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The volatility facing ASX 200 mining shares is a reminder that there will be no easy profits to be had in the coming months.

The sector crashed nearly 2% today and is one of the worst performers on the S&P/ASX 200 Index (Index:^AXJO).

All sectors are in the red during lunch time trade. The only other sector that’s faring worse than mining is ASX 200 Real Estate, which is down 2.5%,

ASX 200 mining shares in a hole

The way things are going, the S&P/ASX 200 Index (Index:^AXJO) could finish the week nursing a loss of around 4%.

Friday’s big falls in ASX resource shares comes even as commodities are seen to be well placed to benefit from the rising risk of stagflation.

Not that you can tell with the way ASX 200 mining shares are trading today. The Fortescue Metals Group Limited (ASX: FMG) share price crashed 2% to $21.13, South32 Ltd (ASX: S32) share price tumbled 3.6% to $4.83 and Alumina Limited (ASX: AWC) share price tanked 5.5% to $1.56 at the time of writing.

Why are ASX 200 mining shares underperforming?

A drop in hard commodity prices is dragging on ASX 200 mining shares. Iron ore shed 1.4% overnight, while copper slipped 1.4% while aluminium gave up 1.2%.

There are also worries that high fuel and power prices will crimp on profit margins for miners. This is because processing plants are energy intensive, while heavy machinery used onsite are require diesel.

What is also hurting sentiment are predictions that aluminium prices have peaked. Research firm Harbor Intelligence warned that the price will plunge by nearly 20% by December to US$2,310 a tonne, reported Bloomberg.

Gloomy prediction for aluminium

The dire forecast was presented at North America’s largest aluminium conference this week. The drop is caused by slowing demand and rising supply.

Harbor Intelligence managing director Jorge Vazquez said at the conference:

We all know that last year and so far this year has been the best ever in terms of demand.

But there’s one component of that demand borrowed from the future, and we’ll need to pay that – consumers cannot sustain this level of goods spending seen the past two years.

Is it time to sell out of the sector?

Meanwhile, the price of other commodities is also tipped to decline in the near- to medium-term. This includes lithium and iron ore.

This doesn’t necessarily mean ASX 200 mining shares are about to collapse into bear territory. The fact is many do not need record high prices for their commodities to generate good profits.

Further, the price for many commodities isn’t likely to crash given the high inflation forecasts by most economists.

The post Why are ASX 200 mining shares tumbling on Friday? appeared first on The Motley Fool Australia.

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More reading

• The market expects the RBA to take the cash rate to 3% by the end of 2022
• ASX 200 midday update: Big four banks rebound, Atlas Arteria’s takeover update
• Why are ASX 200 bank shares rebounding on Friday?
• Fortescue share price sinks: Broker warns that it could fall a further 34%
• South32 share price sinks: Is this a buying opportunity?

Motley Fool contributor Brendon Lau has positions in Fortescue Metals Group Limited and South32 Ltd. 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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Shares of Galileo Mining Ltd (ASX: GAL) have slipped hard this week and now trade more than 21% in the red. At the time of writing, Galileo shares are fetching $1.43 apiece.

In broad market moves, the S&P/ASX 300 Metals and Mining Index (ASX: XMM) has slipped around 2% on the day.

What’s up with the Galileo share price?

After news surfaced that the company could be a takeover target earlier this week, there was short-term optimism in the Galileo share price, with the stock surging 9% on the day.

Zooming out, however, shares have clamped down from a high of $1.82 since 2 June, and are now continuing in a downtrend since that date.

The company also advised this week it had started drilling at its Callisto discovery, located at its Norseman project in Western Australia.

Nevertheless, investors weren’t biting from the update and sent the stock even lower on the day.

An equal weighting factor is the broad-sector weakness currently marring the metals & mining sector.

Over the past month of trade, there’s been a striking similarity in the trajectory of both the Metals & Mining index and the Galileo share price, as seen below. Both have slipped from highs in June.

With that in mind, it appears sector weakness may have spilled over to the Galileo Mining share price this week.

Despite the downward pressure, the Galileo Mining share price has returned more than 535% this year to date and has spiked 429% in the last 12 months.

The post Why is the Galileo Mining share price diving 21% this week? appeared first on The Motley Fool Australia.

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More reading

• Why is the Galileo share price soaring 9% on Tuesday?
• Galileo share price dips 7% despite project milestone
• Galileo Mining share price shrugs off market pressure, soars 16%
• Why has the Galileo Mining share price shot to the stars in May?
• 3 ASX mining shares soaring by more than 30% on Friday

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 TerraCom Ltd (ASX: TER) share price is roaring higher today despite the broader ASX market plummeting.

At the time of writing, the resource company’s shares are swapping hands at 80.5 cents, up 2.55%, having earlier risen 10.83% to 87 cents. This means its shares have now gained around 37% in the past month.

For context, the All Ordinaries Index (ASX: XAO) is today in the red by 1.2% to 7,153.8 points.

TerraCom on track to hit sales targets

The TerraCom share price is climbing on Friday following a couple of positive announcements made by the company.

According to its release, TerraCom is on track to meet its June 2022 quarterly forecast.

As such, 640,000 tonnes of coal from the company’s wholly-owned Blair Athol (BA) coal mine in Central Queensland will be delivered. This represents 27% of the 2.3 million tonnes of coal sales to be achieved in FY22.

Furthermore, management is forecasting an operating earnings before interest, taxes, depreciation, and amortisation (EBITDA) for BA of approximately $180 million in the June quarter. Combined with the prior nine months, TerraCom is hoping to achieve an operating EBITDA of $360 million for FY22.

At its South Africa operations, operating EBITDA is expected to be around $44 million for the June quarter. This will total roughly $128 million for FY22 when including the previous $84 million attained from July 2021 to March 2022.

On a separate note, TerraCom issued a convertible bond to Madison Pacific Trust Limited for US$20 million. The conversion price stood at A$0.696, with the bonds expiring on 24 December 2022.

However, OCP Asia informed TerraCom that it wishes to convert the full amount of the bonds into fully-paid ordinary shares.

Based on the conversion rate, this will equate to around 39.91 million TerraCom shares to OCP Asia. This represents approximately 5% of the entire company’s issued capital.

Lastly, management stated that it will be looking to restart its dividend policy in the coming weeks.

Management commentary

In regards to the dividends, TerraCom executive chair Craig Ransley said:

The Company’s balance sheet has significantly improved following the repayment of the US$167 million Euroclear Bond.

The Board looks forward to being able to recommence dividends to shareholders following strong financial performance continuing to be achieved.

Based on forecast, the first dividend to be returned to shareholders is expected to be declared for the period ending 30 June 2022 and estimated to be paid during September 2022. The dividend is forecast to be an initial unfranked dividend of 10 cents per share.

TerraCom share price summary

Strong investor sentiment has led the TerraCom share price to accelerate over the past 12 months, reaching gains of 600%.

Year-to-date, the company’s shares have also performed admirably, up 345%.

TerraCom presides a market capitalisation of around $591.58 million.

The post TerraCom share price rallies as dividends return appeared first on The Motley Fool Australia.

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More reading

• 3 ASX shares I’m telling my clients to buy: advisor
• Why these ASX coal shares could be ‘bigger than Ben-Hur’: fundie

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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The National Australia Bank Ltd (ASX: NAB) share price has fallen by close to 10% this week.

Indeed, all of the other big four banks of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), and Australia and New Zealand Banking Group Ltd (ASX: ANZ) have also seen their share prices decline this week.

After that decline, the broker Macquarie believes that NAB is an interesting opportunity.

What happened this week?

Earlier this week, the Reserve Bank of Australia (RBA) decided to increase the interest rate (the cash rate target) by 50 basis points to 85 basis points. The RBA rate is now 0.85%.

There has been a lot of commentary that a rising interest rate could help the net interest margin (NIM) of the banks. This is the margin that the banks make on their lending, compared to the cost (such as savings accounts). The broker Macquarie also sees that potential improvement in margins for NAB.

However, some experts, such as Morgan Stanley, have pointed out that banks are also increasing the interest rate for savers and term deposits, which could be a negative for the NIM.

Macquarie says NAB share price is a buy

The broker has an ‘outperform’ rating on NAB, with a price target of $34. That implies a potential rise of around 20% over the next year on the current NAB share price of $28.22.

It thinks that people that don’t move their money to try to get the best rates — the people that aren’t proactive — will help improve margins for NAB.

Macquarie is expecting a basis point boost in the mid-to-high single digits for NAB over the next year.

Valuation

Using the numbers that Macquarie has projected, the NAB share price is valued at 13.5x FY22’s estimated earnings. Looking at the projected earnings for FY23, NAB shares are valued at 12x FY23’s estimated earnings.

Morgan Stanley’s earnings estimates for NAB over the next two financial years are very similar to Macquarie’s.

But there is more to the bank business than just its valuation.

Dividends can also form an important part of the total returns from the bank.

Macquarie thinks the projected grossed-up dividend yield for NAB in FY22 is going to be 7.4%. The broker is expecting another dividend increase in FY23, leading to a possible grossed-up dividend yield of 7.6%.

NAB share price snapshot

While the NAB share price may be down this week, it’s actually up by around 6% over the past year. However, it is down by around 2% this year to date and more than 10% over the past month.

The post The NAB share price is down 10% this week: Macquarie says it’s a buy appeared first on The Motley Fool Australia.

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More reading

• Why are ASX 200 bank shares rebounding on Friday?
• What exactly is going on with ASX 200 bank shares and the RBA rate rise?
• Why is the NAB share price sinking on Thursday?
• Why are ASX 200 bank shares plunging on Wednesday?
• NAB share price backtracks amid $1 billion capital raise

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 and 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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It’s certainly been a rough month so far for the Pilbara Minerals Ltd (ASX: PLS) share price.

Even though we’re only 10 days into June, Pilbara shares have fallen a painful 26.6% this month so far. That includes the nasty 5.7% drop to $2.16 a share that this ASX 200 lithium stock has fallen by so far today.

But these latest moves can also be seen as just an extension of the woes that Pilbara Minerals shares have been experiencing all year. Since reaching a new high of $3.89 a share back in mid-January, Pilbara shares have now fallen more than 44%.

The latest chapter in the story of these falls came right at the start of this month. On 1 June, we covered how broker Goldman Sachs put out a note that warned of a “sharp correction” in lithium prices over the coming two years.

Goldman predicted that we could see falls from US$60,350 per tonne to around US$54,000 per tonne over this year. But it is also expecting this to drop dramatically to as low as US$16,372 per tonne by 2023.

This prediction pulled the rug out from under ASX lithium shares when it became public. As we covered at the time, PiIbara Minerals shares were down 22% at one point that day.

What’s next for Pilbara Minerals shares?

So with such dramatic falls under the belt, could it finally be time to dig into Pilbara shares this June?

Well, it could be, according to some ASX expert investors.

This week, my Fool colleague Brooke covered how analysts at Macquarie Group Ltd (ASX: MQG) reckon there is still “material upside to lithium miners” after these falls. These analysts point to how Pilbara is already “factoring in realised lithium prices of approximately US$13,000 per tonne”.

But opinions are certainly mixed right now.

Earlier this month, my Fool colleague Bernd also covered fellow broker Credit Suisse’s opinion. Credit Suisse is currently “neutral” on Pilbara shares. Saying that, this broker still has a $3 share price target on Pilbara. That implies a potential upside of more than 38% on current pricing.

So some ASX experts are still confident Pilbara shares will reach higher form here. But it is certainly a tough period for the Pilbara Minerals share price and its fellow ASX lithium shares at the moment.

The post Down 26% in June, is it time to dig into Pilbara Minerals shares? appeared first on The Motley Fool Australia.

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More reading

• Is it too late to buy ASX lithium shares?
• Here are the 3 most traded ASX 200 shares on Thursday
• Can the Pilbara Minerals share price recover from a 28% loss this year?
• Here are the 3 most traded ASX 200 shares on Wednesday
• Why Macquarie still sees ‘material upside’ for ASX lithium shares

Motley Fool contributor Sebastian Bowen 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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Earlier this week, the Reserve Bank of Australia surprised the market with a greater than expected increase in the cash rate.

In response to rising inflation and low unemployment, the central bank took rates 50 basis points higher to 85 basis points.

Governor Philip Lowe explained why the Reserve Bank made the move. He said:

Inflation in Australia has increased significantly. While inflation is lower than in most other advanced economies, it is higher than earlier expected. [..] Inflation is expected to increase further, but then decline back towards the 2–3 per cent range next year. Higher prices for electricity and gas and recent increases in petrol prices mean that, in the near term, inflation is likely to be higher than was expected a month ago [..]. Today’s increase in interest rates will assist with the return of inflation to target over time.

Unfortunately for borrowers, the central bank acknowledges that this rate hike, as large as it was, won’t be enough to tame the inflation beast. Mr Lowe has warned that more hikes are coming and soon. He explained:

The Board expects to take further steps in the process of normalising monetary conditions in Australia over the months ahead. The size and timing of future interest rate increases will be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labour market. The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time.

Where are rates going?

If you thought that 0.85% was a shock to the system then you might want to hold onto your hat.

The ASX 30 Day Interbank Cash Rate Futures provide investors with an idea of what the market is expecting from the Reserve Bank over the next 18 months. And it certainly isn’t pretty for borrowers.

Here’s what lies ahead for the cash rate between now and this time next year according to futures:

Jul	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun
1.55%	1.63%	1.96%	2.35%	2.8%	3.02%	3.09%	3.31%	3.46%	3.59%	3.68%	3.7%

This means that the market is now pricing in the cash rate reaching 3% by Christmas, after which it is expecting rates to continue to rise to 3.7% by this time next year.

Given this expected rapid rise and the impact it could have on borrowers and the economy, it’s no surprise to see Commonwealth Bank of Australia (ASX: CBA) shares, the rest of the big four, and the ASX 200 index behaving so volatile this week.

Time will tell how accurate the market is with its predictions.

The post The market expects the RBA to take the cash rate to 3% by the end of 2022 appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: Big four banks rebound, Atlas Arteria’s takeover update
• Why are ASX 200 bank shares rebounding on Friday?
• 5 things to watch on the ASX 200 on Friday
• Here are the 3 most traded ASX 200 shares on Thursday
• ASX 200 midday update: Magellan rebounds, Crown’s takeover boost

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 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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Shares of Novonix Ltd (ASX: NVX) have sunk 4% in the red on Friday and now trade at $3.08 apiece.

The slide brings losses to more than 66% this year to date for the company, and over 74% from its 52-week closing high of $12.15.

The question now becomes if Novonix can restart its growth engine and push back toward these former highs.

Can the Novonix share price revive itself?

We’ve got to at least gauge the market’s prospects in order to address this question. According to its Annual Energy Paper 2022, JP Morgan notes that “global [electric vehicle] sales gathered steam in 2021, growing to almost 9% of total vehicle sales”.

“Although to be clear, EVs are still just 1.5% of the global fleet of vehicles on the road,” it added.

The JP Morgan team also noted the substantial increase in battery costs, underscored by surging commodities used in their production.

Estimated battery costs have also risen approximately $500–$1,500 since January 2020 across various battery styles, it says.

“EV buyers can expect to offset part of this price increase via lower fuel costs if the current gap between gasoline and electricity costs per mile is sustained,” the team remarked.

With the price of oil and gasoline surging at equal pace, the case is arguably stronger for the transition some might also say.

But the market also prices stocks on a blend of past earnings history, and forward earnings expectations, according to Peter Lynch, in his book, ‘One up on Wall Street’.

According to Bloomberg consensus data, Novonix is forecast to grow revenue by 69% year on year to $8.8 million in FY22, with that expanding more than 478% to $51 million in FY23 and $141 million in FY24.

However, it’s also forecast to produce a net loss into FY23, before turning profitable in FY24, according to this data.

Noteworthy is that FY22’s projected loss of $35 million is more than its FY21 result of a $16 million loss.

It’s not uncommon for ‘growth’ companies to present with negative earnings and high revenue growth forecasts. However, the high-growth trade has arguably unwound itself this year.

For instance, the Vanguard Growth ETF (NYSE: VUG) has tanked 26% in the last 6 months, whereas the BetaShares Diversified All Growth ETF (ASX: DHHF) has slipped more than 10%, both behind the benchmark.

The striking similarity in these instruments and their directional movement is shown on the chart below.

The culmination of these pressures means the future outlook of the Novonix share price is murky.

The post Can the Novonix share price hit the comeback trail in June? appeared first on The Motley Fool Australia.

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More reading

• Novonix share price slips to 10-month low amid Thursday’s sell-off
• Novonix share price dips ahead of US investor conference presentation
• Do Novonix shares pay dividends?
• Why are ASX 200 tech shares having such a cracking Friday?
• Why did the Novonix share price tumble 22% in May?

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 Sezzle Inc (ASX: SZL) share price is getting hammered today.

Sezzle shares closed yesterday trading for 43 cents and are currently trading for 40 cents, down 7%.

So, why is the buy now, pay later (BNPL) share coming under selling pressure again today?

Interest rates and competition

The Sezzle share price isn’t the only one amongst the BNPL companies doing it hard today.

Global payments provider Block Inc (ASX: SQ2), which acquired Afterpay in January, is down 6.6% at this same time. Openpay Group Ltd (ASX: OPY) is down a somewhat less painful 2.6%.

So why is the Sezzle share price under pressure alongside the wider BNPL sector?

First up, there’s interest rates. Rates are going up across most of the western world for the first time in more than a decade. And as we witnessed with the RBA’s 0.50% rate hike on Tuesday, they have the potential to rise further and faster than most analysts had expected.

With US inflation figures due out today (tonight Aussie time), jittery investors pushed the tech-heavy Nasdaq down 2.8% in Thursday’s trading. If inflation figures come in higher than forecast, it could mean more aggressive tightening from the Federal Reserve.

Higher rates throw up a number of headwinds for BNPL shares, including a likely rise in bad customer debts in a sector already struggling with that issue. Higher rates could also impact customer spending habits, seeing a decrease in demand for Sezzle’s payment services.

Then there’s the rise of some serious competition in the pay via interest free instalments space that’s pressuring the Sezzle share price.

Earlier this week Apple Inc. (NASDAQ: AAPL) announced that it was pressing ahead with its own BNPL service, Apple Pay Later. Apple, one of the biggest companies in the world with a market cap north of US$2.3 trillion, said it won’t charge interest rates or late fees. And the service will be available to any merchants who already accept Apple Pay.

Sezzle share price snapshot

A stellar performer during the first year following the pandemic lows, the Sezzle share price has been heading sharply downhill since last June.

Over the past 12 months, Sezzle shares are down a painful 95.7%. That compares to a full year loss of 5% posted by the All Ordinaries Index (ASX: XAO).

The post Why is the Sezzle share price fizzling 7% on Friday? appeared first on The Motley Fool Australia.

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More reading

• 10 ASX All Ords shares that could be stung by tax-loss selling
• ‘Just horrific’: Why this fundie says Zip should abandon its Sezzle takeover
• Why Brambles, James Hardie, Seek, and Sezzle shares are sinking
• Why is the Sezzle share price tumbling on Tuesday?
• Why is the Sezzle share price tumbling 8% on Wednesday?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple and Block, Inc. 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 Block, Inc. The Motley Fool Australia has recommended 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 Aussie share market is yet again heading south after Wall Street recorded another heavy fall overnight.

In early afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is down by 0.89% to 6,957.5 points.

However, ASX bank shares — including the Westpac Banking Corp (ASX: WBC) share price — are defying the sell-off to outperform the broader index.

The Westpac share price spent much of the morning in the green — at one stage rising as high as $21.65, a 2.2% gain. However, at the time of writing it has edged into the red by 0.05% to trade at $21.16.

What’s helping Westpac shares outperform on Friday?

While most of the ASX market is in a sea of red, the S&P/ASX 200 Banks Index (ASX: XBK) is among the best performing sectors today.

Currently 0.28% higher at 2,475.2, the benchmark index for Australian banks is rebounding from this week’s sizeable losses.

Since Monday, the ASX 200 banking sector has dropped almost 10%. This followed the decision by the Reserve Bank of Australia (RBA) to increase the official cash rate by 0.5%.

Today, Westpac’s big four peers are all currently in the green. National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking Group Ltd (ASX: ANZ), and Commonwealth Bank of Australia (ASX: CBA) were all up by more than 1% earlier in the day but have since partially retreated.

Westpac ponders capital notes offer

On a separate note, Westpac advised today that it’s weighing up a new capital notes offer in the near future.

According to its release, the offer could include a reinvestment offer for certain Westpac capital notes 2 holders.

Although, whether or not it goes ahead will depend on market conditions, and regulatory and other required approvals.

It’s worth noting that some investors who previously participated in the capital notes 2 may not be eligible. This is due to Westpac changing how the offer is conducted following the recent introduction of product design and distribution obligations (DDO).

As such, management advised below of what’s expected under any offer that is made:

• All applications, including under a reinvestment offer, will need to be made through a syndicate broker;
• Participating applicants would need to satisfy new eligibility requirements;
• No specific offer will be made to Westpac securityholders; and
• There won’t be any direct applications to Westpac.

Westpac share price snapshot

Over the past 12 months, the Westpac share price has declined by 20% after a tough beginning in 2022.

After significant volatility across the ASX, the bank’s shares are flat year-to-date.

Based on today’s price, Westpac commands a market capitalisation of roughly $76.95 billion.

The post What’s impacting the Westpac share price on Friday? appeared first on The Motley Fool Australia.

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More reading

• Why are ASX 200 bank shares rebounding on Friday?
• Here are the 3 most traded ASX 200 shares on Thursday
• Why Appen, Cleanaway, Syrah, and Westpac shares are dropping
• Westpac share price slides again and is now down 12% this week
• What exactly is going on with ASX 200 bank shares and the RBA rate rise?

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 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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The Virtus Health Ltd (ASX: VRT) share price is lifting on Friday despite the broader market’s suffering.

Right now, the S&P/ASX 200 Index (ASX: XJO) has slumped 0.75% while the All Ordinaries Index (ASX: XAO) has dipped 0.93%.

Meanwhile, the Virtus share price is trading at $8.15, 0.25% higher than its previous close.

The S&P/ASX 200 Health Care Index (ASX: XHJ) is also outperforming today, gaining 0.43%.

Could the company’s ongoing takeover be behind its buoyancy today? Let’s take a look.

Why is Virtus’ stock outperforming on Friday?

The Virtus share price is in the green today as shareholders get closer to receiving a potential special dividend worth up to 30 cents.

The last few weeks have been dramatic for Virtus and its suitors. CapVest Partners and BGH Capital were battling to takeover the company earlier this year.

However, CapVest stepped back from the competition last week, conceding defeat when the company’s board shifted its support from CapVest’s $8.10 takeover bid to BGH’s $8.15 bid.

Now, BGH is working to acquire 90% of the company’s voting power. It holds an 84.3% stake as of this morning.

Its offer closes at 7 pm on Monday – a public holiday for NSW and Victoria.

If it has met its target by the close of business on Tuesday, the company will consider paying a fully franked special dividend valued at up to 30 cents per share.

That means shareholders might get both an $8.15 payout as well as the benefits from franking credits. That could bring a tax benefit of 13 cents per share for some shareholders if the dividend is 30 cents per share.

Previously, the company promised to consider a special dividend of up to 44 cents per share. However, that was revised after it was forced to pay around $7.2 million in break fees to CapVest.

Virtus share price snapshot

Today’s gains have helped to boost the Virtus share price even further into the long-term green.

It’s currently trading nearly 21% higher than it was at the start of 2022. It has also gained 24% since this time last year.

The post Here’s why the Virtus share price is defying Friday’s sell-off appeared first on The Motley Fool Australia.

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More reading

• Why is the CSL share price losing ground on Friday?
• Virtus share price holds steady despite 30% earnings fall

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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