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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

The crypto market sell-off has continued into Monday, with most tokens down considerably in morning trading. Mega-cap tokens Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) both broke through psychological barriers, with Bitcoin dipping below $40,000 per token and Ethereum diving below $3,000 per token this morning. Currently, both tokens are down, though losses have been limited to 0.6% and 2.5%, respectively, for Bitcoin and Etheruem over the past 24 hours, as of noon ET.

Notably, Bitcoin is outperforming the overall crypto market today, which is much deeper in the red on the whole. The entire crypto market has lost 1.7% over the past 24 hours as of noon Monday, also dipping below the psychological threshold of $2 trillion in terms of market capitalization.

Once again, meme tokens such as Dogecoin (CRYPTO: DOGE) are leading the way in terms of losses today. Dogecoin is currently down 4.4% over the past 24 hours.

So what

Investors appear to be continuing to move away from risky, growth-related investments toward more defensive asset classes today. In the stock market, the Nasdaq is once again leading losses among major indexes, as investors look toward safe havens. Guidance given by the Federal Reserve via meeting minutes published last week continues to haunt growth investors, who are now pricing in much more meaningful rate increases, sooner than expected.

In the crypto world, levels of “extreme fear” are being noted by various gauges of investor sentiment. For meme tokens such as Dogecoin relying on positive sentiment and investor interest, this current environment is one that’s not friendly to the sort of parabolic growth trends many investors initially hoped for coming into 2022.

Now what 

This macro environment is one that is likely to test the mettle of the crypto market. Whether this is a market that is currently in bubble territory or not will likely be decided by the price action among major cryptocurrencies in the coming months. We’ve seen large declines before, and this could be yet another test for how resilient these digital currencies will be over the longer term.

For investors in more defensive tokens such as Bitcoin, often dubbed “digital gold,” the relative strength investors are once again seeing today may be viewed positively. That said, outside of a few niche tokens, the crypto market is once again moving in high correlation, as capital flows out of the crypto world continue. 

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

The post Why Bitcoin, Ethereum, and Dogecoin plunged today appeared first on The Motley Fool Australia.

More reading

• Forget Bitcoin! These were the 5 crypto assets you wish you’d held in 2021
• Bitcoin and Ethereum are crashing: Is now the time to invest?
• Could Shiba Inu Surpass Dogecoin in 2022?
• The Bitcoin (CRYPTO:BTC) price has tumbled 10% since the start of 2022. Is it a buy?
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Chris MacDonald owns Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends Bitcoin and Ethereum. 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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It’s been a rough 6 months for many S&P/ASX 200 Index (ASX: XJO) tech shares, with giants such as Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) tumbling 39% and 53% respectively.

The broader technology market has also been suffering. The S&P/ASX All Technology Index (ASX: XTX) slid 4.4% over the same period. For context, the ASX 200 has gained 1.5% since mid-July.

Fortunately, not all ASX 200 tech shares have slumped alongside the index. In fact, these two have positively taken off.

The 2 outperforming ASX 200 tech shares

WiseTech Global Ltd (ASX: WTC) and TechnologyOne Ltd (ASX: TNE) have each bested the technology market’s performance over the last 6 months.

In that time, the TechnologyOne share price has gained 27%, spurred by a major acquisition and despite tumbling on the release of its full-year results.

Meanwhile, the share price of WiseTech has surged a mammoth 77%, helped along by its financial year 2021 earnings.

Right now, the WiseTech share price is $54.63. Its ASX 200 tech peer TechnologyOne is at $11.68 a share.

The two ASX 200 tech shares have managed to dodge what might have been the start of a concerning period for ASX tech investors.

What’s weighing on tech stocks?

As The Motley Fool Australia reported last week, the US Federal Reserve has hinted at interest rate increases in the near future. That might see liquidity removed from equity markets.

Unfortunately, tech shares, including those on the ASX 200, are uniquely positioned to be impacted the move.

That’s because they’re often valued higher than their current earnings – the market generally expects tech companies’ profits to boom in the future.

When interest rates rise, expected future profits are worth less at current monetary values.

While apparent confirmation that interest rates increases are on the table for 2022 is a relatively recent phenomenon, it’s likely been in investors’ peripherals for some time.

That could explain the sluggish performance of the All Tech Index.

The post These 2 ASX 200 tech shares have withstood the selloff to surge higher over the last 6 months appeared first on The Motley Fool Australia.

More reading

• Sticky revenue winners. Here are the 5 best ASX SaaS shares of 2021
• Why Afterpay, BrainChip, Medibank, and WiseTech shares are racing higher
• 5 things to watch on the ASX 200 on Thursday
• Why are ASX 200 tech shares getting hammered today?
• 2 ASX shares analysts rate as buys in January

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 Afterpay Limited, WiseTech Global, and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended Afterpay Limited and WiseTech Global. 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.

What happened

Amid a broad market sell-off, meme token Shiba Inu (CRYPTO: SHIB) has posted a decline of 7.5% over the past 24 hours, as of 12:30 p.m. ET. This decline significantly outpaces the broader crypto market, which is down cumulatively 3.3% over the same time frame. Accordingly, it appears that the market-based selling focused on higher-risk tokens such as Shiba Inu is continuing into a new week.

Various bullish takes on the potential for this meme token to head for the moon have driven incredible performance for Shiba Inu over the past year. Despite dropping more than 65% from its recent peak, Shiba Inu remains more than 20,000,000% higher over the past 12 months alone.

However, more conservative investors seem to be skeptical. As investors continue to sell their winners — and rotate more of their capital into lower-beta, defensive investments — the sell-off with the SHIB token has continued to outpace the overall market once again today.

So what

The bullish camp behind Shiba Inu continues to tout a number of reasons that this meme token could shoot to the moon in 2022. Rising demand for speculative tokens via a listing on platforms such as Robinhood is one potential factor crypto speculators are looking at. Shiba Inu’s recently announced Layer 2 blockchain, named the Shibarium, is also driving investor enthusiasm as developer interest picks up on this network. And the potential for metaverse-themed projects and stablecoins to be added to the Shiba Inu network has many considering the utility angle with this token.

Bears note that many of these projects remain in the conceptual stage for the time being. And while the crypto market is certainly forward looking, the extent to which developer interest turns into real, meaningful progress remains to be seen. Right now, concerns around higher interest rates and a reduced Federal Reserve balance sheet appear to be of bigger concern to investors.

Now what

Rising bond yields, and a search for safety in capital markets, have put crypto investors on edge. This current environment is one that is certainly not friendly for moon shot hopefuls. Those invested in Shiba Inu are seeing what can happen when market sentiment shifts in a meaningful way.

Perhaps Shiba Inu hasn’t mooned yet. Perhaps this token is still on its rocket, headed for new highs shortly. However, the temperature of the market right now suggests investors are more concerned with the risks of this token than its potential near-term returns. Accordingly, investors are taking cover today. 

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

The post Why the Shiba Inu token is sinking appeared first on The Motley Fool Australia.

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• Forget Bitcoin! These were the 5 crypto assets you wish you’d held in 2021
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• Better crypto to own in 2022: Dogecoin or Shiba Inu?
• Meme coin selling: Why Shiba Inu, Dogecoin, and The Sandbox are down

Chris MacDonald 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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The PolyNovo Ltd (ASX: PNV) share price has been a strong performer on Tuesday.

At the time of writing, the medical device company’s shares are up 13% to $1.62.

Why is the PolyNovo share price jumping?

The rise in the PolyNovo share price today has been driven by the release of its second quarter and first half trading update this morning.

According to the release, during December, PolyNovo achieved record monthly US sales (ex Barda) of A$3.4 million (US$2.43 million). This was an increase of 76% over the prior corresponding period. Combined with strong sales results in October and November, this led to record second quarter US sales of US$2.43 million (US$5.86 million). This is an increase of 105% over the same period last year.

In light of the above, the company expects to report first half US sales of A$14.20 million (US$10.38 million). This will mean first half group sales growth of 45% year on year to A$16.28 million excluding Barda revenue and 43% including Barda revenue to A$18.04 million.

What drove its growth?

Underpinning this growth was the addition of a number of new customer accounts. During the first quarter, the company added 16 new accounts and then followed this up with 19 new accounts in the second quarter. This brought its total US accounts to 154.

Pleasingly, with the company intending to increase the size of the US sales team with a further 10 representatives, management expects to be able to expand its coverage across key cities and regions.

PolyNovo’s Senior VP Sales & Marketing Americas, Ed Graubart, said: “We have recruited top talent and they in turn are transitioning new accounts at a record pace. We have also filled some critical internal positions that allow for a more efficient and effective organisation. The team are buoyed by the strong results and opportunities.”

The company’s Chairman, David Williams, added: “While US sales are very encouraging, there is more to achieve as we still have new sales staff being onboarded and more staff to be employed. In addition, we are retraining existing staff to follow surgeon leads using the product in new indications. While the US is the engine room of our growth in the immediate future, there are many opportunities in the rest of the world where we are just starting out.”

The post Here’s why the PolyNovo (ASX:PNV) share price is jumping 13% today appeared first on The Motley Fool Australia.

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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 POLYNOVO FPO. 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 Inghams Group Ltd (ASX: ING) share price is falling, down 7% in early trading, after the poultry company told that the market that the Omicron COVID variant is impacting its operations.

A couple of months ago the business told investors that lockdowns and global COVID effects were a key feature of early FY22 and were causing challenges. But the rapid spread of the Omicron variant is now causing substantial effects too.

Omicron impacts operations and Inghams share price

There were four areas that Inghams updated the market about.

First, the large amount of COVID transmission in the Eastern Australian States from December 2021 is resulting in staff shortages and is now also having an impact on the Australian supply chain, operations, logistics and sales performance of the ASX share, as well as some suppliers and customers. Management re-iterated that there are disruptions to production and distribution capability, as well as an impact on sales.

Second, however, the company has managed to keep all of its major Australian sites operational and it hasn’t experienced any “significant” on-site transmission of COVID. But, those sites are currently experiencing significantly lower levels of staff availability. This is impacting production volumes and operational efficiency.

To combat this, Inghams’ third message was that operational changes are being made to volume and mix across the Australian business. It isn’t possible for management to predict how long this disruption will continue for. It is “premature” to draw any conclusions on the overall impacts on the business and trading results.

Finally, Inghams noted that feed costs continue to remain elevated.

The Inghams share price had drifted lower after the company’s operational update in early November 2021 which included a warning on higher feed costs.

However, it was noted that both the Federal and State Governments recently changed isolation rules for close contacts in the food sector which should help some of the current staff shortages. It’s expecting production capacity to recover relatively quickly to meet demand.

Management commentary

Noting the difficulties, the Inghams CEO and managing director Andrew Reeves said:

The operational and trading difficulties have resulted in significant operational inefficiency, additional costs and the temporary suspension of a number of Ingham’s products. Ingham’s is working closely with our customers and we are focused on supplying as much product as possible to customers while the current disruption continues.

The company continues to manage the cumulative impacts associated with COVID issues which have arisen through FY22. We will continue to closely manage our working capital and inventory and seek to implement initiatives to minimise the financial and other impacts of COVID through the second half.

Inghams share price snapshot

Prior to today’s announcement, Inghams shares had fallen 15% over the past four months. Only part of that decline came after the November 2021 AGM update. Now it is down around 22% in four months.

The post Inghams (ASX:ING) share price sinks as Omicron bites appeared first on The Motley Fool Australia.

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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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The AVITA Medical Inc (ASX: AVH) share price is pushing higher on Tuesday morning.

In morning trade, the regenerative medicine company’s shares are up 3.5% to $3.25.

Why is the AVITA share price pushing higher?

Investors have been bidding the AVITA share price higher today after it released its preliminary unaudited second quarter results.

According to the release, for the three months ended 31 December, AVITA delivered a 35% increase in quarterly revenue to US$6.9 million.

Combined with the US$7 million revenue it recorded in the first quarter, this brings its half year revenue to US$13.9 million. This represents an increase of approximately 37% over the US$10.16 million recorded during the prior corresponding period.

It is also worth noting that the company has changed its financial year-end. So, although this is only technically the end of the first half, the company is now starting FY 2022.

What about its earnings?

No margin or profit (or loss) data was provided with today’s update. However, management did provide an update on its balance sheet. The release reveals that AVITA ended the period with US$55.5 million in cash and cash equivalents. This compares to US$60.5 million at the end of the first quarter.

AVITA also advised that it has US$49.3 million in short-term and long-term marketable securities and no debt.

These funds will come in handy for the year ahead. In December, the company completed the enrolment of pivotal clinical trial evaluating the safety and effectiveness of the RECELL System for the repigmentation of stable vitiligo lesions. And this month AVITA completed the enrolment of a pivotal study of the RECELL System for soft tissue reconstruction (trauma).

AVITA’s Medical Chief Executive Officer, Dr. Mike Perry, said: “Our recent successes in getting two pivotal clinical trials fully enrolled, and also demonstrating proof of concept in two other potential indications, underscore our commitment to further growing the market opportunities for the RECELL system. Looking ahead, we will be preparing our vitiligo and soft tissue dossiers to submit PMA supplement applications to the FDA in late 2022 for commercial launches for those indications in 2023.”

The post Why the AVITA (ASX:AVH) share price is charging higher today appeared first on The Motley Fool Australia.

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• Avita Medical (ASX:AVH) share price sinks to 52-week low despite ‘pivotal’ trial update
• Down 22% in a month: Why is the Avita Medical (ASX:AVH) share price sliding again today?

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 Avita Medical Limited. The Motley Fool Australia has recommended Avita Medical 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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If you’re wanting dividend and growth options, then it could be worth considering Adairs Ltd (ASX: ADH) shares.

One leading broker believes that it could be an under the radar growth star with potentially big dividend yields.

Why could Adairs be a share to buy?

Adairs is a leading retailer of furniture, homewares, and home furnishings in Australia and New Zealand through its core Adairs brand and online Mocka brand.

In addition, the company has signed an agreement to acquire Focus on Furniture for $80 million. Management believes the acquisition is a clear strategic fit, with attractive growth potential and exposure to the $8.3 billion bulky furniture category.

The team at Morgans is a fan of the deal. And while it acknowledges that the acquisition only adds to the market’s concern that Adairs’ organic growth is limited in the near term, the broker feels this view is incorrect.

Morgans commented: “It seems to us that the market sees ADH as a COVID beneficiary that is unlikely to deliver much in the way of organic growth over the next few years. Buying Focus perhaps hasn’t done anything to dispel this notion.”

“But we think that’s unfair. Our estimates are for an EPS CAGR of 21% between FY20 and FY24F. The acquisition of Mocka and Focus play a large part in driving this, but even organically, a combination of a very strong loyalty programme, GLA growth and cost efficiencies underpin a growth story that we think is going under the radar,” it added.

Adairs’ dividends

As well as strong earnings growth, Morgans is forecasting generous dividends in the coming years.

According to the note, the broker has pencilled in fully franked dividends per share of 23 cents in FY 2022 and then 29 cents in FY 2023. Based on the current Adairs share price of $3.82, this will mean yields of 6% and 7.8%, respectively.

Morgans also sees significant upside for the Adairs share price. It has an add rating and $4.80 price target on its shares, which implies potential upside of almost 26% over the next 12 months.

The post Broker names Adairs (ASX:ADH) shares as a buy for growth and income investors appeared first on The Motley Fool Australia.

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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 ADAIRS FPO. The Motley Fool Australia owns and has recommended ADAIRS FPO. 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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ASX software-as-a-service (SaaS) shares proved their worth last year. The business model focused on sticky recurring revenues that brought home the cheese for some Aussie-listed companies in 2021.

Interestingly, often SaaS shares slot into the information technology sector. This is a sector that severely underperformed the S&P/ASX 200 Index (ASX: XJO) in 2021, with tech sliding 2.8% while the broader market rallied 13%. Yet, a number of SaaS companies racked up market-beating returns for their shareholders.

Let’s take a look.

ASX SaaS shares giving investors the juiciest rewards last year

Imdex Limited (ASX: IMD)

Shares in ASX-listed Imdex hit a home run last year, with the share price rallying 71% during the year.

The mining equipment and technology company attracted the market’s attention with a solid FY21 result. Impressively, the $1.12 billion company increased its revenue by 11.2% to $264.4 million year on year. Additionally, net profits surged 45% to $31.67 million.

While a substantial portion of the company’s revenue is comprised of once-off sales and equipment rentals, there is a growing portion of SaaS-based revenue. Between FY17 to FY21, rental and SaaS revenue has increased from 44% to 57% of total revenue.

Readytech Holdings Ltd (ASX: RDY)

Entering the arena of the five best ASX SaaS shares of 2021 is ReadyTech Holdings. This company provides cloud-based software to the education, employment, and government sectors. For shareholders, ReadyTech also provided sizeable returns last year — rising 87% in the 12-month timeframe.

According to its FY21 full year presentation, the education software provider achieved respectable growth during the financial year. For instance, revenue increased 27.4% to $50 million compared to the previous year.

Although, earnings decreased to $2.16 million from $3.94 million. However, it’s worth noting ReadyTech acquired Open Office for an upfront price of $54 million during this time.

WiseTech Global Ltd (ASX: WTC)

Making the podium finish is cloud-based logistics software provider, WiseTech Global. In 2021, the company dished out a 90% gain to investors.

WiseTech continued to grow its top line during 2021, a year plagued by supply chain and logistics issues. Perhaps this enabled a more robust trading period for the ASX SaaS share. In FY21, revenue increased 18% to $507 million compared to the prior corresponding period.

Additionally, the sticky nature of the company’s software was reflected in its percentage of recurring revenue, at nearly 96%.

Janison Education Group Ltd (ASX: JAN)

Breaking into the 100%-plus return club last year and finding itself as the second best-performing ASX SaaS share is Janison Education. The online school assessments provider experienced a 130% rise in its share price in 2021 — a 10 times better return than the benchmark index.

For those unaware, Janison offers assessment platforms to a wide array of customers including the New South Wales government, NAPLAN, Chartered Accountants, and the University of London — to name a few. It appears shareholders weren’t too concerned about the widening losses in FY21. Notably, the company grew revenue by 38% to $30.2 million.

Janison has $80 million to $100 million in revenue on its radar through growing its customer contracts and consolidating the digital assessments industry with its acquisition strategy.

Life360 Inc (ASX: 360)

Taking the top spot as the best ASX SaaS share of 2021 is the high-flying family safety service, Life360. Shares in the company gained an impressive 156% in a busy year.

Investors took a closer look at Life360 after Randi Zuckerberg joined the board of the company. At the time, this was considered a vote of confidence to Wilson Asset Management portfolio manager Tobias Yao.

Since then, the company has gone on to make two acquisitions — Jiobit and Tile. These acquisitions totalled more than $200 million worth of investments in 2021.

The post Sticky revenue winners. Here are the 5 best ASX SaaS shares of 2021 appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy next week
• Why Afterpay, BrainChip, Medibank, and WiseTech shares are racing higher
• 2 excellent ASX tech shares to buy after the market meltdown
• 5 best ASX 200 tech shares of 2021
• These were the 5 best performing ASX 200 shares in 2021

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Imdex Limited, Janison Education Group Limited, Life360, Inc., Readytech Holdings Ltd, and WiseTech Global. The Motley Fool Australia owns and has recommended WiseTech Global. The Motley Fool Australia has recommended Janison Education Group Limited and Readytech Holdings 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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If you’re looking for dividend shares to buy, then you may want to look at the two listed below.

Here’s why these ASX dividend shares are rated as buys by the team at Morgans:

Bapcor Ltd (ASX: BAP)

The first ASX dividend share could be a buy is Bapcor. It is Asia Pacific’s leading provider of vehicle parts, accessories, equipment, service and solutions.

It has been growing at a solid rate over the last few years. This has been underpinned by its strong market position, growing store footprint, a favourable redirection in consumer spending, and robust demand for used cars.

The team at Morgans appear to believe this positive form can continue. The broker likes Bapcor as it “continues to prove its earnings defensiveness with solid organic/inorganic growth prospects over the medium-term.”

As for dividends, Morgans is forecasting fully franked dividends per share of 21 cents in FY 2022 and then 23 cents in FY 2023. Based on the current Bapcor share price of $6.93, this will mean yields of 3% and 3.3%, respectively.

Morgans has an add rating and $8.45 price target on the company’s shares.

Telstra Corporation Ltd (ASX: TLS)

Another dividend share that Morgans rates highly is Telstra. The broker currently has an add rating and $4.55 price target on the telco giant’s shares. Morgans has been pleased with the success of the T22 strategy and the new T25 strategy that comes into place later this year.

It commented: “From a bottom-up perspective, the [Telstra] business has been transformed over the last few years. The outlook has turned from fighting an uphill battle against NBN and declining ARPU to rational pricing, price rises and a supportive backdrop.”

Looking ahead, the broker notes that “underlying earnings returned to growth in 2H21 and should continue growing out to FY25 (underlying earnings have found a base and are headed higher).”

Its analysts expect this to underpin fully franked dividends per share of 16 cents in FY 2022 and FY 2023. Based on the latest Telstra share price of $4.14, this will mean yields of 3.85% for investors.

The post Broker names 2 ASX dividend shares to buy in January appeared first on The Motley Fool Australia.

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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 owns and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended Bapcor. 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 EML Payments Ltd (ASX: EML) share price looks like an attractive opportunity to plenty of analysts at the moment.

EML is a financial technology (fintech) company that powers lots of different types of payments including physical card cards, electronic gift cards, virtual bank accounts, salary packaging, gaming payouts, buy now pay later (BNPL) and so on.

At the moment there are at least three different brokers that like EML as an investment with potential.

One of those with a buy rating on the fintech stock is UBS. Its price target is $4.40. That suggests a possible upside of more than 30% this year if the broker is right.

What does UBS like about the EML share price?

In May 2021, EML shares took a huge tumble. It fell over 40% as investors learned that the Central Bank of Ireland (CBI) was concerned about EML in relation to processes, compliance and risk management in regarding anti-money laundering and counter-terrorism financing (AML/CTF).

It was a potentially painful move because the CBI could have put limits on EML’s Irish business and various other possible impacts. The EML entity, PFS Card Services (Ireland) Limited (PCSIL) is responsible for a substantial amount of payment volume.

However, near the end of November, EML told the market good news regarding the CBI investigation, which UBS said took a lot of risk off the table.

The CBI said that it will permit PCSIL to sign new customers and launch new programs whilst staying within the material growth restrictions. PCSIL is confident that it can meet these obligations.

Next, broad based reductions in limit controls on programs will not be imposed. The CBI is satisfied to continue to engage with PCSIL with a view to agreeing appropriate limits under its risk management and controls framework.

The CBI did say it intended to implement a material growth limitation over PCSIL’s total payment volumes which will be imposed for 12 months or rescinded earlier following third party verification to confirm PCSIL’s remediation plan has been effectively implemented. PCSIL has been removing higher volume, lower yielding programs to enable it to comply with a material growth restriction.

The broker says that EML will be able to achieve more growth with customers thanks to this latest update, which should help grow the business.

How quickly is EML growing?

Investors often like to look at the growth rate, and expected growth rate, of a business before deciding what to value it at. So, faster growth could be useful for the EML share price.

In FY21, gross debit volume (GDV) rose 42% to $19.7 billion and underlying net profit after tax (NPATA) increased 54% to $32.4 million.

Then, in the first quarter of FY22, GDV increased another 14% to $5.5 billion year on year. Revenue was up another 29% to $52.4 million and underlying net profit was up 41% to $4.6 million.

It continues to win new clients and process more volume for existing clients.

What is the EML share price valuation?

Based on the UBS numbers, EML is valued at 27x FY23’s estimated earnings.

The post Here’s why the EML (ASX:EML) share price could be a big opportunity appeared first on The Motley Fool Australia.

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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. owns and has recommended EML Payments. The Motley Fool Australia owns and has recommended EML Payments. 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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