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On Friday the S&P/ASX 200 Index (ASX: XJO) finished the week on a mildly positive note. The benchmark index rose slightly to 7,415.5 points.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to rise

The Australian share market looks set to have a positive start to the week. According to the latest SPI futures, the ASX 200 is expected to open the day 30 points or 0.4% higher this morning. This is despite a mixed ended to the week on Wall Street, which saw the Dow Jones rise 0.2%, the S&P 500 fall 0.1%, and the Nasdaq drop 0.8%.

Oil prices rise

Energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could have a solid start to the week after oil prices pushed higher on Friday night. According to Bloomberg, the WTI crude oil price is up 1.5% to US$83.76 a barrel and the Brent crude oil price has risen 1.1% to US$85.53 a barrel. Prices rose amid tightening US supply.

Elders named as a buy

The Elders Ltd (ASX: ELD) share price could be great value according to analysts at Goldman Sachs. This morning the broker put a conviction buy rating and $15.65 price target on the agribusiness company. This implies potential upside of ~37%. Goldman believes it is a compelling growth opportunity underpinned by strong fundamentals.

Gold price rises

Gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could start the week strongly after the gold price stormed higher on Friday night. According to CNBC, the spot gold price rose 0.8% to US$1,796.30 an ounce. A softening US dollar boosted the price of the precious metal.

Iron ore price rebounds

BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) shares could rise today after the spot iron ore price pushed higher on Friday night. According to Metal Bulletin, the benchmark iron ore price rose 2.2% to US$119.52 a tonne. The low grade iron ore price climbed 3.7%, which will be good news for Fortescue shareholders.

The post 5 things to watch on the ASX 200 on Monday appeared first on The Motley Fool Australia.

More reading

• Can the Northern Star (ASX:NST) share price hit $13 by Christmas?
• The Woodside (ASX:WPL) share price fell 8% this week. But there is some good news
• Top brokers name 3 ASX shares to buy next week
• These were the best performing ASX 200 shares last week
• Can the Newcrest (ASX:NCM) share price hit $32 by the end of 2021?

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 Elders 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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Might it be possible that the Northern Star Resources Ltd (ASX: NST) share price could rise to $13 by Christmas?

Brokers regularly update their price targets for businesses. That is where a broker believes that the share price of the company will be in 12 months.

Recently, some brokers updated their price targets for the Northern Star share price.

Price target on the Northern Star share price

The brokers at Macquarie Group Ltd (ASX: MQG) have a price target on the business of $13. That suggests that the analysts believe that the gold miner’s shares could rise by around 37% over the next year. That’s not necessarily where the broker thinks the Northern Star share price will be at Christmas, though it does indicate the direction Macquarie thinks that Northern Star shares are headed.

This current price target was decided in reaction to the gold miner’s latest quarterly update.

FY22 first quarter

Northern Star said in the first three months of FY22, to September 2021, it said that the gold sold total was 386,160 ounces at an all-in sustaining cost (AISC) of A$1,594 per ounce (or US$1,180 in US dollar terms).

The company broke this down into three separate areas.

Kalgoorlie saw 232,324 ounces of gold sold at an all-in sustaining cost of A$1,533 per ounce.

Yandal saw 109,844 ounces of gold sold at an all-in sustaining cost of A$1,345 per announce.

Pogo saw 43,992 ounces of gold sold at an all-in sustaining cost of US$1,751 per ounce.

The group all-in cost (AIC) was A$1,933 per ounce.

Northern Star said that, as it had previously told the market, the planned FY22 production is weighted towards the second half, driven by increasing grades at Yandal and increasing mining rates at Pogo. The AISC is expected to fall over the year.

Guidance for the whole financial year can have an impact on the Northern Star share price. The large gold miner said that it’s on track to meet FY22 guidance of between 1.55 million to 1.65 million ounces at an AISC of between A$1,475 per ounce to A$1,575 per ounce.

In terms of the financial numbers, the three months to September saw an average realised price of A$2,345 per ounce, leading to sales revenue of A$848 million. This helped the business generate cash earnings of between A$165 million to A$175 million.

At the end of September 2021, it had cash and bullion of A$756 million after paying A$110 million in dividends and investing A$123 million in net growth capital and exploration.

The corporate bank debt reduced to A$262 million, using funds that were received from the Kundana asset sale (for $400 million).

Its hedge book was 839,819 ounces at an average price of A$2,347 per ounce at 30 September 2021.

In terms of the growth projects, it said that it’s progressing in line with its strategy to become a 2 million ounces per year producer by FY26, Kalgoorlie Consolidated Gold Mines (KCGM) open put development and Thunderbox mill expansion in Yandal.

Macquarie thinks that Pogo could be a driver for Northern Star.

Northern Star share price valuation

On Macquarie’s numbers, Northern Star shares are valued at 58x FY23’s estimated earnings with a grossed-up dividend yield of 3.3%.

The post Can the Northern Star (ASX:NST) share price hit $13 by Christmas? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Northern Star (ASX:NST) share price wanes as quarterly production falls
• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 on Monday
• Could renewed inflation fears rekindle these ASX 200 gold shares?

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 owns shares of and 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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Last week was a reasonably disappointing one for the CSL Limited (ASX: CSL) share price.

Despite releasing its research and development (R&D) update for 2021, the biotherapeutics company’s shares ended the period with a weekly decline of 0.5%.

What was the reaction to the R&D update?

The team at Goldman Sachs looked through the update and have given their verdict.

According to the note, one of the products under development that the broker is most positive on is CSL112. This is a potential treatment for early recurrent cardiovascular events following an acute myocardial infarction.

Goldman commented: “Across the pipeline, we believe CSL112 represents the most material opportunity, and remains the primary focus amongst the investor base.”

It notes that CSL112’s final phase three interim analysis is now targeted before July 2022 instead of September/October 2022.

What else?

Goldman also spoke positively about its EtranaDez product candidate.

It said: “EtranaDez offers potential for functional cure in hemophilia B. In May-2021, CSL acquired global rights from UniQure to EtranaDez, a first-in-class and potentially best-in-class gene therapy targeting hemophilia B.”

The broker has previously spoken about how this product could be a significant contributor to revenue in the future if all goes to plan.

Is the CSL share price good value?

Goldman concluded: “Based on today’s update, we update our pipeline valuation framework, primarily reflecting: 1) the incorporation of EtranaDez for the first time (leading heme B gene therapy); 2) a modest increase in PoS for CSL112 (from 10% to 15%), reflective of successful navigation of second futility analysis.”

“However, we also factor several clinical delays across the pipeline (largely reflective of challenges associated with Covid-19). Incorporating these changes, we upgrade our risk-adjusted pipeline valuation to A$57/share, from A$44 (non risk-adjusted: A$205, from A$200).”

This ultimately led to the broker retaining its neutral rating but lifting its price target on the CSL share price to $305.00.

Based on the current CSL share price of $295.86, this suggests there is just modest upside of 3.1% for investors at present.

The post What Goldman Sachs is saying about the CSL (ASX:CSL) share price after its R&D update appeared first on The Motley Fool Australia.

More reading

• The CSL (ASX:CSL) share price is up just 3% so far in 2021. Here’s why
• ASX 200 (ASX:XJO) midday update: BHP’s Q1 update, CSL’S R&D update
• CSL (ASX:CSL) share price trades flat despite annual R&D update
• 5 things to watch on the ASX 200 on Tuesday
• Own CSL (ASX:CSL) shares? Here’s why the government won’t be extending the biotech’s AstraZeneca vaccine contract

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 shares of and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Wesfarmers Ltd (ASX: WES) share price has been a solid performer this year.

Since the start of the year, the conglomerate’s shares have risen just over 11% to $57.31.

Where next for the Wesfarmers share price?

Unfortunately for shareholders, one leading broker believes the Wesfarmers share price is overvalued now.

According to a note out of Citi, its analysts have retained their sell rating and $49.00 price target on the company’s shares.

Based on the current Wesfarmers share price, this implies potential downside of 14.5% over the next 12 months.

What did the broker say?

Citi notes that the company released an update at its annual general meeting last week.

In response to the release, the broker saw no reason to change its rating on the Wesfarmers share price, believing it is overvalued at the current level.

Citi commented: “While no quantitative trading update has been provided, AGM commentary on how the businesses are performing was similar to that provided at the FY21 result and therefore there were no real surprises.”

“Online is naturally lifting to partially offset the loss of sales from store closures. Bunnings has also seen strong commercial sales, but combined with online has not fully offset the impact of store closures. Kmart and Target were most impacted by store closures while Officeworks continues to benefit from customer demand for technology and furniture, though is margins dilutive.”

“The non-retail businesses appear to be performing well with Wesfarmers noting strong demand for ammonium nitrate and favourable LPG pricing. We make no changes to our earnings estimates and maintain our Sell rating on the basis of valuation with a $49.00 target price,” the broker concluded.

The post Why Citi has a sell rating on the Wesfarmers (ASX:WES) share price appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to sell next week
• Own Wesfarmers shares? Here’s why the company is shifting with the times
• 5 things to watch on the ASX 200 on Thursday
• Here’s why the Wesfarmers (ASX:WES) share price is down 4% in a month
• What’s up with the Wesfarmers (ASX:WES) share price 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. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of 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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The AMP Ltd (ASX: AMP) share price was on form last week and pushed 3% higher following its quarterly update.

This means the financial services company’s shares are now up 21% since the time last month.

Can the AMP share price keep rising?

One leading broker has been looking at the company’s third quarter update and given its verdict on the AMP share price.

According to a note out of Citi last week, its analysts have retained their high risk neutral rating and $1.25 price target.

Based on the current AMP share price of $1.17, this implies potential upside 6.8% for investors. Or 11% including Citi’s FY 2022 dividend estimate of 5 cents per share.

What did the broker say?

Citi notes that the company’s third quarter update was a little mixed.

It commented: “Overall AMP’s 3Q cashflows are a little weaker than we expected with a modest deterioration in flows for AWM removing the early release of super impact in pcp and sizeable outflows from AMP Capital, albeit a large proportion of this was previously flagged. North flows, however, rebounded. Bank loan growth was also a bit better than expected, while NZ also saw modest net outflows. Factoring this in sees very little change to our estimates, although we have also reassessed AWM’s likely margins etc, reducing our EPS by 4% in FY22E & 2% in FY23E.”

And while it sees value in the AMP share price, it isn’t enough for a change of rating due to high levels of uncertainty. Though, this could change after its investor day event next month.

Citi concluded: “AMP may be offering value but it remains too hard to tell currently with so many moving parts. We are, however, hopeful that the upcoming 30th Nov investor day may help to clarify some of these. In the meantime, we retain our Neutral/High Risk call and A$1.25 TP.”

The post What this broker thinks of the AMP (ASX:AMP) share price after its update appeared first on The Motley Fool Australia.

More reading

• Why AMP, Aristocrat, Brainchip, and Healius shares are racing higher
• AMP (ASX:AMP) share price gains 3% despite FUM falling by $7b
• Can the AMP (ASX:AMP) share price hit $1.25 by Christmas?
• Here’s what happened to the AMP (ASX:AMP) share price in the FY21 third quarter
• AMP (ASX:AMP) share price lifts amid new board appointments

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 Woodside Petroleum Limited (ASX: WPL) share price slid this week despite the company reporting increased quarterly revenue on Thursday.

While the week was a struggle for the oil and gas producer’s stock, its United States subsidiary had exciting news.

It’s decided to work with Bill Gates-backed renewable energy technology company Heliogen to create a commercial scale artificial intelligence (AI)-enabled concentrated solar energy system.

The Woodside Petroleum share price slumped 7.59% over the course of this week. It finished Friday’s session at $23.27, 2.8% lower than it ended Thursday’s trade.

For context, the S&P/ASX 200 Index (ASX: XJO) gained 0.7% over the same week. Meanwhile, the S&P/ASX 200 Energy Index (ASX: XEJ) fell 4.3%.

Let’s take a closer look at the partnership between Heliogen and Woodside.

Woodside share price falls despite Heliogen agreement

As the Woodside share price fell, Heliogen announced the companies will create a 5-megawatt demonstration facility for Heliogen’s “breakthrough technology” in California.

The solar technology aims to provide renewable power nearly 100% of the time.

The facility will use computer vision software to align an array of mirrors. Those mirrors will reflect sunlight into a target atop a solar tower. Therefore, it will be able to provide low-cost storage in the form of high-temperature thermal energy.

Customers of the technology can choose to add additional technology to their systems. Examples of such would be thermal energy storage systems, a turbine for power generation, and electrolysers for green hydrogen production.

Additionally, the companies have agreed to jointly market Heliogen’s technology in the United States and Australia.

Under the marketing agreement, the companies are considering building more renewable energy projects and, potentially, replicating the demonstration facility internationally.

They’re also talking about designing and selling industrial-scale, cost-competitive, integrated renewable energy and hydrogen solutions in the United States.

Excitingly, Woodside would take on the marketing rights for Australia.

What did management say?

Woodside’s CEO Meg O’Neill commented on the company’s collaboration with Heliogen. She said it demonstrated Woodside’s focus on developing innovative technologies for low-cost, lower-carbon energy:

Heliogen’s innovative technology could play a key supporting role in development of Woodside’s zero-carbon hydrogen and ammonia business, which would rely on access to abundant and reliable renewable power.

We are also excited about the marketing rights for Heliogen’s technology in Australia, where our abundant solar energy resources support application of this technology in remote power generation and other industrial processes.

Heliogen CEO and founder Bill Gross also commented:

Heliogen’s AI-enabled concentrated solar technology has the potential to transform heavy industry by turning sunlight into a zero-carbon source of heat, power and hydrogen that is nearly always available… As the energy sector is ripe for applications of green hydrogen fuels and decarbonisation strategies, Woodside is an ideal collaborator for our breakthrough solar technology, which will support the operational characteristics of heavy industry.

The Woodside share price is up less than 1% this year to date, but has climbed 25% over the past 12 months.

The post The Woodside (ASX:WPL) share price fell 8% this week. But there is some good news appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• ASX 200 energy shares take a breather, broker sees “lot of upside risk” for oil
• Woodside (ASX:WPL) share price dips despite quarterly revenue lift
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday

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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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

BHP Group Ltd (ASX: BHP)

According to a note out of Morgans, its analysts have upgraded this mining giant’s shares to an add rating with an improved price target of $46.05. The broker believes the recent weakness in the BHP share price could be a buying opportunity for investors. Particularly given how it feels the current share price implies an iron ore price almost half the current level. In addition, the broker expects a double-digit dividend yield in FY 2022 despite the iron ore price pullback this year. The BHP share price ended the week at $37.65.

NEXTDC Ltd (ASX: NXT)

A note out of Macquarie reveals that its analysts have retained their outperform rating and lifted their price target on this data centre operator’s shares to $16.10. Macquarie believes that the company has a big opportunity with edge data centres and sees them as a way to boost margins. In addition, the broker notes that with borders reopening, NEXTDC could start to focus on its overseas opportunities. The NEXTDC share price was fetching $11.80 at Friday’s close.

Transurban Group (ASX: TCL)

Analysts at Credit Suisse have retained their outperform rating and lifted their price target on this toll road operator’s shares to $15.15. According to the note, the broker was pleased with the company’s first quarter update. Although traffic volumes were down year on year, they were not down as much as it was expecting. Combined with an earlier than forecast reopening of Melbourne and Sydney, the broker has upgraded its earnings and dividends estimates meaningfully. In respect to the latter, Credit Suisse expects a dividend of 41.5 cents per share in FY 2022 before growing to 61.5 cents per share in FY 2023. The Transurban share price ended the week at $13.75.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

More reading

• Why is the BHP (ASX:BHP) share price slumping today?
• ASX 200 (ASX:XJO) midday update: BHP and Rio Tinto fall, Qantas higher
• 5 things to watch on the ASX 200 on Friday
• Transurban (ASX:TCL) share price slides as traffic volumes push lower
• Top broker upgrades BHP (ASX:BHP) share price to a buy rating

Motley Fool contributor James Mickleboro owns shares of NEXTDC 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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The National Australia Bank Ltd (ASX: NAB) share price was sluggish this week amid news more than 100 activist groups reportedly signed a letter to the bank and other investors in a controversial Canadian gas pipeline.

The letter was penned by leaders of the Wet’suwet’en nation.

It calls for investors to remove TC Energy‘s Coastal GasLink from their loan books, claiming the pipeline violates the United Nations Declaration on the Rights of Indigenous People.

According to BankTrack, NAB lent approximately $127 million to the Coastal GasLink in April 2020.

As of Friday’s close, the NAB share price is $28.86. That represents a dip of 0.1% over Friday’s session and a 0.7% gain for the week.

For context, the S&P/ASX 200 Index (ASX: XJO) also gained 0.7% over the week just been.

Let’s take a closer look at the controversies surrounding the 670-kilometre gas pipeline.

NAB faces calls to divest Coastal GasLink

The NAB share price ended the week in the green by the skin of its teeth. Meanwhile, activist groups are reportedly backing the Wet’suwet’en nation’s calls for financiers, including NAB, to divest the Coastal GasLink.

On Friday, The Age reported activist groups including Greenpeace, Friends of the Earth, Market Forces, and BankTrack have all signed the letter penned by the leaders of the Wet’suwet’en nation, stating:

We are responsible for decisions regarding our land, and the decision of TC Energy to construct the Coastal GasLink pipeline without our consent is an infringement of our title and rights…

We call on you to divest and withdraw investment in the Coastal GasLink pipeline immediately. Furthermore, continued investment in this project is in open violation of Wet’suwet’en, Canadian, and international law. In no way is Coastal GasLink a responsible, profitable, secure, or morally sound investment.

The letter states the Wet’suwet’en nation didn’t consent for the pipeline to be built on its land. It also said the pipeline will result in damage to archaeological heritage sites.

Finally, it claims the Coastal GasLink is a bad investment with a high chance of becoming a stranded asset:

We believe the financial case for… Coastal GasLink is weakening and the scant local economic benefits, particularly in the long term, are dwindling.

NAB share price snapshot

The activist activity likely didn’t affect the NAB share price last week. It managed to scrape in a gain of just 0.7% over the course of the week.

That leaves it with a year-to-date gain of 25%. It is also 47% higher than it was this time last year.

The post Own NAB (ASX:NAB) shares? Here’s how the bank upset activists this week appeared first on The Motley Fool Australia.

More reading

• Own Afterpay (ASX:APT) shares? Here’s how the big banks are honing in on the BNPL sector
• NAB (ASX:NAB) share price nudges 2-year, post-COVID high
• What is the outlook for the NAB (ASX:NAB) share price?
• Analysts rate these 2 ASX dividend shares as buys
• Legal risk just increased for the Westpac (ASX:WBC) share price

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that investors might want to hear about are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

A2 Milk Company Ltd (ASX: A2M)

According to a note out of Credit Suisse, its analysts have retained their underperform rating and $5.50 price target on this infant formula company’s shares. Credit Suisse feels that the market is mispricing A2 Milk’s shares. Its analysts highlight that the lofty multiples its shares trade on are normally reserved for growing companies in growth sectors. It doesn’t feel that A2 Milk and the maturing Chinese infant formula market tick these boxes. The A2 Milk share price ended the week at $6.89.

Megaport Ltd (ASX: MP1)

A note out of Ord Minnett reveals that its analysts have retained their sell rating and $15.00 price target on this network as a service provider’s shares. This follows the release of a first quarter update that was largely in line with the broker’s expectations. One thing that the broker appears concerned about is Megaport’s rising costs. It notes this is due to its sales and marketing investment and costs relating to the new Megaport Virtual Edge. In light of this, the broker isn’t in a rush to change its rating. The Megaport share price was fetching $17.55 at Friday’s close.

Wesfarmers Ltd (ASX: WES)

Analysts at Citi have retained their sell rating and $49.00 price target on this conglomerate’s shares. According to the note, Wesfarmers delivered an annual general meeting update that was in line with expectations. In light of this, the broker hasn’t seen any reason to change its rating and continues to believe that the company’s shares are overvalued at the current level. The Wesfarmers share price ended the week at $57.31.

The post Top brokers name 3 ASX shares to sell next week appeared first on The Motley Fool Australia.

More reading

• Brokers name 3 ASX shares to buy today
• Own Wesfarmers shares? Here’s why the company is shifting with the times
• Why A2 Milk, Eroad, Flight Centre, and Webjet shares are sinking
• Megaport (ASX:MP1) share price slides on record growth
• Top brokers name 3 ASX shares to sell 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 shares of and has recommended MEGAPORT FPO. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended A2 Milk and MEGAPORT 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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The S&P/ASX 200 Index (ASX: XJO) has given investors a fairly solid performance over the past month.

Since 24 September, the ASX 200 has returned roughly 1% in capital growth, rising from 7,342.6 points to the 7,415.5 points it closed at on Friday. One ASX 200 share that’s beaten this performance is the Woolworths Group Ltd (ASX: WOW) share price.

Over the same period, Woolworths shares have lifted from $39.29 apiece to Friday’s close of $40.29 per share. That’s a healthy rise of 2.55%, more than double the broader ASX 200. But before all of you Woolies shareholders pop the champagne, here’s a fact that might stick in the craw.

Not to be beaten by its arch-rival Woolies, the Coles Group Ltd (ASX: COL) share price has done one better. Coles shares are up an impressive 5.22% over the same period, going from $17.06 a share on 24 September to Friday’s close of $17.95. That’s double what Woolies shares have managed.

So why has Coles comprehensively outperformed its rival Woolworths?

Why has the Woolworths share price lost out to Coles?

Well, it’s not exactly clear. There hasn’t been much in the way of major news or announcements out of either company in the past month.

However, there have been a number of developments that might give us some hints.

Firstly, let’s talk about Coles’ CEO. Stephen Cain came out a fortnight ago and told investors that Coles was expecting “a record Christmas” in 2021. As my Fool colleague Tristan covered at the time, Cain stated that “there’s $100 billion extra sitting in people’s bank accounts. We expect a fair share of that to be spent on food and drink”.

There has been no such optimism coming out of Woolworths though, so perhaps investors have acted accordingly.

Another thing to note is the pointed opinions on Coles shares from expert investors. As my Fool colleague James covered earlier this month, broker Morgans is ultra-bullish on Coles shares right now, giving the supermarket giant a 12-month share price target of $19.80. That implies a future potential upside of 10.3% over the coming 12 months.

Experts take their share pick

In contrast, there is arguably less optimism for Woolies shares at their current level. We also recently covered brokers’ opinions on Woolworths, with my colleague noting that “most brokers don’t think Woolworths is a buy right now, with several price targets around the $40 mark”. One in particular, Credit Suisse, reckons Woolies shares could drop as low as $31 a share over the next 12 months. That would be a loss of more than 23%.

This divided expert opinion might have been weighing on investor minds over the past month or so.

At a purely fundamental basis, Woolworths shares are also more expensive than Coles right now. That’s just going off of the price-to-earnings (P/E) ratio metric. At the last pricing, Woolworths shares had a P/E ratio of 33.01, while the Coles share price only commands a P/E ratio of 23.84.

It might be a combination of all of these factors that have led to Coles shares outperforming Woolworths over the month just gone. At the last Woolworths share price, this company has a market capitalisation of $48.83 billion, and a dividend yield of 2.68%.

The post Why is the Woolworths (ASX:WOW) share price underperforming Coles lately? appeared first on The Motley Fool Australia.

More reading

• Is Coles (ASX:COL) a must-buy dividend share for income investors?
• Own Woolworths (ASX:WOW) shares? Here’s why the company is in the news
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Motley Fool contributor Sebastian Bowen 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 shares of and has recommended COLESGROUP DEF SET. 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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