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With the majority of brokers across Australia taking a well-earned break, broker notes are extremely limited present.

In light of this, listed below are a few recent broker recommendations that remain very relevant today. Here are three ASX shares rated as buys:

CSL Limited (ASX: CSL)

According to a note out of Morgans, its analysts have retained their add rating and lifted their price target on this biotherapeutics giant’s shares to $334.70. This follows the announcement of the acquisition of Vifor Pharma for US$17 billion. Morgans doesn’t believe this deal is a sign that CSL’s core business’ growth is coming to an end. Rather, it feels it is a complementary acquisition with a strong product portfolio that has growth opportunities. The CSL share price is trading at $293.25 on Thursday.

Nearmap Ltd (ASX: NEA)

A note out of Morgan Stanley reveals that its analysts have retained their overweight rating and $3.20 price target on this aerial imagery and location intelligence company’s shares. Morgan Stanley was pleased to see that Nearmap reported strong growth in the North American market in recent months. It feels this bodes well for its first half results in February. The Nearmap share price is fetching $1.54 today.

South32 Ltd (ASX: S32)

Analysts at Macquarie have retained their outperform rating and lifted their price target on this mining giant’s shares to $5.00. According to the note, the broker is a fan of South32’s acquisition of an interest in the Sierra Gorda Copper Mine in Chile. Macquarie notes that this gives the company further exposure to the decarbonisation theme. Its analysts also expect the deal to boost the company’s earnings and have upgraded their estimates to reflect this. The South32 share price is trading at $4.03 on Thursday.

The post Brokers name 3 ASX shares to buy appeared first on The Motley Fool Australia.

More reading

• Why has the South32 (ASX:S32) share price surged another 14% in December?
• Analysts name 3 ‘must have’ ASX shares for buy and hold investors
• 3 ASX biotech shares rated as buys in 2022
• Top broker tips CSL (ASX:CSL) share price to climb to $340
• Top ASX shares to buy in 2022

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. and Nearmap Ltd. The Motley Fool Australia owns and has recommended Nearmap 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 wanting to invest in the tech sector for diversification, then exchange traded funds (ETFs) could help you achieve this.

But which ETFs should you look at? Here are two popular ETFs that could be worth considering:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The first tech ETF to look at is the BetaShares Asia Technology Tigers ETF. It gives investors exposure to ~50 of the largest technology and ecommerce companies that have their main area of business in Asia.

These companies, known as Tigers, include well-known players such as Alibaba, Baidu, Infosys, JD.com, Samsung, and Tencent Holdings. In addition, while they may be lesser known than the others, the likes of Kuaishou Technology, Meituan Dianping, and Pinduoduo are certainly not tiger cubs. These are companies that make many Australian tech companies look miniscule.

Pinduoduo, for example, is a US$68 billion e-commerce platform that offers a wide range of products from daily groceries to home appliances. The Pinduoduo platform connects distributors with consumers directly through an interactive shopping experience. This allows shoppers to team up to buy items in bulk at lower prices. It has an active customer base closing in on 1 billion.

It is worth highlighting that regulatory concerns in China have been weighing on the ETF. Though, this is being seen by many as a buying opportunity.

GFM Asset Management’s Tariq Dennison recently told CNBC: “If you ask me, newer regulations are more likely to entrench these companies and to give them wider moats because Tencent is very, very likely to be able to adapt to any of these new rules, to find new ways to make money. And they have lots and lots of consumers to serve in a common prosperity model.”

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

Another tech ETF to consider is the VanEck Vectors Video Gaming and eSports ETF. This ETF gives investors exposure to many of the largest companies involved in video game development, eSports, and gaming related hardware and software.

Among the companies you’ll be owning are game developers Activision Blizzard, Roblox, Take-Two, and Electronic Arts, and graphics processing unit (GPU) developer Nvidia. VanEck notes that the increasing popularity of video games and eSports means that these companies are well-placed to benefit.

One of the companies in the fund is Roblox. It is the game developer behind the eponymous Roblox online metaverse platform and game creation system. It has 50 million daily active users, which are generating significant recurring revenues for the company.

The post 2 exciting tech ETFs for ASX investors in 2022 appeared first on The Motley Fool Australia.

More reading

• Analysts name 3 ASX growth shares to buy right now
• 3 ETFs for smart ASX investors in 2022
• 2 top tech ETFs for 2022
• Why is the Betashares Asia Technology Tigers ETF (ASX:ASIA) struggling in December?
• 3 ETFs for ASX investors in 2022

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BetaShares Asia Technology Tigers ETF and VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. 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 broader S&P/ASX 200 Index (ASX: XJO) and All Ordinaries Index (ASX: XAO) may be returning 12% this year, but not all ASX shares are enjoying the party.

Two ASX shares have just hit 52-week lows today. Let’s take a look at why they are down on their luck.

Booktopia Group Ltd (ASX: BKG)

The Booktopia share price plunged to a 52-week low of $1.31 today despite no news out of the company. The company’s shares are trading at $1.33 at the time of writing, a 55.5% drop from their yearly high of $2.99 in August. They are now down almost 50% this year.

Investors have been selling Booktopia shares on the back of some tough news for the company. Earlier this month, the ACCC notified the company it would be taking it to the Federal Court. The claims relate to communications to customers with regards to returns and refunds.

Booktopia defended the claims in a statement to the market authorised by chairman Chris Beare on December 8. The company said:

At no time were these communications intended to exclude or limit Booktopia’s obligations under the Australian Consumer Law.

Another factor impacting the Booktopia share price could be an update from the company just before Christmas.

In a trading update to the market on December 23, the company advised it is expecting earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $4 to $4.5 million in the first half of the financial year. This is up to 50% less than the $8 million recorded in the previous year.

The company advised earnings were lower due to labour costs managing Sydney’s COVID-19 lockdowns. The ongoing threat of the COVID-19 Omicron variant in Australia could be continuing to impact investor confidence in this ASX share.

Openpay Group Ltd (ASX:OPY)

The Openpay share price hit a 52-week low on Thursday. In afternoon trade, the buy now, pay later (BNPL) company’s shares are trading at 74 cents after hitting the yearly low of 73 cents this morning.

In fact, the Openpay share price is now down nearly 78% from its 52-week high of $3.35 and about 68% this year.

The latest decline in this ASX share reflects a trend across the BNPL sector.

The share price of Afterpay Ltd (ASX: APT) is tumbling 2.7% today, while Zip Co Ltd (ASX: Z1P) has slumped 2.51%. Sezzle Inc‘s (ASX: SZL) stock is also trading 2.27% lower.

Looking at the trend in the US, the Affirm Holdings Inc (NASDAQ: AFRM) share price fell 3.43%, while Paypal Holdings Inc (NASDAQ: PYPL) slipped 0.07%.  

The post 2 ASX shares hitting 52-week lows appeared first on The Motley Fool Australia.

More reading

• Brokers name 3 ASX shares to buy today
• Why the Booktopia (ASX:BKG) share price just crashed 10% to a record low
• Openpay (ASX:OPY) share price sinks 6% in grim day for ASX BNPL shares
• What happened with the Booktopia (ASX:BKG) share price today?
• Analysts are tipping huge gains for these small cap ASX shares

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Booktopia Group Limited. 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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2021 was a brilliant year for many ASX lithium shares, but can the new year bring the same gusto for the sector?

Here’s what experts are predicting for the ‘white gold’ metal and the companies that work to produce it in 2022.

What 2022 could bring for lithium prices

Many experts expect the price of lithium to remain high through next year.

As my Foolish colleague, James Mickleboro, recently reported, Macquarie Group Ltd (ASX: MQG) analysts are bullish on the commodity’s price. And not only for the new year, but for the 3 following years as well.

It believes producers will be kept busy by demand from electric vehicle manufactures.

That sentiment is echoed by S&P Global Platts Analytics. It predicts demand for lithium will likely see production nearly triple by 2025, meaning the coming years could see a major boom in the sector.

However, for the next 12 months, it expects a demand deficient of around 5,000 megatons of lithium carbonate equivalent.

Additionally, as The Motley Fool Australia reported yesterday, mergers and acquisition activity in the lithium space might be about to ramp up. Particularly, as Chinese companies vie to get a slice of the limited lithium pie.

That means the ASX could see more acquisitions similar to Rio Tinto Limited‘s (ASX: RIO) recently announced $1.15 billion lithium mine acquisition.

So, which ASX lithium shares might be worth keeping an eye on in the new year?

ASX lithium stocks experts think could soar in 2022

Pilbara Minerals Ltd (ASX: PLS)

Brokers’ opinions on Pilbara Minerals are mixed, with Macquarie targeting it as a buy and Credit Suisse maintaining a bearish view.

The former has placed a $3.70 price target on the lithium producer’s share price, while the latter has slapped it with a $2.05 target.

At the time of writing, the Pilbara Minerals share price is $3.21.

Allkem Ltd (ASX: AKE)

Alkem is another broker favourite. It’s the entity resulting from the recent merger of Ococobre and Galaxy Resources.   

UBS is targeting $10.75 for the company’s shares, hitting it with a buy rating earlier this month.

Meanwhile, Macquarie has an outperform rating on the company and a price target of $13.60.

Right now, the Alkem share price is $10.45.

Sayona Mining Ltd (ASX: SYA)

Finally, Marcus Today has labelled Sayona Mining a “speculative buy”, stating it has potential.

Right now, investors can get their hands on the company’s stock for 13.5 cents apiece.

The post What’s the outlook for ASX lithium shares in 2022? appeared first on The Motley Fool Australia.

More reading

• Christmas highs: 3 ASX 200 shares hitting record highs today
• 3 obscure lithium ASX shares ready to pop in 2022
• 13% gain in a week: Alkem (ASX:AKE) share price sparks brokers’ interest
• Why Magnis, Pilbara Minerals, Syrah, and Whispir shares are storming higher
• Is this ASX sector gearing up for a year of M&A activity?

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

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The Shopping Cntrs Austrls Prprty Gp Re Ltd (ASX: SCP) share price is falling on Thursday afternoon. This comes as the retail property group shares are trading ex-dividend.

At the time of writing, the Shopping Centres Australasia share price is down 1.31% to $3.01 apiece. Despite the drop, it’s worth noting the company’s shares are up 7% in a month.

Why are Shopping Centres Australasia shares falling today? 

With the company’s half-year 2021 distribution recently announced, investors are eyeing Shopping Centres Australasia shares as they go ex-dividend today.

Typically, one business day before the record date, the ex-dividend date, is when investors must have purchased shares. If the investor does not buy Shopping Centres Australasia shares before this date, the dividend will go to the seller.

Historically, when a company reaches its ex-dividend day, its shares tend to fall in proportion to the dividend paid out. This is because investors tend to sell off the company’s shares after securing the dividend.

What does this mean for shareholders?

For those eligible for the Shopping Centres Australasia dividend, shareholders will receive a payment of 7.2 cents per share on 31 January 2022. The dividend is not franked, which means investors will miss out on the imputed tax credits.

Investors who elect for the dividend reinvestment plan (DRP) will see a number of shares added to their portfolio. This will be based on a volume-weighted average price over 10 business days up until the record date (18 January). The DRP discount rate that will be applied is 1%.

The last election date for shareholders to opt-in to the DRP is 4 January 2022.

Is Shopping Centres Australasia a buy?

Following the company’s financial scorecard earlier this month, American multinational investment bank Jefferies weighed in on the Shopping Centres Australasia share price.

Its analysts upgraded the outlook to “buy” from “hold”, and raised the 12-month price target by 5.3% to $3.16.

Based on the current share price, this implies an upside of about 5% for investors.

Shopping Centres Australasia share price summary

Since the beginning of 2021, the Shopping Centres Australasia share price has gained 16% on the back of positive investor sentiment. The S&P/ASX 200 Real Estate Index (ASX: XRE) is up around 17% over the same timeframe.

Shopping Centres Australasia commands a market capitalisation of roughly $3.33 billion, with approximately 1.11 billion shares outstanding.

The post Shopping Centres Australasia (ASX:SCP) share price edges lower. Here’s why appeared first on The Motley Fool Australia.

More reading

• What’s happening with the Sandfire Resources (ASX:SFR) share price today?
• Here’s what this broker thinks of the CBA (ASX:CBA) share price
• Own Janus Henderson (ASX:JHG) shares? The CEO just made another sizeable transaction
• Christmas highs: 3 ASX 200 shares hitting record highs today
• Is the Magellan (ASX:MFG) share price a beaten-up buy?

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 Shopping Centres Australasia Property Group. 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 Sandfire Resources Ltd (ASX: SFR) share price is rising today following an acquisition update.

The mining and exploration company announced this morning that relevant applications for its upcoming infrastructure acquisition have been approved. This places the transaction two months ahead of schedule.

At the time of writing, the Sandfire share price is up 1.06% at $6.66.

What did Sandfire announce?

The Sandfire Resources share price is on the move after the company announced its proposed acquisition of MATSA has taken a step closer to completion. MATSA is an underground copper location in the Iberian Pyrite Belt of Spain.

According to Sandfire, the site is a large-scale, high-quality, low-cost, long-life development that will establish the company as a leading copper-focused producer.

As such, the resources attached from the MATSA site will become paramount to the miner’s global operations over the next decade.

Sandfire initially announced the takeover back in September, with an agreed transaction of US$1.8 million.

This transaction is now unconditional and will proceed toward completion toward the end of next month.

Karl Simich, managing director and CEO of Sandfire, said the clearance of the relevant approvals in such a short turnaround was a “fantastic result”, and would put the handover two months ahead of schedule.

The acquisition has been funded by a combination of debt, exisiting cash reserves, and equity, the company said.

Sandfire Resources share price snapshot

The Sandfire Resources share price has increased by 31% this year.

The company experienced a two-year price high back in April, following a quarterly update detailing high production and solid cost estimates.

The company has a market capitalisation of over $2 billion and a price-to-earnings ratio (P/E) of 6.88.

The post What’s happening with the Sandfire Resources (ASX:SFR) share price today? appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: CBA rises, Sandfire’s MATSA update
• Why Australian Clinical Labs, Magellan, Sandfire, and Telix shares are rising

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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Despite a recent blip, the Commonwealth Bank of Australia (ASX: CBA) share price has been a very strong performer in 2021.

Since the start of the year, Australia’s largest bank has seen its shares rise 22%. This is almost double the return of the S&P/ASX 200 Index (ASX: XJO).

Can the CBA share price keep rising?

According to the team at Morgans, its analysts don’t believe the CBA share price will go higher from here. In fact, the broker is predicting a sharp decline over the next 12 months.

A recent note reveals that its analysts have a reduce rating and $73.00 price target on the bank’s shares.

Based on the current CBA share price of $102.29, this implies potential downside of 29% over the next 12 months.

Why is the broker so bearish?

Morgans is bearish on CBA due largely to the premium its shares trade at in comparison to the rest of the big four banks. While this has been justified in the past, the broker doesn’t believe this is the case today following its first quarter update.

It said: “Commonwealth Bank’s 1Q22 unaudited cash NPAT is ~9% lower than our expectation largely due to the net interest margin (NIM) being significantly lower than our expectation, non-interest income softness and higher-than-expected operating expenses.”

“Our view is that CBA’s stock has been trading on a significant premium relative to peers, and we believe this premium remains significant despite CBA’s share price fall in the last trading session. In our view, the 1Q22 trading update emphasises that the current extent of the premium is unjustified,” Morgans added.

In addition, the broker has reduced its earnings forecasts to reflect the tough trading conditions the bank is facing.

Its analysts explained: “We have reduced our cash EPS forecasts by 10.7%/9.4%/9.2% for FY22F/FY23F/FY24F respectively largely due to lower net interest income, lower non-interest income and higher operating expenses.”

All in all, the broker believes investors should focus on other options in the banking sector and give the CBA share price a wide berth.

The post Here’s what this broker thinks of the CBA (ASX:CBA) share price appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: CBA rises, Sandfire’s MATSA update
• How does Westpac stack up against the CBA (ASX:CBA) share price?
• ASX 200 (ASX:XJO) midday update: CBA and Westpac rise, Afterpay tumbles again
• 2 ASX 200 dividend shares named as buys
• Leading brokers name 3 ASX shares to sell

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

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The Janus Henderson Group CDI (ASX: JHG) share price is heading south on Thursday. This comes after the company reported its CEO again offloaded a number of his shares through an on-market transaction.

At the time of writing, the fund manager’s shares are down 0.86% to $58.61. This means that over the past month alone, its shares have lost around 7%.

CEO continues to sell off his holdings

Last Thursday, Janus Henderson CEO Richard M Weil made an on-market transaction selling a portion of his shares.

In total, 100,000 shares were disposed of at an average price of $42.03 per share. The sale represented another line of transactions made by the CEO over the course of December.

Notably, Weil has offloaded more than 530,000 Janus Henderson shares in the past three weeks. This is valued at around $22.2 million across 7 separate transactions.

It appears the constant selling has spooked investors, sending the Janus Henderson share price on a decline. Last month, the company’s shares hit an all-time high of $66.31.

While no reason was given as to why the CEO sold his shares, Weil’s portfolio currently holds 423,422 ordinary shares in the company. This still makes him the largest individual shareholder by a sizeable amount.

Interestingly, a broker note from Bell Potter last week raised its 12-month price target for Janus Henderson shares. Analysts at the leading Australian stockbroking firm lifted their outlook by 35% to $71.00.

Based on the current share price, this implies an upside of about 21% for investors.

Janus Henderson share price summary

Since the start of the year, the Janus Henderson share price has posted a gain of 38%.

Janus Henderson commands a market capitalisation of approximately $1.59 billion, with 27.22 million shares on issue.

The post Own Janus Henderson (ASX:JHG) shares? The CEO just made another sizeable transaction appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday

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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The benchmark S&P/ASX 200 Index (ASX: XJO) is rangebound today and is currently in the green at 7,510.0 points. Several majors in the broad index have had a rough time lately, whereas others have flourished to close out the year.

Nonetheless the broad market has rallied off a low in December and looks set to finish the trading year on a high after relentlessly setting a series of new highs in 2021.

With this momentum in situ, these 3 ASX 200 shares each started the day well on Thursday, nudging past their record highs.

Allkem Ltd (ASX: AKE)

Shares in Allkem are inching higher today and are less than 1% in the green at $10.44 apiece. Although in the past week, investors have thrust its share price northwards following a feasibility study and Maiden Ore Reserve release for its James Bay Lithium Project in Canada.

In the announcement, Allkem says the study and ore results afford an approximate 2.5x increase in Net Present Value (NPV) on the site from the preliminary economic assessment that was released in March 2021. This bodes in well for the company’s valuation.

Construction is now planned to commence towards the end of 2022 with commissioning in Q1 2024, after certain criteria are satisfied.

Allkem says the move positions the company in markets “located in proximity to high-growth electric vehicle markets in North America and Europe”.

Today’s gain builds on an extended run into the green that Allkem shares have been on since early December, having bounced off a low of $8.51 to start the month.

UBS, Macquarie and JP Morgan reckon that Allkem is a buy right now, each valuing the company at $10.75, $13.60 and $12 per share respectively.

Macquarie Group Ltd (ASX: MQG)

Shares in investment banking giant Macquarie eclipsed the illustrious $200 per share mark in 2021 and have continued the strength to trade at $206.85 at the time of writing.

Earlier in the session on Thursday, Macquarie shot past its previous record and established a new all-time high at $208.60 before retracing back down to its current levels.

Macquarie’s Commodities and Global Markets (GCM) division has already delivered a 60% year-on-year growth in net profit after tax (NPAT) contribution in the first half.

Further, both the firm and experts covering its share price are adamant Macquarie Investment Management (MIM) will benefit from the Waddell & Reed acquisition coming into the new year.

The vast majority of analysts covering the stock have it as a buy. JP Morgan reckons Macquarie is worth $214 whereas Morgan Stanley has the bank as a buy at a $245 price target.

Considering its fundamental this year and the earnings growth planned on the horizon, the market is bullish on Macquarie as well right now, helping carry its share price to new record highs.

Reece Ltd (ASX: REH)

Shares in plumbing and refrigeration supplies giant Reece also cruised past their record high today, reaching an intraday high of $27.48 in early trading.

It’s been fairly quiet out of Reece’s camp lately, with its last major update confirming it had completed a round of debt refinancing.

Prior to this however, the company released its first-quarter sales update for FY22 in October. This gave investors something to bite their teeth into, seeing as sales revenue grew to $1.77 billion for Q1, a 13.2% increase on the year prior. The bolus of growth was underscored by ANZ and United States sales expansion of 9% and 18.6% respectively. 

Despite unpredictable “inflation dynamics, supply chain disruptions together with tight labour markets and wage inflation” Reece expects it will “accelerate in Q2 and persist for the balance of FY22”.

With this in mind, the company envisions 1H FY22 EBITDA to fall in a range of 8% to 11% higher than the previous year’s 1H result of $349 million.

The market likes these projections from the plumbing giant, and investors have piled into Reece thereby shooting its share price up by over $9 per share since it released its first half results.

With the ASX about to fulfil its penultimate session for 2021 today, these 3 ASX 200 shares have closed out the year on a high.

The post Christmas highs: 3 ASX 200 shares hitting record highs today appeared first on The Motley Fool Australia.

More reading

• 13% gain in a week: Alkem (ASX:AKE) share price sparks brokers’ interest
• Why did the AVZ (ASX:AVZ) share price jump 11% to a record high today?
• Is the ANZ (ASX:ANZ) share price a buy with its 8% dividend yield?
• Could 2022 be a good year for the BHP (ASX:BHP) share price?
• 2 excellent ASX growth shares offering big potential returns in 2022

The author has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Magellan Financial Group Ltd (ASX: MFG) share price has fallen around 36% over the last month and 60% in the past year.

Not only has Magellan gone through a downwards re-rating of what earnings multiple investors were willing to pay for the shares, but it has also lost its largest client.

Magellan share price dives after St James’ Place loss

Earlier in December, the funds management business was notified that St James’ Place – a major wealth management business – had terminated its mandate with Magellan.

The mandate, which was a separate account and not an investment in any of Magellan’s retail global funds, represented approximately 12% of the current annual revenue and is anticipated to have an approximate 6% impact on the revenue for the year ended 30 June 2022.

Due to the timing of the mandate termination, the impact is immaterial for the first half of FY22.

What does this mean?

Not only will it mean a sizeable chunk of revenue is lost from its annualised total, but profit will also be significantly impacted. Magellan benefits from operating leverage when funds under management (FUM) grows, but the opposite can happen if FUM is lost.

Brokers think that the business may be facing more difficulties in the shorter-term. Magellan’s funds continue to show underperformance against benchmarks in recent times, which could mean that the net flows may be impacted.

Management fees could also come under further pressure as investors question whether the fund manager is worth the fees that are being paid for its performance.

Morgans recently cut its price target for Magellan to $24.15, so it’s expecting a bit of a recovery over the next 12 months.

Is the Magellan share price a potential opportunity?

A few brokers actually still think there is further downside for Magellan shares.

For example, UBS rates Magellan as a sell with a price target of just $17 – that’s around 20% lower. The broker is concerned about outflows in the coming years and potential fee reductions.

Morgan Stanley has similar thoughts to UBS, with a sell/underweight rating and a price target of $17.50.

Looking at those pessimistic ratings, let’s see what the valuation is for the projected earnings in FY23. UBS reckons the Magellan share price is valued at 12x FY23’s estimated earnings. Morgan Stanley thinks that Magellan is valued at 11x FY23’s estimated earnings.

Whilst analysts are focused on the potential profit decline from the global equity strategy, there are other areas that Magellan is bullish on over the longer-term such as infrastructure, Australian shares and ESG investing. It also thinks that its investments of FinClear, Guzman y Gomez and Barrenjoey have attractive futures.

The post Is the Magellan (ASX:MFG) share price a beaten-up buy? appeared first on The Motley Fool Australia.

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• Leading brokers name 3 ASX shares to sell
• Top brokers name 3 ASX shares to sell next week
• These were the worst performing ASX 200 shares last week
• The Magellan (ASX:MFG) share price is now up 11% in 3 days. What’s going on?
• Here are the top 10 ASX shares today

Motley Fool contributor Tristan Harrison owns Magellan Financial Group. 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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