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While recent volatility has been disappointing, it may have created attractive entry points for some ASX 200 shares.

Two such shares are listed below. Here’s why analysts see a lot of value in them at current levels:

CSL Limited (ASX: CSL)

The first ASX 200 share to look at is CSL. It is one of the world’s leading biotherapeutics and vaccine companies.

CSL has a world class portfolio of products that are used around the world to treat immunodeficiencies, bleeding disorders, hereditary angioedema, Alpha 1 antitrypsin deficiency, and neurological disorders.

But management isn’t resting on its laurels. It is investing ~US$1 billion a year (and growing) into research and development and is in the process of making a major acquisition. The latter will add treatments for iron deficiency, nephrology and cardio-renal through the acquisition of Vifor Pharma for $17 billion.

The team at Citi is positive on its growth outlook over the coming years. For example, this year the broker is forecasting a net profit of US$3,158 million. It expects this to then grow to US$4,689 million by FY 2024.

Citi currently has a buy rating and $340.00 price target on the company’s shares. This compares to the latest CSL share price of $264.52.

REA Group Limited (ASX: REA)

Another ASX 200 share to look at is REA Group. It is best known as the digital advertising company that operates Australia’s leading property website, realestate.com.au.

But there’s more to REA than just the realestate.com.au website. It also owns and operates a number of complementary businesses in the Australian market and internationally. These include property listing websites and mortgage broking.

All in all, together with new revenue streams, its good cost control, and a strong housing market, REA appears well-placed for growth over the coming years.

Goldman Sachs is confident in its growth outlook. It is forecasting a net profit of $388 million in FY 2022, $445 million in FY 2023, and then ultimately $510 million in FY 2024.

In light of this, the broker has put a buy rating and $193.00 price target on REA’s shares. This compares to the current REA share price of $146.83.

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

More reading

• Has the CSL (ASX:CSL) share price dropped back into the buy zone?
• 2 killer ASX shares to buy for a volatile 2022
• How is the CSL (ASX: CSL) share price performing in the age of Omicron?
• Leading fund manager says these blue-chip ASX shares are buys right now
• 2 outstanding ASX 200 shares to buy this month according to analysts

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 CSL Ltd. The Motley Fool Australia has recommended REA Group 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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The Fortescue Metals Group Limited (ASX: FMG) share price will be one to watch on Monday.

This follows the release of an announcement after the market close on Friday.

Why is the Fortescue share price on watch?

Investors may want to keep an eye on the Fortescue share price on Monday after it announced an agreement with China’s state-owned Sinosteel.

According to the release, the two parties have signed a binding Memorandum of Understanding (MoU) to complete a rapid project assessment of Sinosteel’s Midwest Magnetite Project in Western Australia. The assessment will include a rail and port development at Oakajee.

Following the conclusion of the 12 month rapid project assessment and subject to the outcome of that process, Fortescue will have the option to acquire up to 50% of the Midwest Magnetite Project and up to 100% of the proposed port and rail infrastructure project.

Fortescue’s Chief Executive Officer, Elizabeth Gaines, said: “For over three decades, Sinosteel has demonstrated their strong performance and ability to deliver mining projects in Australia including their Channar Mine in the Pilbara. The signing of this MoU demonstrates Fortescue’s commitment to our strategic pillars of investing in the long-term sustainability of our iron ore business, expanding into new regions and continuing to deliver strong returns to our stakeholders.”

Ms Gaines also sees opportunities for its highly divisive Fortescue Future Industries business to leverage the operation.

She said: “We look forward to working with Sinosteel on the next steps for this important project for Western Australia which, in addition to the magnetite and infrastructure development, offers the opportunity for a co-ordinated project combining Fortescue’s iron ore and infrastructure pedigree with Fortescue Future Industries’ green energy objectives.”

“Future development including a renewable, green hydrogen hub in the Midwest region at Oakajee would deliver a large-scale resources and renewables project for Western Australia, further underpinning our enduring relationship with China,” Ms Gaines added.

The post Fortescue (ASX:FMG) share price on watch amid Sinosteel Oakajee agreement appeared first on The Motley Fool Australia.

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• Can the Fortescue (ASX:FMG) share price break the $30 barrier in 2022?
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• 4 reasons Goldman says the Fortescue (ASX:FMG) share price is a strong sell
• Leading fund manager says these blue-chip ASX shares are buys right now
• Is the iron ore price set to slide?

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

• The CogState share price fell as low as $1.84 today — 20% down on yesterday’s close
• The neuroscience technology company released a quarterly update today
• Clinical sale contracts have increased by 141%, hitting a new record

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The CogState Limited (ASX: CGS) share price flatlined today after the company released a business and investor update this morning.

At market close, the CogState share price was down 15.95% to $1.95. The share price bounced back in late afternoon trade after declining to an intraday low of $1.84.

Whilst CogState reported record figures for contracts and revenue, its shares continued the bleeding today as they have all month. The CogState share price began 2022 at $2.55 on the first day of ASX trading on 4 January. That’s a 23% dip to date.

So what exactly did CogState report? Let’s take a closer look.

CogState investors unenthused by results

CogState aims to provide tools to measure brain health and cognition in order to assist in research and remedies.

Today’s announcement reveals just a small number of business financials, with a more detailed report set to be released on 24 February.

CogState’s business update revealed:

• Revenue for 2Q22 up 40% at $10.8 million against its prior corresponding period (PCP)
• Revenue for 1H22 up 67% at $23.1 million compared to PCP
• $24.6 million in net cash as of 31 December

Record figures for CogState

In its investor report, CogState revealed a number of records hit during the quarter, including:

• A 141% increase in executed clinical sale contracts amounting to $54.5 million
• A 78% increase in contracted future revenue at $132.9 million
• A 67% increase in group revenue at $23.1 million

The company said Alzheimer’s trials have continued to boost its clinical sales contracts. In 1H22, the disease accounted for 90% of CogState sales contracts.

What else is news?

Just recently, CogState announced that its brain assessment tool, CogMate, is to be marketed in Taiwan and Hong Kong through its Taiwanese subsidiary, Eisai Taiwan Inc.

CogMate is a multilingual tool that measures cognitive performance. It can be used with smartphones and other smart devices.

CogState hopes the product will assist in the “self assessment and prevention” of diseases such as dementia, with ageing populations in mind.

Exposure to other countries, including Singapore, is on the horizon.

Cogstate share price snapshot

Over the past 12 months, the CogState share price has leapt 75%.

There was a 50% jump in June after the company announced its Alzheimer’s therapeutic had received accelerated approval based on its clinical trials. At that time, the CogState share price was $1.40. It also saw a sharp 8% jump in September to $1.87.

The company has a market capitalisation of just over $402 million and a price-to-earnings ratio (P/E) of 55.25.

The post CogState (ASX:CGS) share price crashes 20% on quarterly update appeared first on The Motley Fool Australia.

More reading

• What’s happening to the Wesfarmers share price (ASX:WES) this year?
• Own AGL (ASX:AGL) shares? JP Morgan is overweight, tips 23% upside in 2022
• Own CBA (ASX: CBA) shares? Here’s what’s happening with the big bank this week
• The Hot Chili (ASX:HCH) share price cooled by 7% today. Here’s why
• 2 cheap ASX 200 shares rated as top buys

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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Key points

• The Wesfarmers share price has descended more than 10% since the start of the year
• COVID-19 is impacting consumer confidence and retail sales
• The S&P/ASX 200 Consumer Discretionary Index has fallen almost 8% since 31 December

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The Wesfarmers Ltd (ASX: WES) share price is plummeting this year.

The Western Australian-based conglomerate’s share price has fallen 10.51% since market close on 31 December to finish this week trading at $53.07. It fell 2.27% today alone.

Let’s take a look at what is impacting the company’s shares in January.

What’s going on with Wesfarmers?

The Wesfarmers share price has been on a steady decline since the start of the year with a few positive bumps along the way.

Retail shares have been falling amid declining consumer confidence due to the COVID-19 Omicron variant.

Early this week, an ANZ-Roy Morgan survey revealed consumer confidence had dropped 8.1 points to its lowest level since October 2020. This followed confidence falling 2.4 points in the first week of January.

The S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ), which includes Wesfarmers, has fallen 7.77% since 31 December.

However, on Monday the Wesfarmers share price had a minor reprieve following the release of its half-yearly results up to 31 December.

The company anticipates its net profit after tax to decline by 12.5% to 16.5% compared to the previous corresponding period. Kmart and Target sales fell 10.3% due to COVID-19 restrictions and Target store closures. However, the results were in line with expectations.

Analysts at Citi maintained their sell rating on the company’s shares this week with a $50 price target. That’s 5.8% less than the current share price. Citi expressed concerns about consumer spending and increased COVID-19 costs.

However, there could be brighter days coming in the view of some analysts. Morgans upgraded Wesfarmers shares to a buy rating on Tuesday, describing the company as “high quality”. The broker gave the company a price target of $60.80. That is 14.6% more than the current share price.

Wesfarmers share price snapshot

The Wesfarmers share price has returned 1.6% in the past 12 months. This week it has fallen 1.7%, while it has slumped 9.97% over the past month.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has returned 5.16% in the past year.

The post What’s happening to the Wesfarmers share price (ASX:WES) this year? appeared first on The Motley Fool Australia.

More reading

• Kogan (ASX:KGN) share price hits new 52-week low. Down 37% in 6 months
• Leading brokers name 3 ASX shares to sell today
• Morgans upgrades Wesfarmers (ASX:WES) shares to buy rating
• ASX 200 (ASX:XJO) midday update: Rio Tinto’s Q4 update, JB Hi-Fi rockets, Kogan sinks
• Own Wesfarmers (ASX:WES) shares? Jefferies just lowered FY22 earnings forecasts

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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Shares in energy giant AGL Energy Limited (ASX: AGL) have rocketed out of the gates in 2022 and are now up more than 21% since January 1.

AGL shares surged in the first week of trading and have now shot back to 3-month highs of $7.30 as of Friday’s close.

With the recent upside, the team at JP Morgan have become constructive on AGL and reckon the energy player could be a buy right now. Let’s take a look.

Is AGL a buy right now?

JP Morgan reckons so, having reiterated its overweight posture on the stock in a recent note. The broker said it remains positive on AGL “despite recent performance of the stock”.

However, analysts at the firm also note that AGL has been “one of the strongest performers in the ASX200 in recent months”, alluding to its 21% gain in the last month versus the S&P/ASX200 Index (ASX: XJO) at 1.5%.

The broker reckons this performance “is likely attributable to stronger wholesale forward prices”. In fact, JP Morgan notes that it revised commodity prices for AGL in an update last week, “resulting in material increases to earnings estimates and valuation”.

It also reckons that Accel Energy is now a “significantly more palatable asset” given its cash flow outlook at such strong spot prices.

With this kind of fundamental momentum, JP Morgan even goes as far as to say that AGL could upgrade guidance during its earnings results penned in next month.

Company guidance is for $220–$340 million NPAT, however, the firm notes that “average wholesale price is up A$24/MWh since that guidance”.

“We would finally suggest that there remains the possibility that AGL could upgrade full-year NPAT guidance at the interim result next month. While most forward electricity sales are completed ahead of the fiscal year, it is possible (and likely) that some generation is unsold and therefore exposed to spot prices”, it said.

In the long-term, JP Morgan sees value in AGL seeing that it is “Australia’s largest private owner, operator, and developer of renewable generation assets”.

In that view, the broker feels the market is undervaluing AGL shares, and values the company at $8.70 per share, indicating around 23% upside potential at the time of writing.

“Notwithstanding reduced corporate appeal, we remain positive on AGL given much better electricity prices and compelling value”.

How’s AGL performing so far in 2022?

The AGL share price is off to an impressive start so far, after regaining momentum towards the end of 2021. The chart below shows AGL’s performance against the benchmark index from June 2021 to date. Note how shares bounced off a 6-month low of $5.10 in November and have reclaimed territory to now trade back above 3-month highs.

In fact, the performance gap between AGL and the index is converging at a rapid pace and at this momentum could hit a crossroads should the trend continue.

But, AGL has a long way to go for longer-term shareholders, with shares sliding more than 38% over the past 12 months, and tumbling from a high of $27.70 back in 2017.

The post Own AGL (ASX:AGL) shares? JP Morgan is overweight, tips 23% upside in 2022 appeared first on The Motley Fool Australia.

More reading

• Here’s why BlackRock plans to keep these carbon intensive ASX 200 shares
• What will AGL (ASX:AGL)’s 2022 dividend yield look like?
• Top brokers name 3 ASX shares to buy next week
• These were the best performing ASX 200 shares last week
• Why has the AGL (ASX:AGL) Energy share price climbed 18% in a week?

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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Key points

• CommBank to release half year results on 9 February
• Net interest margin could fall below expectations
• Why analysts are watching Omicron’s impact
• How Omicron is impacting CBA’s Household Spending Intentions Index

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Commonwealth Bank of Australia (ASX: CBA) looks to be caught up in the wider selling action hitting the S&P/ASX 200 Index (ASX: XJO) today.

CBA shares finished Friday’s trading session down 1.26% while the ASX 200 slipped 2.27%. 

That’s today’s price action.

Below we look at what’s been happening with the big bank this week.

CBA shares in the news this week

Investors will be keeping a keen eye on CBA shares on 9 February. That’s when the big bank reports its half year financial results.

With a lot riding on those results, analysts are offering their forecasts for ASX investors looking to get positioned early.

Among those is Morgans.

As my Foolish colleague James Mickleboro noted earlier today, the broker expects that CommBank won’t reach market expectations. It has a reduce rating on CBA shares with a price target of $74. That’s well below the current $97.53 per share.

Morgans believes CBA shares could come under pressure, as the broker expects its net interest margin (NIM) to come in at 1.86%. The consensus forecast is 1.91%.

Morgans is also keeping a close eye on how the Omicron variant could impact the bank’s business, saying, “By way of outlook for asset quality, we will be particularly interested to hear about what CBA is seeing on the SME front with the spread of Omicron.”

CommBank on Omicron

The CommBank Household Spending Intentions Index – which measures Aussie consumer spending – leapt by 2.5% in December. The gains were largely driven by big gains in the travel, transport and retail sectors when the Delta variant restrictions were wound back.

However, the rise of Omicron looks to be putting a dent in consumer spending.

According to CBA senior economist Belinda Allen:

The Omicron variant, which has led to a surge in COVID cases late in December and into January, is an important development to watch. It is impacting the demand and supply side of the Australian economy. We can see from our high frequency credit and debit card data there does appear to be a fall in spending in January, with spending on services more impacted than goods spending.

Lawsuit moves forward

CBA shares were in the national news again today, after the Finance Sector Union filed a suit in Federal Court. The union says that CommBank didn’t allow approximately 3,000 retail staff to take their contractual 10-minute rest breaks, netting the bank some $45 million over the last 6 years.

A CBA spokesperson said the bank will carefully review the claim once it is served.

How have CBA shares been performing?

Despite the recent selling, CBA shares remain up 14% over the past 12 months. By comparison, the ASX 200 has gained 5% over that same time.

The post Own CBA (ASX: CBA) shares? Here’s what’s happening with the big bank this week appeared first on The Motley Fool Australia.

More reading

• What to expect from the CBA (ASX:CBA) half year result next month
• 2 buy-rated ASX dividend shares with fully franked yields
• How are ASX bank shares performing today?
• Will the CBA (ASX:CBA) share price climb another 23% in 2022?
• CBA (ASX:CBA) is about to lose the mantle of the ASX’s largest company, here’s why

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

• The Hot Chili share price shed almost 7% today
• The company has executed a letter of intent for port access
• Copper prices have fallen nearly 2%

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The Hot Chili Ltd (ASX: HCH) share price lost some of its spice today. The ASX mining company’s shares ended the day down 6.74% at $1.73 apiece.

For context, the S&P/ASX 200 Index (ASX: XJO) sunk 2.27% today.

Let’s take a look at what might have impacted the company today.

Port negotiations commence

The Hot Chili share price plummeted today despite the company releasing what appeared to be a positive announcement.

The miner, which is exploring for copper in Chile, South America, signed a letter of intent with Puerto Las Losas SA (PLL) to negotiate port access and port services.

Hot Chili requires access to the port to progress its Costa Fuego copper development hub in Chile. PLL will pay for a study looking into the use of its port for the shipping of copper and other materials at the project.

Speaking on the announcement, Hot Chili country manager and chief legal counsel Jose Ignacio Silva said:

Securing port services will be a major step forward for Costa Fuego. Leveraging off existing port infrastructure will materially reduce Costa Fuego’s environmental footprint during construction and operations.

As no new port or areas will be required for construction or subject to environmental permitting, we expect a positive impact to our construction capital requirements and overall permitting/construction timelines.

Hot Chili said PLL is looking to present the company with a binding offer for port services in 12 weeks or fewer. If this goes ahead, the companies will start operations in the final quarter of 2025.

Falling copper prices could have also have impacted the Hot Chili share price today. Copper has dropped 1.78% from US$4.5825 on 20 January to US$4.501 per Lbs at the time of writing.

Hot Chili share price snapshot

The Hot Chili share price has sunk 14% in the past year. In the past month, it has gained 1.47% but has fallen around 5.5% this week.

Meanwhile, the broader ASX 200 index has returned around 5% over the past 12 months.

The post The Hot Chili (ASX:HCH) share price cooled by 7% today. Here’s why appeared first on The Motley Fool Australia.

More reading

• 2 cheap ASX 200 shares rated as top buys
• Goldman Sachs tips 27% upside for the Northern Star (ASX:NST) share price
• Can the Qantas (ASX:QAN) share price fly higher in 2022?
• These 3 ASX retail shares have grossed-up dividend yields over 8% right now
• American Rare Earths (ASX:ARR) share price slumps 9% on quarterly update

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

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Key points

• Analysts have identified two leading ASX 200 shares that look cheap
• Fund manager Pendal is losing FUM, but brokers see positives and good value
• Seven Group’s industrial businesses are showing good progress with expectations of ongoing opportunities for growth

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Analysts have been on the search for undervalued S&P/ASX 200 Index (ASX: XJO) shares.

Share prices are always changing, but sometimes a business update or a drop in the share price can make it into an opportunity.

When a business is well-liked by a number of analysts, it might suggest that it’s an opportunity. But, there’s also a chance that all of those analysts end up being wrong at the same time.

With that in mind, these two have been rated as leading opportunities:

Pendal Group Ltd (ASX: PDL)

Pendal is one of the larger fund managers on the ASX. It is rated as a buy by at least six brokers, including Morgan Stanley. This broker has a price target of $8.80 on the business, suggesting a possible upside of around 70% over the next 12 months if the broker ends up being right.

The latest influence on the broker’s thoughts was the latest quarterly update. Whilst Pendal continues to suffer outflows, Morgan Stanley sees the ESG segment as a useful long-term positive.

Pendal had $135.7 billion of funds under management (FUM) at 31 December 2021. It suffered a total net outflows of $6.8 billion across the business, with $5.5 billion of outflows from the Europe, UK and Asia division. Investors already knew about two notable redemptions by UK institutional clients which was announced at the AGM in December.

The ASX 200 share’s management is disappointed with the net flow performance, but it’s responding with a “clear set of actions”.

It’s investing in distribution in key target markets, Pendal is working closely with fund managers to strengthen investment performance and has launched new impact and thematic products that are quickly gaining traction.

On Morgan Stanley’s numbers, it is currently valued at 10x FY22’s estimated earnings. The broker is expecting a grossed-up dividend yield of 12.75%.

Seven Group Holdings Ltd (ASX: SVW)

Seven Group is currently rated as a buy by at least four brokers, including UBS. That broker has a $27.15 price target on the business. 

This business has investments and operations in a few different areas. In industrial services, WesTrac is the sole authorised Caterpillar dealer in Western Australia, New South Wales and the Australian Capital Territory in Australia. It also owns Coates Hire, Australia’s largest equipment hire business and AllightSykes, a supplier of lighting towers, generators and pumps.

The ASX 200 share owns around 70% of Boral Limited (ASX: BLD). Seven is looking to expand its presence in oil and gas projects in Australia and the United States. Seven also has a 30% shareholding in Beach Energy Ltd (ASX: BPT).

Seven Group also owns almost 40% of Seven West Media Ltd (ASX: SWM).

UBS thinks that the ongoing economic recovery of Australia will be helpful for the business.

In a recent trading update, Seven Group said that WesTrac was benefiting from continuing strong demand, with good mining demand in WA and NSW. Construction demand remains strong.

Seven West Media is benefiting from advertising spending and video on demand growth. It is targeting annual savings of between $15 million to $20 million. It’s also improving its balance sheet by improving its net debt position.

Seven Group also thinks that Coates is well positioned for new opportunities and growth.

On UBS numbers, the Seven Group share price is valued at 13x FY22’s estimated earnings.

The post 2 cheap ASX 200 shares rated as top buys appeared first on The Motley Fool Australia.

More reading

• Why Anteotech, Appen, Boral, and Kogan shares are rising today
• ASX 200 (ASX:XJO) midday update: Whitehaven sinks, BHP to unify
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX shares today
• Here are the 3 most heavily traded ASX 200 shares this Thursday

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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

• Northern Star shares are rising on Friday despite the market selloff
• Goldman Sachs has reiterated its buy rating following the gold miner’s second quarter update
• It believes its shares can rise 27% from here

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There are only a handful of shares that are pushing higher on the ASX 200 on Friday. One of those is the Northern Star Resources Ltd (ASX: NST) share price.

In late afternoon trade, the gold miner’s shares are up 0.5% to $9.79.

Why is the Northern Star share price avoiding the selloff?

The Northern Star share price has avoided the market and gold sector selloff today after brokers responded positively to its second quarter update.

One of those brokers was Goldman Sachs. This morning the broker retained its buy rating and lifted its price target on the company’s shares to $12.40.

Based on the current Northern Star share price, this implies potential upside of almost 27% over the next 12 months.

What did the broker say?

Goldman notes that Northern Star’s second quarter result was slightly below its estimates. However, it was pleased to see its guidance maintained for the full year.

In light of this, it continues to believe the Northern Star share price is very attractively priced at 0.78x net asset value (NAV). This compares to 1.3x NAV for its North American peers.

But the main reason for its positivity is the company’s growth outlook. It notes that this is being underpinned by high-returning organic growth across all production hubs.

Goldman explained: “Strong medium-term growth profile from the diverse portfolio of assets drives down unit costs, improves margins, and lifts FCF (+25% production growth from FY21 to FY26E, +20% 5-year EPS CAGR). Every asset in the portfolio has potential to grow production and extend mine life.”

A final reason Goldman is positive on the Northern Star share price is its balance sheet.

It commented: “Strong balance sheet and FCF despite investment in growth; forecast net cash of A$463mn (ex-leases) by Jun-22, 5.8%/8.1%/9.4% FCF yield (FY22/23/24E).”

The broker expects this to underpin solid dividend growth in the coming years. Goldman forecasts a 2.1% yield in FY 2022 and then ultimately a 3.3% yield by FY 2025.

The post Goldman Sachs tips 27% upside for the Northern Star (ASX:NST) share price appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX shares today
• Why Allkem, Beacon Lighting, Northern Star, and Virtus Health shares are charging higher
• Why the Northern Star (ASX:NST) share price is surging 7% today
• 5 things to watch on the ASX 200 on Wednesday

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

• Qantas shares impacted by Omicron COVID-19 outbreak
• Domestic and international passengers down from previous estimates
• Clearer horizons expected to emerge in company’s half-year results in February

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The Qantas Airways Limited (ASX: QAN) share price has failed to take off in 2022 and is down again today.

A surge in cases of the Omicron variant is causing widespread panic in Australia’s travel market. As a result, the Qantas share price has fallen over the past few weeks from $5.15 on 4 January to $4.86 today.

The Qantas share price is down by 3.57% in late afternoon trading on Friday. However, this is likely due to the broader market sell-off on the S&P/ASX 200 Index (ASX: XJO). The benchmark index is down 2.24% to 7,178 points.

What’s the latest with Qantas?

The volatility in the Qantas share price is being driven by uncertainty relating to the recovery of the travel market.

For the better part of 2021, Australia managed to control the spread of COVID-19. This led to Qantas taking advantage of the strong interest in consumers wanting to travel domestically.

However, investor confidence has turned sour following Omicron outbreaks across the country. This has caused Qantas to re-adjust its capacity estimates for the 2022 financial year.

As such, Qantas is forecasting third-quarter domestic capacity at 70% of pre-COVID levels. This is down from the 102% they had expected previously.

In addition, international capacity for the same period will fall from 30% to around 20% of pre-COVID levels. The reduction is being caused by increased travel restrictions in countries like Japan, Thailand and Indonesia.

On a positive note, other markets such as London, Los Angeles, Vancouver, Johannesburg and India are continuing to perform well for the ASX travel giant.

Qantas noted that an assessment of the financial impact of these changes will be given at its half-year results. By then, it expects a clearer picture of swing factors such as actual demand levels, and travel restrictions in overseas countries.

Will Qantas shares make a comeback in 2022?

It’s anyone’s guess whether the Qantas share price or any other ASX travel shares will return to their pre-COVID levels in 2022. However, a number of brokers believe that the Qantas share price is attractively valued today.

Last month, UBS slashed its outlook by 3.1% to $6.20 per share, representing a potential upside of 26%.

Following suit, Citi had a more bearish tone, cutting its price target on Qantas shares by 1.2% to $5.86 apiece.

Similar to UBS’s view, the team at JPMorgan also reduced its valuation by 0.8% to $6.25 this week. Nonetheless, the broker thinks there is still significant value in the airline and that a recovery is inevitable.

Qantas will report its FY22 half-year results on 24 February.

Qantas share price summary

Year to date, the Qantas share price has fallen by 5% amid Australia reporting record COVID-19 cases amongst its population.

Based on valuation grounds, Qantas has a market capitalisation of $9.16 billion, with approximately 1.88 billion shares on issue.

The post Can the Qantas (ASX:QAN) share price fly higher in 2022? appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Aaron Teboneras owns Qantas Airways 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 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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