Tag: Motley Fool

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Shares in private health insurer Medibank Private Ltd (ASX: MPL) are edging lower today and now trade at $3.15 apiece.

Medibank shares have taken a beating since we started the new year. After peaking at highs of $3.60 per share on 7 January, investors have melted more than 12% off the value of Medibank’s share price at the open of trade on Thursday.

So, when will the selling pressure begin to liftoff, and what does all of this mean for Medibank shareholders in the long run?

The team at JP Morgan have some interesting thoughts on the topic, seeing as the investment bank covers Medibank in its insurance and diversified financials universe.

In a recent note, analysts at JP Morgan Securities Australia, led by Siddharth Parameswaran, downgraded the broker’s recommendation, urging its clients to sell Medibank shares. Here are the details.

Brokers now underweight on Medibank

The team at JP Morgan turned bearish on the health insurance giant following its detailed assessment of key issues going into the first half of FY22.

In the short run, the broker says that Medibank will benefit from a winding back of COVID-19 claims, but profits “may not materially benefit” because of obligations to policyholders.

Not only that, but the firm is far less constructive on the entire insurance sector, given the foreseeable challenges to profitability moving forward.

“In the medium term, material increases in capital requirements, only a partial return to prior profits in IIHI and travel, even lower rate increases that could be below underlying inflation trends, uncertainties arising from the federal election, and relative valuation differences with other stocks in our sector make us cautious on the sector outlook” the broker noted.

Medibank should see modest earnings growth in FY22 according to the firm – but with even more benefits next year as premium activity normalises.

Long-term, the broker notes there is a risk that “claims utilization returns to long-run trends, making holding margins difficult following ever-lower premium increases”.

It forecasts premium revenue of $6,983 million for FY22 and $7,256.2 million in FY23, which carries down to statutory NPAT of $408 million and $422.5 million respectively in the broker’s model.

This would lead to operating margins of 7.8% in FY22 and an adjusted return on equity (ROE) of 21.2% this year should JP Morgan’s thesis come to light.

As a result of its most recent assessment, the broker downgraded its valuation on the company to $3 per share, from $3.30 per share previously.

It notes the change in price target reflects “earnings changes post our MTM and valuation roll forward”, including franking credits valued at 70% of face value.

Medibank share price snapshot

In the last 12 months, the Medibank share price has held gains and is now up almost 5% in that time.

Since 2022 however, things have turned sour and shares are now down 8% after faltering in early January. As such, Medibank leads the benchmark indices in losses so far this year.

The post When might Medibank (ASX:MPL) shareholders ‘feel better’? appeared first on The Motley Fool Australia.

More reading

• How do Medibank (ASX:MPL) dividends compare to NIB?
• Why Domino’s, Fortescue, Medibank, and Metcash shares are falling
• Medibank (ASX:MPL) share price shrugs off further questions over profit paybacks
• Own Medibank (ASX:MPL) shares? Here are some key dates to watch in 2022
• How did the Medibank (ASX:MPL) share price perform in 2021?

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 Bruce Jackson.

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The Appen Ltd (ASX: APX) share price is out of form on Thursday.

In morning trade, the artificial intelligence data services company’s shares are down 7.5% to $9.33.

Why is the Appen share price sinking?

The Appen share price has come under significant selling pressure this morning despite there being no news out of the company.

However, the likely cause for this share price weakness is the release of the quarterly results of one of its biggest customers – Meta (Facebook).

In after hours trade, the social media giant’s shares have crashed 23%, wiping over US$200 billion off its market capitalisation.

Wall Street has been selling off Meta’s shares after its quarterly revenue and guidance fell well short of expectations. Meta’s CEO, Mark Zuckerberg, blamed this partly on inflation and supply chain issues that are impacting advertisers’ budgets.

This is where Appen comes into the equation. Meta has traditionally been one of Appen’s largest customers along with Google, Microsoft, and Amazon. Facebook uses Appen’s services to support its advertising operations. The company’s team essentially help teach machines to predict which advertisements will resonate with which users.

So this softer advertising demand could have an impact on Appen’s revenues in FY 2022.

In fact, you only need to look at its half year results to see how it can impact its performance. For the six months ended 31 June, Appen posted a 2% reduction in revenue and a 14.3% decline in EBITDA.

At the time, Appen’s Chief Executive Officer, Mark Brayan, said: “As expected, our first half results were impacted by our global technology customers’ focus on new AI products and applications, as they broaden their revenue base outside of digital advertising and respond to data privacy changes. This resulted in lower ad-related services revenue.”

This will make Appen’s results for FY 2021 and guidance for FY 2022 later this month worth watching very closely.

The post Why is the Appen (ASX:APX) share price down 7% today? appeared first on The Motley Fool Australia.

More reading

• Why did these tech shares lead the ASX 200 today?
• These are the 10 most shorted ASX shares
• Down 77%! Is the Appen (ASX:APX) share price a buy today?
• 5 things to watch on the ASX 200 on Thursday
• What happened to ASX tech shares today?

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. 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 Appen Ltd and Meta Platforms, Inc. The Motley Fool Australia owns and has recommended Appen Ltd. The Motley Fool Australia has recommended Meta Platforms, Inc. 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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As we pass the 2-year anniversary of COVID-19 arriving in Australia, the share market is on tenterhooks as much as when the pandemic started.

Perhaps it’s time for a drink? 

Each month Morgans reveals its “best ideas” — a list of ASX shares to buy that the team thinks has the greatest chance of high returns over the next 12 months.

Among the February honour roll are 2 ASX shares that keep the beverages flowing for Australians.

Cheers!

Making up for lost ground

Treasury Wine Estates Ltd (ASX: TWE) took a brutal hit in 2020 when its lucrative Chinese market disappeared overnight after a diplomatic feud between Canberra and Beijing.

Morgans analyst Andrew Tang estimates it will take 2 to 3 years to recover the Chinese revenue in other markets.

“However, once it comps China earnings, we expect Treasury Wine Estates to deliver strong earnings growth from the 2H22 onwards.”

In addition to organic growth, acquisitions could also prove fruitful.

“We view Treasury’s recent acquisition of the Napa Valley luxury wine business, Frank Family Vineyards, as strategically important,” said Tang.

“This high margin business should see Treasury achieve its US margin target 2 years earlier than planned.”

The great news for those considering buying Treasury shares is that the stock price has taken a 13.6% haircut so far this year.

“We see recent share price weakness as a great buying opportunity in this high quality company. The stock is currently trading at a material discount to its long term PE range.”

Treasury Wine Estates shares closed Wednesday at $10.80.

Will Australians return to pubs as we ‘live with the virus’?

Endeavour Group Ltd (ASX: EDV) listed last June as a spin-off from former parent Woolworths Group Ltd (ASX: WOW).

The group operates recognisable alcohol retail brands like Dan Murphy’s and BWS, as well as licenced venues.

The retail arm has gone gangbusters over the past couple of years as Australians stayed home and drank.

Conversely, Endeavour’s pubs and hotels have suffered from lockdowns and restrictions keeping patronage low.

As Australia moves to “living with the virus” mode, the Morgans team reckons it can only improve the company’s prospects.

“The reopening of venues in NSW and VIC should be positive for Endeavour overall, despite likely weakness in retail as at-home consumption normalises, given hotels is a higher margin business.”

Like Treasury, Endeavour shares are going for a tidy discount at the moment. The stock price has lost almost 6% this year, and more than 10% since November.

Endeavour shares closed Wednesday at $6.36.

The post This calls for a toast! 2 alcohol ASX shares to buy right now appeared first on The Motley Fool Australia.

More reading

• Analysts name 2 ASX 200 blue chip shares with 30% upside
• Treasury Wine (ASX:TWE) share price lifts amid latest tariff battle
• The Treasury Wine (ASX:TWE) share price has plunged 25% from its 2021 highs. What’s next?
• Are ASX consumer staples shares really ‘safe’ to hold in a market selloff?
• Fans of Treasury Wine (ASX:TWE) shares might be surprised to learn of its NFTs

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 recommended Treasury Wine Estates 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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Key points

• The Meta Platforms (NASDAQ: FB) share price has fallen off a cliff after missing earnings expecations
• Rising inflation costs were cited as a headwind for the company
• Investors of ASX media shares could be on heightened alert this earnings season

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Investors will be keeping a close eye on ASX-listed media shares today following the release of Meta Plantforms Inc (NASDAQ: FB) fourth-quarter results this morning.

The US-based tech company responsible for Facebook, Instagram, and Whatsapp missed revenue and earnings projections.

In response, the company’s shares have been dismantled more than 21% in after-hours trading. At the time of writing, shares in Meta are now hovering around US$252, down from US$327 at the open.

Headwinds highlighted by Meta in its results could draw attention to ASX media shares today.

Rising inflation puts a dent in advertising budgets

Meta’s fourth-quarter results could be the canary in the coal mine for investors of media companies reliant on advertising revenue. Despite a 20% year-on-year increase in revenue for the quarter, diluted earnings per share (EPS) fell 5%.

Furthermore, shareholders were also alerted to a potentially slower period of growth in the next quarter. In explaining this, Meta pointed to several headwinds that the company will be facing. These include:

• Increased competition for people’s time
• A shift of engagement towards video experiences i.e Reels, which monetise at a lower rate; and
• Cost inflation is inhibiting advertising spend

Honing in on the inflation headwind, Meta chief financial officer David Wehner said:

[…] we’re hearing from advertisers that macroeconomic challenges like cost inflation and supply chain disruptions are impacting advertiser budgets.

This follows the United States headline inflation rate recently hitting 7%, marking a 39-year high for the country. However, Federal Reserve chair Jerome Powell has suggested a rate hike in the near future to quell the rising cost pressures.

What could it mean for ASX media shares?

While Meta Platforms is a slightly different beast compared to the ASX-listed shares which derive revenue from advertising, rising inflation is a far-reaching concern.

Importantly, Australia’s headline inflation figure is half of the United States — sitting at 3.5%. Although, there is potential that advertisers will be cautious of forking out as much for advertising in the current economic environment.

For this reason, investors of ASX media shares such as Nine Entertainment Co Holdings Ltd (ASX: NEC), News Corp (ASX: NWS), and Ooh!Media Ltd (ASX: OML) — all of which are in the red in early trading today — will likely be paying extra attention this earnings season. Especially any commentary around how inflation costs might be delaying advertising spending.

The post Meta (NASDAQ:FB) share price plunges 22%. How might this impact ASX shares? appeared first on The Motley Fool Australia.

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• 1 green flag and 1 red flag for Meta’s Metaverse dreams
• FAANG Stocks: 2022 Winners and Losers
• Is the metaverse the next big thing? Here’s why ASX investors think so
• 2 ASX dividend shares to buy this month: experts

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Mitchell Lawler owns Meta Platforms, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Meta Platforms, Inc. The Motley Fool Australia has recommended Meta Platforms, Inc. and oOh!Media Ltd. 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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Key points

• The Xero share price has slumped 22% since the end of 2021
• It may have been weighed down by rising inflation, which likely impacted most of the tech sector
• Still, brokers are bullish on the technology company. One has slapped it with a $158 price target

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The new year has been tough on the Xero Limited (ASX: XRO) share price.

It’s tumbled 22.1% since the final close of 2021. That’s despite no news having been released by the company.

At the time of writing, the Xero share price is $110.16. That’s despite it closing at $141.44 on 31 December.

The S&P/ASX 200 Index (ASX: XJO) has also had a shocking start to 2022. It has fallen 5.1% this year.

That leaves Xero’s stock having underperformed the broader market by around 17% in 2022 so far.

So, what’s been weighing on the accounting software provider lately? And when can the market expect to hear from it next? Let’s take a look.

What’s going on with the Xero share price?

The Xero share price has had a rough trot in 2022, likely made worse by the performance of the broader tech sector.

While the ASX 200 has slipped 5% the S&P/ASX 200 Information Technology Index (ASX: XIJ) has plunged 19.8%. At the same time, the S&P/ASX All Technology Index (ASX: XTX) has slumped 14.8%.

And what might be behind the tech sector’s struggles? Well, it’s likely the much-discussed talking point, inflation.

As The Motley Fool Australia’s Zach Bristow recently reported, tech shares are particularly sensitive to inflation concerns due to how they’re valued.

Earlier this week the Reserve Bank of Australia noted inflation is rising faster than predicted. Though, the body hasn’t made any moves to up interest rates yet.

While this could sound dire for the Xero share price, brokers are still bullish on the company.

Morgan Stanley rates the company as a buy with a $137 price target. Goldman Sachs also has high hopes for the stock – it’s targeting $158.

Unfortunately, there’s still a while before the market expects to hear news that could boost the ASX tech favourite back towards the green.

As Xero is a New Zealand-based company, its financial year runs from 1 April to 31 March. That means it won’t be participating in the February reporting season. Its full year results are set to be dropped on 12 May.

The post The Xero (ASX:XRO) share price is trailing the ASX 200 by a whopping 17% so far in 2022. What’s next? appeared first on The Motley Fool Australia.

More reading

• These 2 impressive ASX shares are buys in February 2022: experts
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• Are these beaten down ASX 200 shares now too cheap to ignore?
• From hero to Xero (ASX:XRO): share price tumbles 8% to hit 52-week low
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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 Xero. The Motley Fool Australia owns and has recommended Xero. 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 Cettire Ltd (ASX: CTT) share price is crashing on Thursday following the release of its half year results.

At the time of writing, the global luxury online retailer’s shares are down 14% to $2.60.

Cettire delivers explosive growth during the first half

• Gross revenue up 192% to $154.1 million
• Active customers up 208% to 209,000
• Product margin up 178% to $42.7 million
• Operating loss of $9.9 million compared to EBITDA of $4.8 million
• Net loss after tax of $8.3 million compared to a profit of $2.3 million
• Operating cashflow up 43% to $12.3 million
• Cash balance of $55.5 million at the end of December

What happened during the first half?

For the six months ended 31 December, Cettire delivered a 192% increase in gross revenue to $154.1 million. This was also more than the revenue of $124.5 million that the company generated during the entirety of FY 2021.

Management advised that this was driven by a 208% jump in active customers to 209,000, offset slightly by an 8% reduction in average order value to $712.

One big disappointment, which could be weighing heavily on the Cettire share price today, was that this stellar revenue growth did not translate into profit growth. In fact, the company posted a net loss after tax of $8.3 million, which compares to a profit of $2.3 million a year earlier.

This was because Cettire’s sales and customer growth was underpinned by a significant increase in advertising and marketing costs. For the six months, Cettire spent $25.9 million on these activities, which is up approximately 550% from just ~$3.9 million in the prior corresponding period. In addition, a 200% increase in merchant fees also weighed on its margins.

Management commentary

Cettire’s Founder, CEO, and Executive Director, Dean Mintz, appeared to be very pleased with the half.

He said: “A lot of the themes from our FY21 results continued in the first half of FY22. Cettire again grew very rapidly, substantially increasing unique visitors and active customers, further increasing the proportion of revenues from repeat customers, and overall continuing its growth trajectory.”

“The financial results delivered over the first half of FY22 demonstrate the substantial progress we’ve made in executing our growth strategy. A number of important enhancements were implemented to our consumer proposition including further localisation, enabled by our proprietary e-commerce storefront solution, and investing in our brand. What excites us is that Cettire has only just started and is in the early stages of its growth journey. The runway ahead is vast and we will continue to invest to capture the significant market opportunity we see for the business,” Mintz added.

Outlook

The good news for shareholders is that Cettire has started the second half how it finished the first.

As of the end of January, the company’s unaudited gross revenue was up 242% on the prior corresponding period. However, no details were provided in respect to its profits for the period, though management hinted that its increased spend on marketing has continued.

Mr Mintz commented: “Our growth trajectory has continued into H2 FY22, where we have experienced a further acceleration in our growth rate in January. Given the global growth opportunity available to Cettire, we will be running the business to maximise revenues by further investing in brand and customer acquisition, to drive long-term shareholder value.”

“Our focus for the remainder of FY22 is to continue to enhance our customer proposition which is centred around our vast selection of luxury products, value and rapid fulfilment, whilst continuing to develop our deep and diverse supply relationships and investing in our world-class proprietary e-commerce technology that can be rapidly scaled to support entry to new product and geographic markets,” he concluded.

The post Why the Cettire (ASX:CTT) share price is crashing despite 192% revenue growth appeared first on The Motley Fool Australia.

More reading

• 2 ASX growth shares that could be buys in February 2022
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• Cettire (ASX:CTT) share price gains on new $100b potential market
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• Up 480% in a year: Is it too late to invest in Cettire (ASX:CTT) 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 Cettire Limited. The Motley Fool Australia has recommended Cettire 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.

Shares of internet tech giant Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) exploded as much as 10% higher in Nasdaq trading Wednesday, before settling down to about an 8% gain in the afternoon.

Of course, even just an 8% gain in a company that’s worth nearly $2 trillion works out to Alphabet stock being about $160 billion more expensive today than the stock was yesterday. And when you realize this, the question naturally arises: Is it now too late to buy Alphabet stock?

If you ask Wall Street, the answer is a resounding no.

It’s been less than 24 hours since Alphabet reported its fourth-quarter numbers, but according to TheFly.com, already about a dozen separate analysts have rushed out reports raising their price targets on Alphabet, with each and every one of them urging investors to buy Alphabet stock.

The reasons should be obvious. In yesterday’s report, Alphabet boasted that it grew sales 41% year over year in fiscal 2021, and nearly doubled its net profit — up 91% year over year at $112.20 per share. Operating profit margins were a robust 31% for the year, despite coming in a bit below that level in Q4 alone (when profit margins were 29%, and earnings growth “only” 38%).

Even 38% profits growth, however, makes Alphabet stock look incredibly attractive at its current P/E ratio of 26.6 — if, that is to say, Google can keep on growing at 38%.

Problem is, Alphabet management did not make any promises on how fast it expects to grow in the future. Indeed, analysts who follow the stock are predicting Alphabet will grow at closer to 18% annually over the next five years, according to data from S&P Global Market Intelligence.

That’s still pretty brisk growth, however. Maybe even fast enough to roll the dice on Alphabet stock at 26.6 times earnings. 

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

The post Alphabet stock soared today — Is it a buy? appeared first on The Motley Fool Australia.

More reading

• Alphabet and Amazon will make or break the Nasdaq this week
• FAANG Stocks: 2022 Winners and Losers
• Can 2021’s best-performing FAANG stock do it gain in 2022?

Rich Smith has no position in any of the stocks mentioned. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Alphabet (A shares) and Alphabet (C shares). The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). 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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The Aristocrat Leisure Limited (ASX: ALL) share price is falling on Thursday morning.

At the time of writing, the gaming technology company’s shares are down 3% to $40.01.

Why is the Aristocrat share price falling?

Investors have been selling down the Aristocrat share price on Thursday after it revealed that its $5 billion takeover of online real money gaming company Playtech collapsed.

According to the release, Playtech held a shareholder meeting on Wednesday, and based on proxy votes, Aristocrat was able to conclude that not enough votes were going to be received in favour of the deal. This has since being confirmed with an official vote count.

While the majority of Playtech shareholders were voting in favour of the deal, a group of investors have built a stake since Aristocrat made its offer and were able to block the deal. These investors are understood to be the reason that another suitor withdrew a competing takeover offer last month.

A disappointing and “highly unusual” situation

Aristocrat’s CEO and Managing Director, Trevor Croker, was disappointed with the news.

He said “We are disappointed that our recommended offer to acquire Playtech plc is expected to lapse. Notwithstanding extensive due diligence on Aristocrat’s part, developments since the announcement of our offer have been highly unusual and largely beyond Aristocrat’s control.”

“In particular, the emergence of a certain group of shareholders who built a blocking stake while refusing to engage with either ourselves or Playtech materially impacted the prospects for the success of our offer, which had been recommended by the Board of Playtech plc,” Croker added.

What now?

While the Playtech takeover may have collapsed, Aristocrat remains committed to expanding in the online real money gaming (RMG) market.

Mr Croker commented: “From a strategic perspective, Aristocrat’s commitment to participate in the online RMG segment will not change. In the future, online RMG capability will be one way we deliver new and connected experiences that leverage our world-leading content, and unlock additional value across Aristocrat’s portfolio while deepening customer engagement.”

“Our focus now shifts to accelerating our plans for alternative online RMG scaling options, and continuing to execute our growth strategy, in a way that is consistent with our rigorous investment criteria, high regulatory standards and integrity. We look forward to sharing more details with shareholders as we move forward,” Mr Croker concluded.

The post Aristocrat (ASX:ALL) share price sinks after $5bn Playtech takeover collapses appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• 3 buy-rated ASX growth shares
• 2 strong blue chip ASX shares rated as buys
• Why the Aristocrat Leisure (ASX:ALL) share price is one to watch today
• 5 things to watch on the ASX 200 on Monday

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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Key Points

• Wesfarmers shares down 20% from its all-time high reached in August last year
• Management signalled tough trading conditions brought on by the pandemic
• Brokers weigh in on Wesfarmers shares highlighting an attractive investment

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The Wesfarmers Ltd (ASX: WES) share price has travelled lower in 2022.

When looking at the past month, the conglomerate’s shares have lost ground by 9.54%. In comparison, the S&P/ASX 200 Index (ASX: XJO) has declined by 4.79% over the same time frame.

Below, we take a closer look at what’s been happening with the Wesfarmers share price.

What’s dragging Wesfarmers shares lower?

Investors have been selling off the Wesfarmers share price as the company struggles to navigate its way through COVID-19.

The company reported tough retail trading conditions at its half-year results update in mid-January.

In the release, management advised that its K-mart and Target businesses have been severely impacted by COVID-19 restrictions. This is due to almost 25% of store trading days lost from government-mandated store closures.

On a pleasing note, the group’s overall performance was supported by Bunnings and Wesfarmers Chemicals, Energy & Fertilisers. These segments thrived on the back of trending DIY home projects along with ammonium nitrate demand and favourable LPG pricing.

As a whole, Wesfarmers is forecasting a net profit after tax (NPAT) of between $1,180 and $1,240 million for H1 FY22. This is broadly in line with current consensus expectations.

Nonetheless, the increasing cases of COVID-19 Omicron variant across Australia became a turning point in Wesfarmers shares.

Late last month, the company’s share price reached a 10-month low of $49.84, before staging a mini rebound.

Are Wesfarmers shares a buy?

A number of brokers note weighed in on the company’s shares following the release of its trading update.

American multinational investment bank, JPMorgan recently cut its price target on Wesfarmers shares by 5.3% to $60.60 apiece.

Macquarie and UBS had a similar view, also slashing the outlook by 2.2% to $60 and by 1.7% to $59, respectively.

Based on yesterday’s closing price of $53.64, this implies a potential upside of around 12% for investors.

Wesfarmers share price snapshot

Over the past 12 months, the Wesfarmers share price has moved in circles, posting a loss of almost 3%.

The company’s shares reached a record high of $67.20 in August before treading lower in the months ahead. This represents a fall of more than 20% from where Wesfarmers shares trade today.

Wesfarmers commands a market capitalisation of around $60.82 billion, making it the tenth largest company on the ASX.

The post The Wesfarmers (ASX:WES) share price is 20% off its all-time high. Is it a buy? appeared first on The Motley Fool Australia.

More reading

• Wesfarmers (ASX:WES) threatens to fly the WA coop. Here’s the latest
• Own Wesfarmers (ASX:WES) shares? 2 of its major businesses are wearing new crowns
• Could this signal the next big acquisition for Wesfarmers (ASX:WES)?
• Here’s a deep dive into the historical returns of Wesfarmers (ASX:WES) shares
• What’s happening to the Wesfarmers share price (ASX:WES) this year?

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 owns and has recommended Wesfarmers 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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Key Points

• BHP shares have climbed almost 10% this year following an uptick in iron ore prices
• Broader market index is also surging ahead on the back of positive investor sentiment
• The company’s H1 FY22 results are scheduled to be released on 15 February

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The BHP Group Ltd (ASX: BHP) share price has been marching upwards in 2022.

At Wednesday’s market close, shares in the world’s second largest miner finished the day 1.58% higher to $45.64. This means that BHP shares have now gained 9.98% since the start of the year.

What’s driving BHP shares higher?

There are a few factors as to why the BHP share price is trading in positive territory this year.

Firstly, the accent of iron ore prices is providing a strong support base for the company’s margins thus far in FY22. Regarded as a key commodity in BHP’s portfolio, this is particularly important given that a majority of its revenues come from the steelmaking ingredient.

In the financial year ending 30 June 2021, iron ore accounted for 57% of the total group revenue from BHP.

Investors will be keeping a close eye as the company gears up to release its half-year results on 15 February.

In addition, the S&P/ASX 200 Resources (ASX: XJR) index has also pushed ahead, gaining almost 4% in 2022. The sector represents 48 of the largest companies in the S&P/ASX 200 that are members in the energy, metals and mining industry.

A positive shift in investment sentiment toward the index has propelled BHP shares forward.

Lastly, stock markets around the world have regained composure following hope that military tensions between Russia and Ukraine can be resolved. Furthermore, the steady decline of Omicron cases has signalled that the pandemic is nearing an end.

Analysts at UBS updated their outlook on BHP shares yesterday. The broker raised the 12-month price target by 14% to $42 apiece. While this may be slightly lower than the current share price, UBS believes BHP shares are now fully valued.

BHP share price summary

Despite a positive gain of 10% in 2022, the BHP share price is relatively flat over the last 12 months.

Investors heavily sold off the company’s shares in August after reaching an all-time high of $54.55. Since then, its shares hit a 52-week low of $35.56, before surging to late August levels of around the $45 mark.

Based on today’s price, BHP presides a market capitalisation of roughly $231.04 billion and has approximately 5.06 billion shares outstanding.

The post Here’s why the BHP (ASX:BHP) share price is rebounding in 2022 appeared first on The Motley Fool Australia.

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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 Bruce Jackson.

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