focus to the strong underlying plasma product demand. This should lead to strength in the CSL share price.

Last week, fellow Fool Tony Yoo also reported that 12 out of 13 analysts rate CSL a buy, according to CMC Markets. Ten of those 12 call it a strong buy.

The pandemic impact on the CSL share price

CSL is a global biotechnology company that manufactures biotherapies and vaccines.

Overall, CSL was a COVID-19 loser. In the initial pandemic market crash of 2020, CSL shares fell from around $336 in February to about $270 in March. As the pandemic rolled on, CSL shares went lower to about $250 in March 2021. They returned to the same level in February this year.

This happened because CSL relies on blood plasma donations to develop its medicines and vaccines. Lockdowns around the world made this exceptionally difficult. That was a bit of a problem given that CSL’s blood plasma division generates 70% of its revenue.

Things have changed

As my Fool colleague Monica reported in May, plasma collections are now roughly back to pre-pandemic levels. CSL is also using new technology to reduce the time it takes to donate plasma by 30%.

At the moment, CSL is awaiting the finalisation of its acquisition of Swiss giant Vifor Pharma AG.

Vifor is a leading global producer of products to treat kidney disease and iron deficiency. CSL expected to close the $17 billion deal in June but told the ASX in May that there would be a delay.

In a statement, CSL said it “expects the regulatory approval process to take a few more months”.

Regardless, the Vifor deal represents a synergistic expansion that bodes well for the CSL share price.

As we reported, the Vifor acquisition is “expected to be low-to-mid teens NPATA per share accretive in the first full year of CSL ownership, including full run rate cost synergies”.

The post Why is the CSL share price up 11% in a month? appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy today
• $264 million! The 10 highest-paid CEOs on the ASX
• What are brokers saying about the CSL share price?
• What’s the outlook for ASX biotech shares in FY23?
• What’s the outlook for ASX 200 healthcare shares in FY23?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in CSL Ltd. and Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has recommended Macquarie Group Limited. 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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If you’re wanting to gain exposure to the beaten down tech sector, then it could be worth considering the two ASX tech shares listed below that Goldman Sachs rates as buys.

Here’s what you need to know about these tech shares:

Megaport Ltd (ASX: MP1)

The first tech share that Goldman rates highly is Megaport. It is a leading provider of elastic interconnection services globally. Its analysts remain very positive on the company’s growth outlook and are forecasting a gross profit compound annual growth rate (CAGR) of 36% between FY 2023 and FY 2025.

The broker explained

While we acknowledge near-term channel execution issues (incl. any potential impact from recent mgmt. departures) and mixed signals on enterprise hardware spending, we continue to see the networking benefits and broader cost savings from MP1’s products to sustain a robust growth profile for the company. Combined with FX upgrades (+7% benefit, with MP1 having >78% revenue offshore), our FY22-25 GP estimates are -0 to +3%.

Goldman Sachs has a buy rating and $9.00 price target on Megaport’s shares.

Xero Limited (ASX: XRO)

Another ASX tech share that Goldman Sachs rates highly is Xero. It believes the cloud accounting company is well-placed to deliver strong gross profit growth in the coming years despite the tough operating environment. The broker is forecasting a gross profit CAGR of 22% between FY 2023 and FY 2025.

Goldman Sachs said:

While noting that the near term remains robust, we do acknowledge the risk of higher churn from SME business challenges and recent price increases. Nevertheless, we see Xero as well-placed to navigate this uncertainty given the stickiness & importance of its software, and lower levels of churn vs. AU overall. We revise FY23-25 GP [to 22%] to reflect FX and higher churn/ARPU growth (price increases).

The broker has a buy rating and $113.00 price target on Xero’s shares.

The post Broker names 2 ASX tech shares to buy in July appeared first on The Motley Fool Australia.

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More reading

• Why Block, Megaport, Navigator Global, and Whitehaven Coal shares are rising
• ASX 200 midday update: ANZ confirms MYOB talks, energy shares fall
• This broker sees 30% upside for the Xero share price over the next year
• These were the best (and worst) performing ASX 200 sectors of FY22
• Here’s why Goldman Sachs sees lots of value in the Xero share price

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended MEGAPORT FPO and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended MEGAPORT FPO. 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: ZIP) share price had a positive day on Wednesday.

Especially in comparison to BNPL rival Sezzle Inc (ASX: SZL), which continues its post-merger collapse with a 22% decline today.

At Wednesday’s close, the Zip share price was up 1% to 53.5 cents. This extends its two-day return to a sizeable 8%.

Where next for the Zip share price?

While the market may have responded positively to the termination of the Sezzle merger, one leading broker thinks it’s too soon for investors to get excited.

According to a note out of UBS, its analysts have reiterated their sell rating with a 45 cents price target.

This implies potential downside of almost 16% for investors over the next 12 months from current levels.

What is the broker saying?

While UBS suspects that the merger termination could slow down Zip’s cash burn, it believes its outlook still remains very uncertain.

Especially given how expensive it could be chasing growth in the US market where credit losses could be higher.

In fact, the broker has suggested that Zip might be better off divesting its international operations now the merger is off and focus on the core ANZ business instead.

Time will tell what happens, but it certainly should be an interesting few months for the Zip share price.

The post Is the Zip share price going to take off? appeared first on The Motley Fool Australia.

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More reading

• What’s the outlook for ASX BNPL shares in FY23?
• Sezzle shares plunge another 16%, now down 60% in a week
• ASX 200 midday update: ANZ confirms MYOB talks, energy shares fall
• Are falling BNPL shares pushing the ASX banks higher today?
• Outlook for Zip share price ‘uncertain’ following scrapped merger: UBS

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

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ASX BNPL shares had a shocker run last financial year with the sector incurring heavy losses. That downward momentum has continued in FY23, with the BNPL segment continuing to face multiple headwinds.

The latest news to shake the sector is the breakdown of the Zip Co Ltd (ASX: ZIP) and Sezzle Inc (ASX: SZL) merger, announced yesterday.

So what’s ahead for this troubled sector? Let’s check the outlook for FY23.

BNPL shares to face pressure this financial year

It certainly hasn’t been a good start to the new financial year. Speaking to the Responsible Lending and Borrowing Summit in Sydney this week, federal Financial Services Minister Stephen Jones said the government was cracking down on the BNPL industry.

Jones said he would soon be consulting with industry stakeholders and regulators on how to improve credit regulation in Australia.

He also dismissed arguments that BNPL players aren’t extending credit:

[L]et’s have an end to the silly argument about whether BNPL is credit and get on with the next stage of growth for this emerging industry.

If it walks like a duck and quacks like a duck, it’s a duck.

Meanwhile, Grant Halverson of banking and payments consultancy McLean Roche said Australia has “an enormous bubble” in its BNPL sector. That’s certainly not bullish language.

Halverson told The Australian:

It’s absolutely bizarre that the ASX has 12 listed BNPL stocks … and it is all built on this notion that you can borrow money forever and not pay for it.

I think in 12 months’ time, you’ll have two or three surviving; the rest will all be gone. They’ll either go broke or they’ll be bought very cheaply.

Indeed, on the back of Zip and Sezzle’s failed merger, the Sezzle share price has plummeted, closing the day 21.57% lower at 20 cents a share.

While the Zip share price has fared better since the deal was called off, the ASX BNPL share is now set to face additional headwinds.

In a note to clients, UBS analyst Tom Beadle reiterated this point and said the move would “potentially crimp [Zip’s] ability to turn a profit”.

He said the UBS team was surprised by the announcement and that macroeconomic headwinds are also plaguing the BNPL sector’s outlook.

Certainly, it appears the future is murky for BNPL shares such as Zip and Sezzle, but other players are on the slab too.

Whilst Zip has crashed 93.5% into oblivion, names such as Laybuy Group Holdings Ltd (ASX: LBY) and EML Payments Ltd (ASX: EML) are also down more than 91% and 71% in the past 12 months respectively.

The post What’s the outlook for ASX BNPL shares in FY23? appeared first on The Motley Fool Australia.

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More reading

• Why Galileo Mining, Platinum, Sezzle, and Woodside shares are dropping
• FY22 was a lousy period for ASX fintech shares. Here’s why
• Sezzle shares plunge another 16%, now down 60% in a week
• ASX 200 midday update: ANZ confirms MYOB talks, energy shares fall
• Is FY23 going to be a winning year for ASX fintech shares?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended EML Payments and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended EML Payments. 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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