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After a tough start to the week, the All Ordinaries Index (ASX: XAO) rebounded on Thursday.

The index was up by as much as 1.2% during the session before finishing down 0.031%. But many of its constituents did far better than that.

Let’s take a look at three ASX shares boasting gains of more than 10% today.

3 ASX All Ordinaries shares up more than 10%

Brainchip Holdings Ltd (ASX: BRN)

The Brainchip share price was lifted by 10.3% to finish at 86 cents today.

Interestingly, today’s gain marks the first day in June that the company has traded in the green. Before today, the Brainchip share price was consistently dropping, losing 31% from the end of May.

The ASX technology business works in neuromorphic computing – a branch of artificial intelligence.

There’s no news to explain today’s boost. However, the S&P/ASX 200 Information Technology Index (ASX: XIJ) was up 2.8% at its highest point today before settling to finish flat.

Brainchip will be included in the ASX 200 index from next week following the quarterly rebalance.

Ioneer Ltd (ASX: INR)

Another ASX All Ordinaries share that soared 10% or more today was Ioneer. It finished at 40 cents, up 12.7%.

This stock has also struggled recently, falling 38% between 31 May and 15 June.

The company is focused on its Rhyolite Ridge Lithium-Boron Project. Ioneer was joined in the green by fellow ASX lithium share, Allkem Ltd (ASX: AKE). The Allkem share price rose by 1.5% today.

Thus, positive market sentiment on commodities is a potential explanation for today’s gains.

5E Advanced Materials Inc (ASX: 5EA)

The final ASX All Ordinaries share we’ll look at is 5EA Advanced Materials, which rocketed 11.4% to a final price of $2.83.

The company is focused on helping the world decarbonise by producing boron and lithium.

There’s been no news to explain today’s gain.

However, earlier this week the company announced its NASDAQ-listed stock will soon be included in the Russell 2000 Index, Russell 3000 Index, and Russell Microcap Index.

Commenting on its inclusion, the company’s president and CEO Henri Tausch said the Russell indexes are some of the most widely cited for US companies.

The post 3 ASX All Ordinaries shares that leapt more than 10% on Thursday appeared first on The Motley Fool Australia.

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More reading

• Why’s the Allkem share price flaring higher today?
• BrainChip share price surges 11% as ASX tech stocks rally on Thursday
• Market crash: A message from our CIO
• Why is the WAM Capital share price down 20% in June?
• Lake Resources share price defies rout to leap 14%

Motley Fool contributor Brooke Cooper 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 Wesfarmers Ltd (ASX: WES) share price could be great value at the current level.

That’s the view of one of Australia’s leading brokers.

Why is the Wesfarmers share price great value?

A recent note out of Morgans reveals that its analysts have retained their add rating with a $58.40 price target.

Based on the current Wesfarmers share price, this implies potential upside of 40% for investors over the next 12 months.

Its analysts are fans of Wesfarmers due to their belief that it “possesses one of the highest quality retail portfolios in Australia with strong brands including Bunnings, Kmart and Officeworks.”

The broker also highlights that “the company is run by a highly regarded management team and the balance sheet is healthy.”

What else is the broker saying?

In addition, Morgans believes that Wesfarmers is well-positioned for a tough retail environment. This is due to partly to its focus on value with its popular Kmart business. It explained:

Kmart’s scale and sourcing capabilities underpin its low-cost business model, which allows it to deliver the lowest prices, driving greater demand and scale, and allows further sourcing and product development capabilities.

With value expected to become increasingly important, we think Kmart is well-placed to benefit with the average price of an item at around $6-7. Even if price rises are needed to mitigate cost inflation, this will be small on an absolute basis (eg, a 5% increase in average selling price = ~35c) and Kmart can use its scale and supply chain flexibility to limit increases vs its competitors.

All in all, the broker sees the company “as a long-term, core portfolio holding” and appears to believe the recent weakness in the Wesfarmers share price is a buying opportunity for investors.

The post Morgans tips 40% upside for the Wesfarmers share price appeared first on The Motley Fool Australia.

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More reading

• Why I think these 2 ASX 200 dividend shares offer great buying right now
• 2 ASX companies busted for sneaky facial recognition on customers
• Why are these ASX 200 retail shares lagging the market today?
• Should you buy these top blue chip ASX 200 shares after the market selloff?
• Should income investors buy Wesfarmers shares for the dividends?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Wesfarmers 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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The BetaShares Nasdaq 100 ETF (ASX: NDQ) used to be one of the best-performing exchange-traded funds (ETFs) on the ASX. NDQ is, at its heart, a tech-based ETF — but technically, it’s an index fund.

This fund tracks the NASDAQ-100 Index (INDEXNASDAQ: NDX), which follows the largest 100 companies on the United States NASDAQ stock exchange.

The NASDAQ is one of the two major stock exchanges in the US. It is the one that most prominent tech companies call home in America, which gives it a heavy bias towards tech shares.

But 2022 has not been kind to this ETF. In fact, it’s been the worst start to a year that NDQ has ever gone through. Year to date, NDQ units are now down 28% on the ASX. That’s including the small gain that the fund managed today.

So what’s behind this dramatic change in fortune?

Why has the NDQ ETF had such a tough 2022 on the ASX?

Well, the problems the BetaShares NASDAQ 100 ETF has faced this year largely stem from its largest holdings.

It was NDQ’s exposure to tech giants like Apple Inc (NASDAQ: AAPL), Amazon.com Inc (NASDAQ: AMZN) and Microsoft Corporation (NASDAQ: MSFT) that helped it have such a strong few years before 2022.

But it is this same exposure that is dragging NDQ back to Earth this year.

The ETF’s five-largest holdings are Apple, Amazon, Microsoft, Tesla Inc (NASDAQ: TSLA) and Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL). Together, these five tech giants make up more than 40% of NDQ’s portfolio weighting as it currently stands.

What’s happening with NDQ’s top 5 holdings?

We all know how successful these companies have been over the past few years. But 2022 has seen investors get cold feet.

Apple shares are now down more than 25% year to date.

Amazon shares have lost 36.8% over the same period.

Microsoft has shed 24.8%.

Alphabet’s Class A shares are down 24.3%, while Tesla has lost almost 42%.

So, this is why the BetaShares Nasdaq 100 ETF has been suffering so much pain over the year so far.

But consider this. Even though NDQ has been in the wars of late, this ETF has still (as of 31 May) managed to return an average of 18.15% per annum over the past five years, and 19.94% per annum over the past three.

The post Here’s why the NDQ ETF is down almost 30% in 2022 appeared first on The Motley Fool Australia.

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• Here are 3 top ETFs for ASX investors to buy now
• Here’s why the BetaShares Nasdaq 100 ETF could be a buy today
• 2 great ETFs I’d buy in June 2022
• Three trillion reasons why young investors need to be taken seriously
• 3 high quality ETFs for ASX investors to buy now

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Alphabet (A shares), Amazon, Apple, Microsoft, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, BETANASDAQ ETF UNITS, Microsoft, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, and Apple. 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 Qantas Airways Limited (ASX: QAN) share price descended lower today.

Qantas shares dropped 4.03% to $4.52 in today’s trade. For perspective, the  S&P/ASX 200 Index (ASX: XJO) closed 0.15% in the red at 6,591.1 points.

Let’s take a look at what is going on with the Qantas share price.

Cancelled flight route

Qantas shares fell harder than their ASX 200 travel share peers today. The Flight Centre Travel Group Ltd (ASX: FLT) share price fell 2.18%, while Webjet Limited (ASX: WEB) dropped 0.96%.

In contrast, US airlines had a good day on Wednesday, with American Airlines Group Inc (NASDAQ: AAL) leaping 2.78% and United Airlines Holdings Inc (NASDAQ: UAL) jumping 2.43%. Meanwhile, Delta Airlines Inc (NYSE: DAL) jumped 1.85%.

Qantas hit headlines today amid news it will cut its flight route between Alice Springs and Perth in July, the ABC reported. This is reportedly due to low passenger numbers.

In comments quoted by the media outlet, Tourism Australia CEO Danial Rochford described the decision as “not good news”. He added:

…what we need from our carrier at the moment is to be backing remote Australia, not pulling out of remote Australia.

Meanwhile, Qantas is planning to lift the mask mandate on some international flights, 9 News reported.

A spokesperson said: “The Qantas Group intends to soon update our onboard mask policy for international flights to align with the rules at the destination.”

In other news, it has emerged Qantas will be relying on office workers to work as baggage carriers to cope with the busy winter holiday travel season.

A Qantas spokesperson quoted by Sky News said Qantas is preparing to seek the assistance of office staff at airports during the upcoming school holidays. They added:

As we have done in the past during busy periods, about 200 head office staff helped at airports over Easter undertaking tasks such as handing out water, queue combing and helping in the bag room.

We are preparing to do the same over the July school holidays.

Qantas share price snapshot

The Qantas share price has dumped nearly 4% in the past 12 months, while it has fallen more than 9% year to date.

For perspective, the benchmark S&P/ASX 200 Index (ASX: XJO) has lost nearly 11% in a year.

The post What happened to the Qantas share price today? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Thursday
• How did ASX 200 travel shares perform amid today’s sell-off?
• Why did the Qantas share price nosedive 6% today?
• Virgin Australia eyes upcoming ASX IPO: ‘Doing at least as well’ as Qantas
• ‘We need your help’: What’s dragging on the Qantas share price today?

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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Despite reports that China plans to wage war on the iron ore price, ASX 200 mining shares were in the green on Thursday.

In an effort to remove volatility from the steel-making commodity’s price, China wants to monopolise the country’s iron ore imports. As the largest purchaser of annual iron ore production, the country hopes to ‘force’ a lower selling price.

If true, this would be the latest incident of China dealing a trade blow to Australia. Not long ago, the People’s Republic ditched foreign ties over a range of goods after Australia called for an investigation into the source of the COVID-19 pandemic.

At the time, ASX 200 iron ore mining companies dodged a bullet, with China unable to feed an alternative source. However, these recent developments suggest the Xi Jinping-led country could threaten the lucrative industry.

Applying a chokehold on ASX 200 mining shares

Earlier today, my colleague Zach covered analyst expectations of a more buoyant iron ore price for the remainder of the year. While insightful in their own right, perhaps those estimates failed to factor in China’s latest plan.

Reportedly, the China Iron and Steel Association is joining forces with state-owned steel groups to form a group capable of dictating prices. The ambition isn’t farfetched considering China accounts for 70% of annual purchased iron ore production. In total, the country imports around 1 billion tonnes per year.

The Australian Financial Review sourced comments from an unidentified Beijing policy adviser on the matter, with the individual stating:

The [world’s biggest] iron ore suppliers will have no one else to turn to when it comes to serving the world’s largest market. That would force them to give us a discount.

Under such circumstances, ASX 200 mining shares could see profits dwindle as they fall beholden to a state-owned customer that would account for 70% of demand.

Despite this, ASX-listed iron ore giants such as BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) appeared relatively unfazed today. Shares in the two companies ended the day up 0.25% and 0.67% respectively. Although, shares in Fortescue Metals Group Limited (ASX: FMG) closed 1.26% lower.

Harder in practice

While the possibility of a state-controlled conglomerate could pose a threat to miners, not everyone is convinced it will happen. On paper, it seems relatively straightforward: but in practice, such a move might be difficult to pull off.

One such person who isn’t so sure about China curbing the market is Liberum analyst Tom Price. The London-based broker shared his perspective with the AFR, saying:

Even if a price agreement is secured, smaller mills and traders may go and do deals with iron ore mines on the side. Then the whole thing breaks down.

For now, the iron ore price sits near US$132.50 per tonne — down approximately 35% from a year ago. Many ASX 200 mining shares are in the green this year after a rebound in the price of iron ore.

The post ‘Force them to give us a discount’: ASX 200 mining shares lift despite China’s latest move to curb iron ore prices appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: BHP’s NSW coal update, Link takeover on the rocks
• Why I think the BHP share price is a good buy for the long term
• BHP share price pushes higher despite coal sale fail
• Green machine: Here’s why the Fortescue share price is rising today
• Broker names 2 ASX 200 mining shares with big dividends to buy now

Motley Fool contributor Mitchell Lawler 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 Neometals Ltd (ASX: NMT) share price is surging 10% higher on Thursday and now rests at $1.01 apiece.

Investors have bid the Neometals share price higher today on no news.

In broad market moves, the S&P/ASX 300 Metals and Mining index (XMM) has spiked nearly 1% into the green today. Year to date returns for both are seen below.

What’s up with the Neometals share price?

Neometals shares have bounced from 6 month lows today. The company attracted buyers when shares were fetching 92 cents apiece at the close yesterday.

With the share price sliding from former highs of $1.95 in April, the selling pressure’s been on the stock and prices have now traced 39% lower this year to date.

The share jumped back on 13 May when the company announced a deal with Mercedes Benz to build a lithium-ion battery recycling plant.

However, the joy was shortlived and the share continued in its downtrend soon afterwards. The company did release an investor presentation today, although nothing to be considered price sensitive.

In the update, Neometals it explained it is an “emerging, sustainable battery materials producer… underpinned by proprietary, green, processing technologies [with] 16 granted patents [and] 54 Patents pending.”

Investors certainly don’t appear to have reacted poorly to the update, that’s for sure.

Alas, despite no market sensitive updates today, investors have bid the share upwards in line with strengths in the wider sector.

Indices tracking the materials and mining sectors are each booking gains today, reversing downward trends in both segments.

In the last 12 months, the Neometals share price has secured a 110% gain, despite trading down in 2022.

The post Why is the Neometals share price surging 10% today? appeared first on The Motley Fool Australia.

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More reading

• Mineral Monday: What you need to know about vanadium and which ASX shares are cashing in on it

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 Nearmap Ltd (ASX: NEA) share price is flying higher today after posting losses over the last two days.

At the time of writing, the aerial imagery specialist’s shares are up 5% to $1.05 apiece.

With no news out of the company, we take a closer look at could be pushing its company’s shares higher.

What’s driving Nearmap shares higher?

Following heavy losses on the ASX this week, a sharp rebound has ensued, sending the Nearmap share price higher.

In particular, the S&P/ASX All Technology index (ASX: XTX) is climbing 0.26% to 1,829.6 points.

It’s worth noting that the index was up as much as 2.8% during midday trade.

Furthermore, with Nearmap shares tanking 10% in a week, investors looking for a bargain may be providing support. This comes after its shares dipped under the psychological $1 barrier on Tuesday.

The last time this was seen was during the COVID-19 crash in March 2020.

Nonetheless, the company has been making tailwinds in recent times with the launch of its aerial camera system, HyperCamera3.

This is expected to be rolled-out in both Australia and New Zealand before entering the North American market.

Nearmap’s content is regularly relying upon government customers from 42 out 50 states in America. To put that into perspective, the average revenue per subscription is around US$22,350 in the North American market.

Nearmap share price summary

Since November 2021, the Nearmap share price has struggled to hold its ground, falling 55% over the 7-month time frame.

This comes regardless of the company announcing that it’s expecting to achieve the upper-end of its FY22 guidance.

It’s worth noting that Nearmap shares touched a 52-week low of 98 cents on Tuesday.

Based on today’s price, the company commands a market capitalisation of roughly $551.47 million.

The post Why is the Nearmap share price soaring 5% on Thursday? appeared first on The Motley Fool Australia.

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More reading

• Why has the Nearmap share price dumped 20% since the end of March?

Motley Fool contributor Aaron Teboneras has positions in Nearmap Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nearmap Ltd. The Motley Fool Australia has positions in and has recommended Nearmap 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 Woolworths Group Ltd (ASX: WOW) share price is down today as investors get to grips with the latest developments for the supermarket business. At the time of writing, the Woolworths share price is trading down 0.93% at $32.99.

Woolworths is already dealing with elevated inflation on a variety of products, with suppliers asking for price rises. But, Woolworths is also thinking about how to help customers as well.

Price freeze

Earlier this week, the supermarket business announced price freezes on a number of staple products.

According to Seven West Media Ltd (ASX: SWM) reporting, this is the first time that Woolworths has committed to price freezes in a century of operating.

Some of the products that won’t see a price rise this year, which are predominately Woolworths brand products, are: flour, sugar, vinegar, oats, eggs, tea bags, coffee, canned tomatoes, tomato sauce, pasta, frozen peas, cheese blocks and shredded cheese, bread rolls, bacon, chicken tenders, cans of tuna, yoghurt, juice, laundry powder, dishwashing liquid, fabric conditioner, sponges and bin bags.

The Woolworths CEO Brad Banducci said:

Food inflation in Australia began to increase towards the end of last year following many years of low inflation. Initially it affected mostly meat and imported products, but has since grown to impact almost every category.

Most recently, we have seen material inflation in vegetables given the very poor growing season on the Eastern Seaboard, due to the rain, high humidity and low light levels – hence what you may see on cucumbers, capsicums and lettuces amongst others.

Food inflation isn’t the only factor that the supermarket is having to deal with. The company will now also have a higher wage bill as it enacts wage increases. Higher costs could reduce profitability, which in turn may have (or already has had) an impact on the Woolworths share price.

Wage increase

As reported by The Australian, around 145,000 Woolworths staff are covered by the Fair Work Commission’s decision to increase the minimum wage by 5.2% and the award rate by 4.6%.

Woolworths will be passing on a $40 a week pay rise. A spokesman from Woolworths was quoted by the newspaper, who said:

Following today’s Fair Work decision, we will be passing on the annual pay increases under the modern award to our hourly-paid Woolworths Supermarket, Metro and Big W retail workers from July and will review for our salaried retail team members.

We have previously said we support an increase in team member wages that keep pace with underlying cost-of-living increases and are committed to doing the right thing.

Broker unconvinced

The broker Macquarie was not a fan of these two developments – its Woolworths share price target is now $36.40. However, this still implies a possible upside of around 10%.

Macquarie rates Woolworths as neutral. The Australian reported that Macquarie analyst Ross Curran said:

We note that supermarkets often struggle to take margin during economic disruption.

We are at the bottom of consensus for FY23 and FY24.

Based on Macquarie estimates, the Woolworths share price is valued at 28 times FY22’s estimated earnings with a possible grossed-up dividend yield of 3.6%.

The post What’s dragging the Woolworths share price lower today? appeared first on The Motley Fool Australia.

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More reading

• 2 blue chip ASX 200 shares that Goldman Sachs rates as buys
• Why this top broker thinks the Woolworths share price is cheap
• Tolls and phones: Wilsons unveils 3 ASX shares to buy for a slowing economy
• Woolworths share price edges lower despite green milestone
• Why did the Woolworths share price underperform on Thursday?

Motley Fool contributor Tristan Harrison 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 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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There’s probably a reason that most people associate the name of tech billionaire Bill Gates with Microsoft Corporation (NASDAQ: MSFT), or perhaps philanthropy, rather than cryptocurrencies or non-fungible tokens (NFTs).

Gates remains one of the richest people on the planet, despite his absence from the day-to-day running of the company he founded.

He’s even divested much of his wealth away from Microsoft in recent years (although he remains a large shareholder). But he probably hasn’t directed his enormous wealth into NFTs, or cryptocurrencies like Bitcoin (CRYPTO: BTC).

Why does Bill Gates shun NFTs and cryptocurrencies?

How do we know?

Well, Gates recently spoke at a TechCrunch talk on climate change, as documented by CNBC. Gates reportedly described cryptocurrencies and NFTs as something that’s “100% based on [the] greater fool theory”.

The greater fool theory is one that describes some assets as having value only being based on what the ‘next fool’ is willing to pay, rather than the asset’s productive value itself.

“I’m used to asset classes … like a farm where they have output, or like a company where they make products,” Gates said.

In terms of cryptocurrencies, the billionaire confirmed: “I’m not involved in that … I’m not long or short any of those things.”

Gates didn’t seem to have a far higher opinion of NFTs either. He joked that “expensive digital images of monkeys [would] improve the world immensely”, referring to the famous ‘Bored Ape Yacht Club’ series of NFTs, which have sold for astronomical prices over the past few years.

So Gates is certainly not a fan of either cryptocurrencies or NFTs. Instead, according to Gurufocus, Gates prefers to store his wealth in shares. His largest holding is in fellow crypto-sceptic Warren Buffett’s Berkshire Hathaway. But there’s also waste and recycling company Waste Management, Canadian National Railway Co, heavy equipment manufacturer Caterpillar, and grocer Walmart. That’s in addition to Microsoft, of course.

But it’s not as though all billionaires are shunning Bitcoin. The cryptocurrency has had some other high-profile backers among the world’s financial elite. The most famous is probably Tesla Inc (NASDAQ: TSLA) CEO Elon Musk, who has directed his company to accept Bitcoin as a payment option in the past.

Another billionaire who is bullish on Bitcoin is hedge fund manager Paul Tudor Jones. Jones has said that he pursues a 5% allocation to Bitcoin in his portfolio.

The post Why tech billionaire Bill Gates is ‘not involved’ in crypto or NFTs appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Bitcoin, Caterpillar, Waste Management, Microsoft, and Walmart Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway (B shares), Bitcoin, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares) and Bitcoin. 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 Sonic Healthcare Limited (ASX: SHL) share price is edging higher today, up 0.24% to $32.84.

But like most ASX shares in 2022, it has struggled amid lower market sentiment as inflation and interest rates rise.

On the first day of trading this year, Sonic Healthcare shares closed at $46.14. So, the pathology provider has endured a 28.8% loss in share price value year to date.

Based on this, Sonic has underperformed its peers in the sector in 2022. The S&P/ASX 200 Health Care Index (ASX: XHJ) is down 16.7% year to date.

However, over the past 12 months, Sonic has outperformed the index, down 10.5% compared to 15.8%.

How do the experts view the Sonic Healthcare share price?

Top broker Bell Potter believes Sonic Healthcare is well-placed for growth. It points to the growing demand for pathology services and international expansion opportunities.

The broker said:

[Sonic is] the world’s third largest pathology provider with significant operations in the USA, United Kingdom, Germany, Switzerland, Belgium, Australia and New Zealand. Against the backdrop of continuing growth in the demand for pathology services over the longer term, the group has further international expansion opportunities in both existing and new geographical markets.

Another top broker, Morgan Stanley, doesn’t just say buy, it says go overweight on this one.

The team has put a price target of $40 on Sonic Healthcare shares, implying a potential gain of more than 20% in 12 months’ time.

The broker says Sonic has benefitted from massive COVID-19 testing. This boosted its earnings in FY21 and the broker is expecting the same for FY22.

Morgan Stanley also points out that Sonic’s base business revenue is also rising. HY22 base revenue was up 4.3% year-on-year and up 2.5% compared to HY20 (before COVID-19).

However, the team expects earnings to normalise in FY23. So, they value the Sonic Healthcare share price at 10 times FY22 estimated earnings and 16 times FY23 estimated earnings.

What else is happening at Sonic Healthcare?

In its half-year results for FY22, Sonic Healthcare revealed it had spent $585 million in acquisitions and joint ventures during the half. It plans to continue to explore further opportunities for expansion.

CEO and managing director Dr Colin Goldschmidt said:

During the half-year Sonic invested A$585 million in acquisitions and joint ventures that will enhance the future growth of the company. The acquisition of Dallas-based ProPath has significantly strengthened Sonic’s anatomical pathology operations and management in the USA, whilst the acquisition of Canberra Imaging Group has materially expanded the revenue, footprint and talent of Sonic’s Radiology division.

Our strategic investment into Harrison.ai and the establishment of a pathology AI joint venture is a very exciting step for Sonic. Harrison.ai is a leading global healthcare AI company and we believe that the combination of Sonic and Harrison.ai, through our joint venture, will be a powerful force in developing best-in-class AI diagnostic tools for pathology.

Sonic’s global management teams continue to focus on identifying and assessing synergistic acquisitions and outsource contracts. Sonic is well positioned to continue to invest in and expand the business with an active pipeline of opportunities under evaluation, backed by a very strong balance sheet.

What about dividends?

As my fellow Fool Tristan reported recently, Sonic has a ‘progressive dividend policy’.

This has led to the company increasing its dividend every year for approximately a decade.

Most recently, Sonic Healthcare upped its interim dividend by 11% to 40 cents per share.

And it was 100% franked too, which is not usual for the stock.

The post Why this top broker tips 20% upside for the Sonic Healthcare share price appeared first on The Motley Fool Australia.

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More reading

• Buy these 2 quality ASX 200 shares: broker
• Why I think the Sonic Healthcare share price is a buy
• I’d invest $5,000 into these excellent ASX shares for the long term
• Is it reasonable to expect share price growth AND reliable dividends from ASX shares?

Motley Fool contributor Bronwyn Allen 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 recommended Sonic Healthcare 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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