Tag: Motley Fool

It has been a disappointing few weeks for the Novonix Ltd (ASX: NVX) share price.

Since this time last month, the battery materials company’s shares have lost 22% of their value.

Why is the Novonix share price down 22% in a month?

The Novonix share price has come under pressure recently due partly to its larger than expected spending during the first half.

Last month the team at Morgans commented: “NVX spent $15.7m ($8.6m more than Morgans forecast) on operating activities and $112.4m ($22.5m more than Morgans forecast) on investing activities. Headcount has doubled in the Battery Testing Services (BTS) division and corporate overheads were pushed higher by one-offs and underlying increases.”

Though, it acknowledges that with $260 million of available cash, “it has plenty of headroom to continue to expand its production capacity.”

Nevertheless, due to the prospect of higher ongoing operating costs into FY 2023, potential ramp up delays, and the market’s current aversion towards growth shares, Morgans has lowered its valuation.

The broker currently has a hold rating and $4.88 price target on the company’s shares. This compares to the current Novonix share price of $5.20, which implies further potential downside of 6.1% for investors.

The post Why is the Novonix (ASX:NVX) share price down 22% in a month? appeared first on The Motley Fool Australia.

More reading

• Expert explains why this investment opportunity is ‘much bigger’ than hydrogen
• Novonix (ASX:NVX) share price jumps as net assets, cash earnings spike
• How have ASX lithium stocks been faring this reporting season?
• Down 39% in a month. Has the tide turned for Novonix (ASX:NVX) shares?

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 Bruce Jackson.

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The 88 Energy Ltd (ASX: 88E) share price has jumped significantly this week.

The price movement coincides with updates on two of the oil and gas explorer’s Alaskan projects — including a rig mobilisation and an oil interception.

At the time of writing, the 88 Energy share price is up 2.08% today at 4.9 cents. That’s a 28.9% gain on last Friday’s closing price of 3.8 cents. For comparison, the All Ordinaries Index (ASX: XAO) is currently down 0.17%.

So, what’s going on with 88 Energy?

Icewine oil obtained

The company’s Project Icewine site is located in the North Slope of Alaska — an area pertaining to about 195,000 acres in which the company has a 75% stake.

Today, the oil explorer announced that light oil had been “recovered” during tests at the neighbouring Pantheon Resources’ Talitha-A well.

As the Pantheon well is located 2.8 miles north of Icewine, 88 Energy says “all targets are interpreted to extend into 88 Energy’s Project Icewine acreage”.

The data from Pantheon, along with results obtained last year, will go into an “independent resource report for Project Icewine focusing on the eastern leases in the first half of 2022”.

Peregrine site update sparks 88 Energy share price jump

On Tuesday, the oil explorer gave an update into its Project Peregrine site — more specifically, its Merlin-2 well — also located in the same region of Alaska.

The well was initially spudded (drilled) in March last year, with drilling operations completed the following month.

A rig has been mobilised for drilling next week. It will be initially dug to a depth of 2,000 feet, with permission to extend to 8,000 feet.

88 Energy said a well production test has been implemented, with “equipment placed on standby during initial well site operations”.

Further, 88 Energy reported:

Flow testing of Merlin-2 will be contingent upon the wireline results, in particular the MDT outcomes, as well as government approvals and weather window considerations.

The company has a 100% working interest in the site.

The 88 Energy share price surged 9.5% on the day of the announcement, and 13% the following day.

What did management say?

Commenting on the Peregrine update, 88 Energy managing director and CEO Ashley Gilbert said:

We are now entering the final phase of pre-spud preparations and look forward with excitement to the next few weeks of drilling operations.

Success at Merlin-2 has the clear potential to be transformational for our shareholders and we look forward to providing updates as the drilling of this appraisal well progresses.

88 Energy share price performance

Over the past 12 months, the 88 Energy share price has increased by 380%. It saw a jump of 135% over four days in April last year after the explorer released an update on its Peregrine site.

Its shares have also soared by 92% this year to date.

The company has a market capitalisation of $762.48 million.

The post Why the 88 Energy (ASX:88E) share price has jumped 29% in a week appeared first on The Motley Fool Australia.

More reading

• Why is the Novonix (ASX:NVX) share price down 22% in a month?
• Goldman says the tech selloff has made Xero (ASX:XRO) shares a buy
• Could investing in this ETF right now make you a millionaire retiree?
• The Telstra (ASX:TLS) share price has tumbled 9% in 6 weeks. What’s happening?
• Why BHP (ASX:BHP) is ‘having its time in the sun’: expert

Motley Fool contributor Alice de Bruin 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 Bruce Jackson.

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It certainly has been a difficult start to the year for the Australian tech sector. For example, since the start of the year, the S&P ASX All Technology index has lost 21% of its value.

This has been driven by the prospect of higher interest rates putting pressure on valuation multiples.

What’s the damage?

Goldman Sachs has been busy assessing the tech sector and notes that companies with little to no profits have been hardest hit. This includes the three Ns, Nearmap Ltd (ASX: NEA), Nitro Software Ltd (ASX: NTO), and Nuix Ltd (ASX: NXL).

It commented: “Technology companies with low/no profitability have been hardest hit by rising rates, falling -40% on average since the Nov-21 vs -24% for profitable tech and -14% for US tech. […] with the median company de-rating -25% and NEA, NXL, NTO de-rating >50%.”

Are there buying opportunities for investors?

Goldman believes this has created a few buying opportunities for investors. It notes that valuations are below pre-COVID levels now, despite the pandemic accelerating the shift to the cloud.

The broker explained: “A wide valuation gap has opened between profitable tech firms (trading on ~6x NTM EV/sales) vs. low/no profit firms (~5x) despite profitable firms growing at c.1/2 the pace. The ASX All Tech index has largely fallen in line with increasing real yields, with sector valuation now below pre-COVID levels while fundamentals are arguably stronger given the pandemic accelerated cloud/ technology adoption.”

Xero shares are a buy

In light of the above, Goldman believes the Xero Limited (ASX: XRO) share price is in the buy zone. This is despite reducing its valuation to reflect lower multiples.

It commented: “Given the recent de-rating of high growth, low profitability technology peers, we decrease our Xero 12mf TP by -15% to A$135/share, driven by a mark-to-market on growth adjusted multiples. We make no earnings changes.”

Based on the current Xero share price of $98.30, this implies potential upside of 37% for investors over the next 12 months.

The post Goldman says the tech selloff has made Xero (ASX:XRO) shares a buy appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• 2 small cap ASX shares that are highly rated by brokers
• 3 ASX tech shares going gangbusters today
• 2 top ASX growth shares that have been heavily sold off
• Analysts see huge upside potential for these beaten down ASX tech shares

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. owns and has recommended Nearmap Ltd. and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nuix Pty Ltd. The Motley Fool Australia owns and has recommended Nearmap Ltd. and Xero. The Motley Fool Australia has recommended Nitro Software Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Over long periods of time, investing in stocks has enabled ordinary people build substantial amounts of wealth. A key problem with stock picking, however, is that not every stock turns out to be a winner, and you often can’t tell which ones will turn out to be duds before it’s too late to do anything about it. Populate your portfolio with too high a proportion of losers, and the money you hoped to accumulate by the time you retire simply won’t be there for you.

That’s what makes the Vanguard Total World Stock Index ETF (NYSEMKT: VT) such a compelling potential investment. By buying shares in a broad, globally diversified pool of stocks from nearly every corner of the globe, that exchange-traded fund takes away the need to try to separate the winners from the losers. Investors in that ETF will get returns about in line with the global stock market in general, rather than individual stocks in particular. That’s how investing in this ETF right now could make you a millionaire retiree. 

Low cost, decent potential returns

The Vanguard Total World Stock Index ETF sports a modest 0.07% expense ratio, which means its investors get nearly all the potential returns of owning the underlying stocks, for far less effort. Indeed, since the ETF’s inception in 2008, investors have seen an average annualized return around 7.75%, which is in line with the benchmark it attempts to track. 

Returns like that are never guaranteed, but it if they continue, they can provide many investors with a path to millionaire status by the time they retire. The table below shows how many years it will take to reach a $1 million nest egg starting from scratch, depending on the rate of return you earn and the amount you can sock away each month.

Monthly Investment	8% Annual Returns	6% Annual Returns	4% Annual Returns
$1,500	21.3	24.5	29.3
$1,250	23.1	26.9	32.5
$1,000	25.5	29.9	36.7
$750	28.7	34.0	42.4
$500	33.4	40.1	51.0

Calculations by author.

Each of those dollar amounts represents an amount that can be contributed by an employee in a typical 401(k) plan. For people under age 50, the limit in 2022 is $20,500 per year  — or just over $1,700 per month.  

If history is any guide, this means that making regular investments in the Vanguard Total World Stock Index ETF can help ordinary people become millionaires by the time they retire. The key, though, is to get started soon. Notice that for any given return rate in that table, the longer your time frame, the less you need to invest each month to reach millionaire status.

In addition, socking away more each month could still help you reach that target in a reasonable time, even if future returns aren’t as strong as past returns have been. If you’re not able to save as much as you would like right away, getting started with what you can save is a better idea than waiting. After all, the sooner you get started, the more time you’ll have on your side to let the market’s compounding work its magic over time.

Why buy the world?

The biggest advantage that the Vanguard Total World Stock Index ETF offers is the fact that as an investor in it, you’re not trying to separate the winners from the losers. You’re not making an overly outsize bet on a particular sector, company, or even country for that matter. You’re betting on long-term economic growth and innovation, and total returns over time. Virtually no matter where those returns come from, you can benefit from them.

Of course, there still is no such thing as a free lunch when it comes to investing. One key potential issue with this ETF is that, like most index-related ETFs, it is market-capitalization weighted.  That means the biggest publicly traded companies out there have the biggest impact on the fund’s performance.

The risk that brings is that the fund’s top 10 holdings collectively represent a whopping 13% of the EFT’s total capitalization, and nine of those 10 holdings are U.S.-based businesses. As a result, the fund may not give you quite as strong a diversification play as you would have hoped, particularly if the rest of your investing is already heavily weighted in large, American companies.

Another potential issue you might find with this ETF is that it invests virtually everywhere. That means if you buy it, you can’t pick and choose which industries or countries you invest in, and you might end up with a stake in a company or country you don’t personally approve of.

Still, if you want an easy way to build a broad-based portfolio, the Vanguard Total World Stock ETF is worth considering. It’s a simple-to-buy, one-stop shop that lets you get access to the world’s stock market for an incredibly low overhead cost.

Start your investing journey today

No matter how you ultimately choose to invest, the time you have between now and when you retire is the most important asset you have on your journey. The sooner you begin investing, the better your chances are of reaching retirement as a millionaire. So get started now, and take that all-important first step to a stronger financial future. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Could investing in this ETF right now make you a millionaire retiree? appeared first on The Motley Fool Australia.

More reading

• The Telstra (ASX:TLS) share price has tumbled 9% in 6 weeks. What’s happening?
• Why BHP (ASX:BHP) is ‘having its time in the sun’: expert
• 2 totally obscure ASX shares in the buy zone right now: experts
• Top broker gives its verdict on the Blackmores (ASX:BKL) share price
• Hot or cold? Here’s how the A2 Milk (ASX:A2M) share price performed in February

Chuck Saletta 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 Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

One day after electric truck company Rivian Automotive (NASDAQ: RIVN) voluntarily blew up its stock price by announcing it would raise the price of its R1T pickup truck by 17%, and its R1S SUV by 20%, Rivian stock is tumbling once again on Thursday.

As of 10:25 a.m. ET, Rivian is down another 5% — a total of an 18% drop since this debacle began.

So what

Rivian tried to mitigate the PR damage this morning. After announcing yesterday that “inflationary pressure, increasing component costs, and unprecedented supply chain shortages and delays for parts (including semiconductor chips)” necessitated the price hikes just yesterday, today Rivian CEO RJ Scaringe promised that Rivian would eat some of those costs itself.

In a letter to customers, he wrote, “Earlier this week, we announced pricing increases that broke the trust we have worked to build with you. … [W]e wrongly decided to make these changes apply to all future deliveries, including pre-existing configured preorders.”

In an attempt to rectify this mistake, Scaringe said, “For anyone with a Rivian preorder as of the March 1 pricing announcement, your original configured price will be honored. If you canceled your preorder on or after March 1 and would like to reinstate it, we will restore your original configuration, pricing, and delivery timing.”

Now what

This should go a ways toward repairing customer trust in the company, but … once burned, twice shy. Rivian is still going to suffer a reputational hit from this debacle.

It will also take a financial hit. In explaining the company’s original move to raise prices, Scaringe reiterated that “everything from semiconductors to sheet metal to seats has become more expensive,” pointing out that other automakers have raised their average prices “more than 30%” to cover their own added costs of production. Rivian will now have to eat those higher costs on the more than 70,000 preorders it racked up in past months.

If you figure that the average price increase that the company attempted to pass along was about $13,000 per vehicle, you have to assume that Rivian is now looking at something like $910 million in unanticipated costs — and losses — from keeping its word on all those preorders.

Final point: Rivian will want to make up those losses down the road. Expect even higher prices on new preorders and sales going forward and a consequent decrease in customer willingness to pay those high prices — depressing future sales.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Rivian stock keeps going down appeared first on The Motley Fool Australia.

More reading

• Yet another billionaire buys Rivian stock: Should you too?

Rich Smith 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 Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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As most investors would be acutely aware, the S&P/ASX 200 Index (ASX: XJO) hasn’t exactly had a smooth run in 2022 thus far. In fact, even after yesterday’s gains, the ASX 200 remains down by almost 5.8% year to date. But the Telstra Corporation Ltd (ASX: TLS) share price has fared even worse.

Telstra shares were in the red yesterday and closed at $3.91 a share. The ASX 200 telco also remains down by a nasty 6.9% in 2022 so far. What’s more, the company last peaked at its current reigning 52-week high of $4.31 back in mid-January. That means Telstra has now dropped more than 9% over the past 6 weeks or so.

So what has gone wrong with the Telstra share price?

Telstra starts 2022 off on the wrong side of the bed

Well, it’s not too clear. There have been a number of developments around the company though that may have contributed.

The first is the recruitment of the former New South Wales premier Gladys Berejiklian by Telstra’s rival telco Optus that was announced last month. As my Fool colleague Monica covered at the time, this move had one analyst predict the reaction at Telstra would be one of “quaking in their boots”. Investors seemed to share that sentiment, with the Telstra share price losing some steam at the time.

Another factor may have been Telstra’s half-year earnings report that the company divulged on 17 February. This saw the company announce underlying earnings growth of 5.1%, as well as an 8 cent per share interim dividend. That dividend was flat on the previous year’s payout. This may have disappointed some investors, many of whom may have been hoping for a pay rise after a few years of a static 16 cents per share annual dividend. The company traded ex-dividend for this payout earlier this week, which has also dented the company’s recent performance.

But a final factor to consider is the Telstra share price itself. Telstra, as a blue-chip ASX 200 telco, doesn’t exactly have a reputation as a hot growth share. It still hasn’t ever risen above its all-time high of almost $9 that we saw back in 1999, after all. And yet 2021 saw Telstra shares return a very pleasing 43%. Even after yesterday’s close, the telco remains up more than 27% over the past 12 months.

After a run of that nature, it’s not exactly unusual for an ASX share to have a breather.

Is the Telstra share price a buy today?

So those might be some of the reasons why Telstra shares have had a rather lacklustre 6 weeks. But it’s not all bad news.

As my Fool colleague James recently covered, broker Morgans is expecting more gains out of Telstra soon. It currently has an add rating on the telco, complete with a 12-month share price target of $4.56. That would represent a gain of more than 16% on yesterday’s close.

At Telstra’s last share price, this ASX 200 telecom has a market capitalisation of $46.17 billion, with a dividend yield of 4.09%

The post The Telstra (ASX:TLS) share price has tumbled 9% in 6 weeks. What’s happening? appeared first on The Motley Fool Australia.

More reading

• Telstra (ASX:TLS) share price in the red amid new satellite deal
• Here are the 3 most heavily traded ASX 200 shares this Thursday
• Battle for 5G: here’s why Telstra (ASX:TLS) is ruffling feathers of its rival
• These 3 ASX 200 shares are topping the volume charts on Wednesday
• What’s with the Telstra (ASX:TLS) share price today?

Motley Fool contributor Sebastian Bowen owns Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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It’s been a big year so far for BHP Group Ltd (ASX: BHP), and its share price.

The company took over the top spot on the ASX in late January, officially becoming the index’s largest entity after it merged with its London-listed twin.

Additionally, commodity prices boosted the company’s profits for the first half of this financial year a whopping 57% higher.

As of Thursday’s close, the BHP share price is $50.06, 18% higher than it was at the start of 2022.

But will the ‘Big Australian’s’ big run continue? SG Hiscock portfolio manager, Hamish Tadgell has weighed in.

Why is this expert bullish on BHP shares?

BHP shares have boomed higher in 2022, but they are still Tadgell’s “preferred large, diversified commodities play”, he told the Australian Financial Review.

The quality of BHP’s business is undoubtable, said the expert. And with commodity prices surging, the company is “having its time in the sun

Over the first half, BHP recorded around US$33.8 billion of revenue and underlying earnings before interest, tax, depreciation, and amortisation (EBTDIA) of US$21.3 billion – respective increases of 27% and 46% on those of the first half of financial year 2021.

Its profit from continuing activities reached US$9.7 billion.

The resources giant’s results were helped along by a 9% increase in its realised iron ore price – which reached US$113.54 per wet metric tonne.

Meanwhile, its realised copper and nickel prices both surged 30%.

Realised coal prices also took off. Those of metallurgical coal, thermal coal, and hard coking coal gained 166%, 210%, and 162% respectively last half.

Additionally, Tadgell compared the mining giant’s post-merger position to that of News Corporation (ASX: NWS) in the 2000s. He said, back then, the media conglomerate “dominated the index”.

Further, worries over BHP’s unification are like some that existed when CSL Limited (ASX: CSL) launched upwards to join other ASX giants, Tadgell said.

Though, an investment in BHP shares isn’t without risk, warned Tadgell.

“It’s a cyclical industry, and things can change, as we have seen with News Corp and CSL over the years,” he said.

The post Why BHP (ASX:BHP) is ‘having its time in the sun’: expert appeared first on The Motley Fool Australia.

More reading

• ‘Hope for the best and plan for the worst’: BHP boss
• Here’s how these top 3 ASX 200 mining shares performed in February
• Why did the BHP (ASX:BHP) share price deliver such lacklustre gains in February?
• ‘A lot of headroom to grow’: Is 2022 the year ASX investors turn to ESG shares?
• How might the conflict in Ukraine impact the iron ore price?

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. owns and has recommended CSL Ltd. 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 Bruce Jackson.

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Fans of small cap ASX shares will ask you what is the point in only investing in well-known brands?

If you’re just holding large-cap household names, then you might as well just put your money into an index fund, they say.

Smaller businesses also present more opportunities when the stock price doesn’t fairly reflect the actual future potential, or even current performance.

The fewer people that pay attention to it, the higher the chance the share price will peel off what’s expected.

With this in mind, here are a pair of ASX shares you may not have heard of that experts have picked as “buys” right now:

‘Earnings outlook is strong’

In a year when most ASX shares have dipped, the NRW Holdings Limited (ASX: NWH) stock price has risen more than 20%.

“The earnings outlook is strong for this mining services company,” Fairmont Equities founder Michael Gable told The Bull.

The company provides contracted services to the mining industry. Think drilling, digging, blasting and equipment maintenance.

NWR is riding the boom that its resources sector clients are currently experiencing.

Despite the recent share price surge, Gable feels like “the valuation remains cheap”. 

“From a charting perspective, the share price had been consolidating for the past few months before breaking higher after its half-year results,” he said.

“We now expect the shares to trend higher from here.”

‘Strong tailwinds’

XRF Scientific Limited (ASX: XRF) also services the mining industry but with more scientific activities, such as chemical analysis.

According to Medallion Financial Group director Philippe Bui, the company put up “solid results” for the first half.

“Revenue grew by 24% and net profit after tax increased by 17%,” he said. 

“Also, results indicated continuing momentum into the second half, with record orders.”

With the resources sector basking in increasing commodity prices, Bui sees more upward movement for the XRF Scientific share price.

“Increasing capital expenditure is expected in the mining exploration sector, which should provide strong tailwinds for XRF.”

The share price more than quadrupled since the March 2020 COVID-19 crash.

Bui’s colleague Michael Wayne told The Motley Fool last year that XRF’s valuation was still not excessive.

“It’s got a strong balance sheet,” he said. 

“A multiple of 25, 30 times earnings, as well, isn’t too challenging for a company that is growing quite nicely.”

The post 2 totally obscure ASX shares in the buy zone right now: experts appeared first on The Motley Fool Australia.

More reading

• These were the best performing ASX 200 shares in February
• These were the best performers on the ASX 200 last week
• NRW (ASX:NWH) share price leaps 14% on ‘high end’ earnings and upgraded guidance
• Why Challenger, CSL, NRW, and Woodside shares are pushing higher
• ASX 200 (ASX:XJO) midday update: Telstra, Wesfarmers, and Woodside report

Motley Fool contributor Tony Yoo 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 Bruce Jackson.

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The Blackmores Limited (ASX: BKL) share price has been a poor performer in 2022.

Since the start of the year, the health supplements company’s shares have tumbled 15% to $77.53.

Is the Blackmore share price good value now?

According to a recent note out of Morgans, its analysts aren’t ready to buy the company’s shares just yet.

Its analysts have maintained their hold rating on the Blackmores share price. Though, with a price target of $88.50, this suggests that there could still be decent upside for investors over the next 12 months.

What did the broker say?

Morgans notes that Blackmores delivered a largely positive result during the first half of FY 2022. Though, it was disappointed with the performance of the China business, which experienced a marked slowdown on ecommerce platforms.

The broker said: “Blackmores’ 1H22 result beat our EBIT forecast but missed our NPAT due to higher than expected minorities. Impressively, strong sales growth was reported across International, and ANZ reported double digit EBIT growth. However, China disappointed.”

“The China result was materially weaker than expected due to the slowing growth on e-commerce platforms, lower levels of domestic travel and elevated economic uncertainty,” it added.

And while Morgans acknowledges that management has a clear strategy aiming to deliver strong earnings growth in the coming years, it isn’t enough for a more positive rating. This is due to the multiples the Blackmores share price trades on and the risks that its ANZ business is facing.

The broker concludes: “After revising our forecasts, our valuation has decreased to $88.50. BKL has a clear strategy to deliver material earnings growth through to FY24. However, growing ANZ’s revenue in line with its targets won’t be easy given structural and competitive threats and this may also be the case for China following today’s weaker than expected result.”

The post Top broker gives its verdict on the Blackmores (ASX:BKL) share price appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to sell next week
• Why is the Blackmores (ASX:BKL) share price tumbling another 10% today?
• Why Blackmores, BWX, Kogan, and Magellan shares are dropping
• ASX 200 (ASX:XJO) midday update: Block rockets, Blackmores sinks
• ‘Ongoing uncertainty’: Blackmores (ASX:BKL) share price falls 6% on cloudy future

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 recommended Blackmores Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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A2 Milk Company Ltd (ASX: A2M) shares were hot in February, making solid gains on the previous month.

The A2 Milk share price climbed nearly 5% between market close on 31 January and 28 February.

Let’s take a look at why the A2 Milk share prices made gains last month.

What happened to A2 Milk shares in February?

The A2 Milk share price rose in February, but one bounce, in particular, stood out.

The biggest surge took place on 21 February, on the back of the company’s financial results. A2 Milk shares exploded 11% on this day alone.

A2 Milk reported net profit after tax (NPAT) fell 53.3% to NZ$56 million. Revenue also fell 2.5% on the prior corresponding period, but was up 24.8% on H2 2021. The company also improved its outlook for revenue in H2 2022.

CEO and managing director David Bortolussi said:

Despite challenging market conditions in China and COVID-19 volatility, we are making good progress stabilising the business.

We remain confident in the long-term China infant milk formula market, and we are growing share in our China label business in-store and online with strong consumer offtake and share growth.

Analysts responded positively to these results, as my Foolish colleague James reported towards the end of the month. Bell Potter retained its buy rating and placed a $7.70 price target on the A2 Milk share price. This is 40% more than the current share price of $5.51. Bell Potter believes A2 Milk can double its profit by the 2024 financial year.

Meanwhile, Macquarie analysts kept their underperform rating on the company’s shares but lifted the price target to $5.60.

A2 Milk shares finished the month on a good note, jumping 3% between market close on 24 February and 28 February. As the Fool reported at the time, analysts at Citi retained their buy rating on the company’s shares with a price target of $7.02.

A2 Milk share price snapshot

A2 Milk shares have descended 42% in the past year. Meanwhile, year to date A2 Milk shares have climbed just 1%.

In contrast, the benchmark S&P/ASX 200 Index (ASX: XJO) has returned around 4% over the past year.

A2 Milk has a market capitalisation of about $4.1 billion, based on its current share price.

The post Hot or cold? Here’s how the A2 Milk (ASX:A2M) share price performed in February appeared first on The Motley Fool Australia.

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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 A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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