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The Magellan Financial Group Ltd (ASX: MFG) share price is in focus today after the fund manager announced its quarterly funds under management (FUM) update.

Investors may notice that Magellan experienced FUM outflows during the three months to 30 September 2021.

Magellan’s FUM decline

The fund manager reported that its total FUM was $113.3 billion at the end of September 2021. This was a decline of around $4.7 billion from August 2021. It was also a decline of around $600 million from June 2021.

Magellan said that for the three months to September 2021, the fund manager experienced net outflows of $1.53 billion, which represented approximately 1.3% of average FUM over the quarter. This decline was made up of net retail outflows of $617 million and net institutional outflows of $910 million.

What happened?

The fund manager did try to explain what happened during the quarter. FUM changes can have a sizeable impact on investor thoughts on the Magellan share price.

Regarding the net institutional outflows, $1 billion of outflows were the result of three clients rebalancing their portfolios across global equities ($410 million), infrastructure equities ($410 million) and Australian equities ($180 million). Magellan looked to reassure investors by saying that all three clients were retained, each with a mandate of more than $2 billion with Magellan at 30 September 2021.

The fund manager also said that no institutional mandates were lost during the quarter and its global sustainable strategy secured its first two mandates during the quarter.

Turning to the retail outflows. Magellan explained that approximately 23% of net retail outflows related to redemptions from the Magellan High Conviction Trust after the decision to open the fund as an active exchange-traded fund (ETF). The Magellan High Conviction Trust had total FUM of approximately $889 million at 30 September 2021.

How has the Magellan share price performed recently?

Before the share price reaction today, over the last month the Magellan share price had fallen 22%. In the 2021 calendar year to date, it had dropped by 36%.

Since the released of the FY21 result, Magellan’s shares have declined by 34%.

Magellan reported that adjusted net profit before tax increased 3% to $587.7 million. However, including its share of the profits and losses of investments/associates (like Barrenjoey), adjusted net profit after tax declined 6%.

Including the $154.1 million of transaction costs relating to strategic initiatives (after tax), Magellan’s net profit after tax fell 33% to $265.2 million.

Looking at the underlying performance of the funds management business, average funds under management (FUM) grew 9% to $103.7 billion and the profit before tax and before performance fees rose 10% to $526.6 million.

Valuation

Using the Commsec earnings forecast, the Magellan share price is valued at 13x FY22’s estimated earnings at the pre-open price.

The post The Magellan (ASX:MFG) share price is in focus on $1.5 billion FUM outflow appeared first on The Motley Fool Australia.

More reading

• 2 ASX shares that could be buys in October 2021
• Own Magellan (ASX:MFG) shares? Here’s what you’re invested in
• Magellan (ASX:MFG) share price falls 2% after investor warning
• 2 ASX 200 blue chip shares that might be the best to buy
• The Magellan (ASX:MFG) share price just hit another 52-week low, down 17% in a month

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The Baby Bunting Group Ltd (ASX: BBN) share price could get a boost this morning on the back of a broker upgrade.

Shares in the baby products retailer slipped 1.6% to $5.43 yesterday when the S&P/ASX 200 Index (Index:^AXJO) fell 0.4%.

The drop in the Baby Bunting share price came after management provided an update at its annual general meeting.

Improving trends to lift Baby Bunting share price

While investors weren’t impressed, Morgans upgraded the shares to “add” from “hold”. The broker described the AGM update as an “upbeat assessment” of current sales and margin trends.

The ongoing COVID-19 delta lockdowns caused like-for-like (LFL) sales to dip 1.3% in the 14 weeks to 3 October. But that’s an improvement over the previous period and LFL sales would have jumped 4.7% if you excluded NSW and the ACT.

What’s more, online sales continued to grow strongly. Sales from this channel jumped 37.7% year-on-year even as it faced a tough comparable period when sales surged 126%.

Defying margins

But sales growth isn’t the only reason for Morgans’ bullish view on the Baby Bunting share price. The retailer’s margins are expanding at a time when cost pressures are rising.

“The gross profit margin was up 120 bp to 38.7% YTD. This was due to increased penetration of private label and exclusive products, sales mix and efficiencies in the supply chain,” said Morgans.

“We have also increased our LFL sales forecast slightly from 3.0% to 3.2%. This, combined with our higher gross margin assumptions, take our forecast NPAT up by 3.6% to $29.0m in FY22 and 3.8% to $36.1m in FY23.”

The increased forecasts prompted the broker to lift its 12-month price target on the Baby Bunting share price to $6.20 from $6 a share.

Other tailwinds lifting the Baby Bunting share price

There’s also room for Baby Bunting to grow. As the only national specialty maternity and baby goods retailer in Australia, it only has under 20% of the $2.5 billion domestic market.

Morgans believes it is well placed to take market share from non-specialist retailers, such as department stores.

There is also a new growth opportunity from New Zealand. The retailer will open its first stores across the ditch before the end of the year. If the offshore expansion is successful, Baby Bunting could use that as a springboard into other countries.

Not all good news

But Morgans warns that the Baby Bunting share price isn’t without risks despite these tailwinds.

“The company is busy on several fronts. Its transformation programme adds additional opex and capex,” said Morgans.

“Secondly, the launch of babybunting.co.nz appears to have been a success, but entering any new market brings risk and we will be following the sales data from the new stores in New Zealand very closely later this year.”

The post Why this broker just upgraded the Baby Bunting (ASX:BBN) share price to buy appeared first on The Motley Fool Australia.

More reading

• ASX futures point to rebound today after US stock market lifts
• Here’s what happened to the Wesfarmers (ASX:WES) share price in September
• 5 defensive ASX shares to guide you through the market correction
• 5 things to watch on the ASX 200 on Wednesday
• The RBA gives ASX 200 shares a slither of good news on a down day

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The Australian share market is expected to bounce back today, with ASX futures pointing higher. This follows the US stock market displaying a broad sea of green overnight. All three major US indexes climbed higher on Wall Street last night, with the S&P 500 increasing 1.05%.

At the time of writing, S&P/ASX 200 Index (ASX: XJO) futures are indicating a 0.79% jump to 7,283 points at the open.

US stock market overnight

After a disappointing session on Monday night, the US stock market regained some optimism to finish higher last night.

Taking a closer look at the indices, the tech-focused Nasdaq composite rose 1.25% as the sector performed strongly. Some of the standout companies included Netflix Inc (NASDAQ: NFLX), Microsoft Corporation (NASDAQ: MSFT), NVIDIA Corporation (NASDAQ: NVDA), rising 5.2%, 2%, and 3.6% respectively.

Interestingly, despite a cataclysmic outage across all of its social media platforms, shares in Facebook Inc (NASDAQ: FB) added 2.1% overnight.

Contemporaneously, the Dow Jones Industrial Average rallied 0.92% — reflecting the broad positive sentiment displayed by investors.

Furthermore, US-listed energy companies gained a boost as energy prices continue to surge. According to Market Index, crude oil lifted 0.22% to US$79.10 a barrel overnight, hitting a new 52-week high. In fact, The Wall Street Journal cites this as being the highest oil price since 31 October 2014. As a result, US-listed energy shares assisted in lifting the US stock market higher overnight.

What’s ahead for the ASX today?

Aussie investors will be anticipating a green day on the ASX today after a 0.44% fall yesterday. Namely, energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) will be in focus as the sector continues its seemingly unrelenting rise.

In other news, The A2 Milk Company Ltd (ASX: A2M) will no doubt be attracting attention today as it announces it will defend against the legal proceedings filed by Slater & Gordon Limited (ASX: SGH). The legal firm alleges that the infant formula company did not adequately account for impacts to its FY2021 guidance.

Finally, investors will be watching closely to see whether the ASX moves in lockstep with the US stock market today.

The post ASX futures point to rebound today after US stock market lifts appeared first on The Motley Fool Australia.

More reading

• Why this broker just upgraded the Baby Bunting (ASX:BBN) share price to buy
• Here’s what happened to the Wesfarmers (ASX:WES) share price in September
• 5 defensive ASX shares to guide you through the market correction
• 5 things to watch on the ASX 200 on Wednesday
• The RBA gives ASX 200 shares a slither of good news on a down day

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Mitchell Lawler owns shares of Facebook. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Facebook, Microsoft, Netflix, and Nvidia. The Motley Fool Australia has recommended A2 Milk, Facebook, Netflix, and Nvidia. 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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Shareholders of some ASX-listed oil producers can rejoice as oil prices hit multi-year highs today.

The value of the black liquid is soaring alongside demand as hopes oil producing countries might bump up supply have waned.

According to data from CBNC, the price of U.S. West Texas Intermediate oil is up 0.2% at US$79.11 a barrel. Meanwhile, the Brent crude oil price has gained 1.3% to reach US$82.56.

Both oil prices have gained more than 4% since Friday’s close.

What’s driving oil prices higher?

The major driver of oil prices this week is the Organisation of the Petroleum Exporting Countries, Russia, and their allies, known as OPEC+.

On Monday, OPEC+ announced it won’t be further increasing oil production despite rising global demand.

Increasing supply would, of course, ease demand and push back against rising prices.

OPEC+ previously committed to increasing oil production by 400,000 barrels per day each month until all oil withheld during the course of the pandemic is back on the market.

According to reports by Reuters, major oil customers, including India and the United States, had called for an increase in the amount of oil hitting the market.

But OPEC+ is reportedly concerned another wave of COVID-19 could see it oversupplying the market once more.

The news from the Organisation comes around 6 weeks after Hurricane Ida halted oil production in the Gulf of Mexico, putting a large dint in the United States’ oil supply chain.

These ASX shares are soaring alongside the price of oil

While rising oil prices spell trouble for some, it’s good news for ASX oil producers.

Shares in Woodside Petroleum Limited (ASX: WPL) are performing well this week so far, jumping 5.5%.

The Santos Ltd (ASX: STO) share price has also taken off this week, gaining 4% since Friday’s close.  

Finally, the Oil Search Ltd (ASX: OSH) share price is bringing up the rear of the major oil producers, gaining 3.7% so far this week.

The post What’s driving oil prices higher and which ASX shares are benefitting? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• These 3 ASX 200 shares are topping the volume charts this Tuesday
• Here’s why the Woodside (ASX:WPL) share price is climbing 3% today
• Oil Search (ASX:OSH) share price gains 18% in 14 days. Here’s why
• ASX 200 (ASX:XJO) midday update: Afterpay & Zip sink, energy shares rise

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 CSL Limited (ASX: CSL) share price took a dive late last month, after touching a year-to-date high of $312.99. While the global biotech didn’t release any market-sensitive news, investors appeared to be selling due to the “September effect”.

At yesterday’s market close, CSL shares closed 0.23% lower to $286.67. This puts them within sight of a 3-month low of $273.01.

What’s weighing down CSL shares?

The “September effect” refers to historically underperforming market returns that occur in the United States and other world economies. In fact, the September effect has seen the Dow Jones Industrial Average Index (DJX: .DJI) dip 0.7% on average from 1950 to 2020, while, since 1971, the Nasdaq Composite (NASDAQ: .IXIC) generally dips 0.6% around this time.

Whilst there is no single cause, analysts blame seasonal rebalancing, tax-loss harvesting by mutual funds, and market psychology.

In local markets, the S&P/ASX 200 Index (ASX: XJO) has sunk 3.65% in a month, at its lowest level since June. This has undoubtedly put pressure on the CSL share price, as investors pulled money out to limit potential further losses.

CSL previously noted in its full-year results that it sees FY22 as a transitional year. This reflects strong demand for its portfolio of therapies and vaccines, offset by plasma collection headwinds.

A number of brokers rated the company’s shares following CSL’s FY21 scorecard.

Multinational investment firm Goldman Sachs cut its price target by 1% to $302, while Morgans had a more bullish outlook. The latter raised its 12-month view by 7.7% to $324.40. Based on the current share price, this implies an upside of around 13% on Morgan’s assessment.

CSL share price summary

When looking from this time last year, the CSL share price has moved in circles, registering nil gains. The same can be said for 2021 year to date, where the company has failed to live up to its traditional expectations.

CSL commands a market capitalisation of $130.62 billion, making it the second-largest company on the ASX.

The post Why did the CSL (ASX:CSL) share price have such a lousy month in September? appeared first on The Motley Fool Australia.

More reading

• 5 defensive ASX shares to guide you through the market correction
• Is the CSL (ASX:CSL) share price a buy today?
• It’s been a rollercoaster for the CSL (ASX:CSL) share price over the last 6 months
• 2 beaten-up ASX shares now ready to rally: expert
• The CSL (ASX:CSL) share price is down 8% this week. Is it a bargain?

Motley Fool contributor Aaron Teboneras owns shares of CSL Ltd. 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 Fortescue Metals Group Ltd (ASX: FMG) share price retested September lows on Tuesday, briefly hitting a 16-month low of $13.97.

Iron ore has cratered amid pressures from all angles. From a demand perspective, factors like China’s energy shortage, Evergrande’s debt crisis and a reduction of steel output have dampened demand. While on the supply side, global iron ore production is forecast to accelerate in the coming years.

With the Fortescue share price going down as fast as it went up, what should investors expect next from iron ore?

Office of the Chief Economist: What’s next for iron ore?

The Australian government’s commodity forecaster, the Office of the Chief Economist (OCE) provides quarterly updates, forecasting the value, volume and price of Australia’s major resources and energy commodity exports.

Its latest September quarterly report was released this week.

The report cited China’s softening demand for steel triggering major falls in the price of iron ore.

This was, in part, due to the seasonality of China’s demand for steel. Demand is typically stronger in the first half of each year as spring construction gets underway. Steel output tends to plateau from around May onwards, coinciding with the start of the rainy seasons.

However, the report observed the seasonal fall in production in 2021 was far greater than in recent years.

China’s fading infrastructure investment, efforts to deleverage the significant levels of debt in its economy and weak construction sector greatly exacerbated the fall in demand.

Adding to iron ore woes was China’s commitment to curbing steel production from the September quarter as part of its goal to lower national steel output in 2021.

China’ steel output accelerated 12% year-on-year in the first six months to June, meaning a significant decline was needed in the second half in order to meet its targets.

The report said that domestic demand for steel has eased in recent months but now “appear[s] to be taking greater effect at a national level”.

It warned that these effects will persist in the second half of the year following “mandated nationwide steel production cuts from June, and local enforcement of this measure”.

As such, the OCE forecasts that these policies are expected to “have an ongoing dampening effect” on iron ore demand and prices through to 2022.

Supply factors could also work against iron ore prices after the OCE flagged that the world’s largest iron ore producer, Brazil’s Vale, is “slowly returning to output levels last seen prior to the January 2019 Brumadinho tailings dam collapse”.

Furthermore, Australian export volumes are forecast to rise in the second half of 2021.

The OCE forecasts iron ore to average around US$150 a tonne in 2021 before falling to below US$100 a tonne in 2022.

Fortescue share price snapshot

The Fortescue share price is deep in the red for 2021, down 42% year-to-date.

At their highest point in the last 12 months, Fortescue shares were up around 53%. These gains have now disappeared with the share price down 15% since October last year.

The post Fortescue (ASX:FMG) share price at 16 month lows. What’s next for iron ore? appeared first on The Motley Fool Australia.

More reading

• Fortescue (ASX:FMG) share price slides to fresh year-to-date low
• Why did the Fortescue (ASX:FMG) share price have such a lousy month in September?
• These were the 5 worst performing ASX shares in September
• Top brokers name 3 ASX shares to sell next week
• Why the Fortescue (ASX:FMG) share price was sold off in September

Motley Fool contributor Kerry Sun 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 Wesfarmers Ltd (ASX: WES) share price had… an interesting September. Not that that was anything different to what the broader S&P/ASX 200 Index (ASX: XJO) experienced over the month that was. The ASX 200 ended up losing roughly 2.6% of its value over September.

But how did Wesfarmers do? After all, Wesfarmers is one of the bluest ASX 200 blue chips on the markets and is a major constituent of the ASX 200 itself.

So the Wesfarmers share price started the month off at $59.95 a share. It ended September at the price of $55.75. That means Wesfarmers shares went backwards by exactly 7% over the month.

That’s a pretty large number for one month’s efforts. Especially if you consider it’s a loss almost 3 times greater than the ASX 200’s. So what happened here?

September rains on ASX 200 parade

Well, it’s worth pointing out that Wesfarmers went ex-dividend for its upcoming final dividend payment on 1 September. Wesfarmers will be shelling out a final dividned of 90 cents per share, fully franked, on 8 October. When the company traded ex-dividend on 1 September, it gave the Wesfarmers share price more than just a pinch and a punch.

As we covered at the time, this initially sent Wesfarmers shares down as much as 3%. This is quite normal for a share trading ex-dividend with the value of the dividend leaving the share price as new investors aren’t entitled to the payout. Even so, it still contributed to Wesfarmers’ poor performance over the month.

Another factor that could have turned investors off Wesfarmers is the long-running battle to takeover Australian Pharmaceutical Industries Ltd (ASX: API). API is the company behind the Priceline chain of pharmacy stores.

Wesfarmers has lobbed more than one bid for API. Its most recent offer came in mid-September when the company offered up $1.55 for every API share on the market. It’s previous offer was valued at $1.38.

However, we learned last month that Sigma Healthcare Ltd (ASX: SIG) had also thrown its hat into the ring, putting up an offer worth $1.57 a share. As it stands today, there is no sign who will end up winning the bidding war. Although Wesfarmers has yet to top the offer Sigma has on the table. Perhaps this dampened investor enthusiasm for Wesfarmers shares in the back half of September.

About the Wesfarmers share price

Although September was a tough month for Wesfarmers, the picture looks more pleasing if we zoom out a little. The company is still up 6.25% year to date in 2021 so far and is also up by close to 22% over the past year.

At yesterday’s closing Wesfarmers share price, the company has a market capitalisation of $62.11 billion, a price-to-earnings (P/E) ratio of 26.06 and a dividend yield of 3.25%.

The post Here’s what happened to the Wesfarmers (ASX:WES) share price in September appeared first on The Motley Fool Australia.

More reading

• 5 defensive ASX shares to guide you through the market correction
• 5 things to watch on the ASX 200 on Wednesday
• The RBA gives ASX 200 shares a slither of good news on a down day
• These 3 ASX 200 shares are topping the volume charts this Tuesday
• How has the AMP (ASX:AMP) share price beaten the market over the past week?

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 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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If you’re looking for blue chip shares to buy, then the current Coles Group Ltd (ASX: COL) share price could make this supermarket giant one to consider right now.

Is the Coles share price good value?

A recent note out of Morgans reveals that its analysts believe the Coles share price is in the buy zone at the current level.

According to the note, the broker currently has an add rating and $19.80 price target on the company’s shares.

Based on the current Coles share price of $16.94, this implies potential upside of 17% over the next 12 months before dividends.

In respect to dividends, Morgans has pencilled in a fully franked 61 cents per share dividend in FY 2022. This represents a 3.6% dividend yield, which increases the total potential return on offer to over 20%.

Why is Morgans bullish?

Morgans was pleased with the company’s performance in FY 2021, noting that its earnings came in ahead of its forecasts.

It said: “FY21 EBIT was up 6% to A$1,873m (2% above Morgans and in line with Bloomberg consensus) and underlying NPAT rose 3% to A$1,005m (2% above Morgans and in line with Bloomberg consensus).”

Morgans was pleased with this and also the company’ healthy balance sheet. The broker believes the latter provides Coles with plenty of scope “to pursue its medium-term investment plans (data, eCommerce, technology, automation, range, stores and sustainability) while maintaining the group’s target dividend payout ratio of 80-90%.”

Overall, its analysts believe the Coles share price is trading at a fair level and offers an attractive yield.

Morgans concluded: “COL is a defensive business with strong market positions and a healthy balance sheet. Trading on 24.6x FY22F PE and 3.3% yield we continue to see the stock as offering good value and maintain our Add rating.”

The post Why this broker sees 17% upside for the Coles (ASX:COL) share price appeared first on The Motley Fool Australia.

More reading

• 2 highly rated ASX dividend shares to buy
• 5 things to watch on the ASX 200 on Tuesday
• September hasn’t been a great month so far for the Coles (ASX:COL) share price
• Woolworths (ASX:WOW) and Coles (ASX:COL) could face a margin shock
• 2 growing ASX dividend shares named as buys

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 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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The Bank of Queensland Limited (ASX: BOQ) share price has been a strong performer in 2021.

Since the start of the year, the regional bank’s shares are up 26%.

Where next for the Bank of Queensland share price?

The good news for shareholders is that one leading broker believes the Bank of Queensland share price can still go higher from here.

According to a note out of Goldman Sachs, it has retained its buy rating and $10.09 price target on the bank’s shares.

Based on the current Bank of Queensland share price of $9.50, this implies potential upside of 6.2%.

In addition, Goldman is forecasting a fully franked dividend per share of 45 cents in FY 2022. If you add this into the equation, the total potential return on offer increases to almost 11%.

What did the broker say?

Bank of Queensland is due to release its full year results next week and Goldman is expecting strong earnings growth.

The broker is forecasting full year cash earnings of $406 million. This will be an increase of 80% year on year.

A key driver of this growth will be its above system lending growth and a steady recovery in business lending according to Goldman.

It commented: “For 2H21, BOQ expected to achieve with a steady recovery in business lending through 2H21. (GSe housing +2.8% vs. system (ex-ME Bank), business -1%). We will be keen to hear management commentary around the sustainability of its volumes growth and whether this can be achieved with a reasonable NIM outcome. We note that the recent month’s APRA data indicates 4 straight months of improved momentum (tracking at 13.3% on a 3m ann. basis) and we remind investors that at its 1H21 result, BOQ guided to 2H21 NIM (ex-ME Bank) to be flat hoh.”

Looking ahead, the broker expects the company’s cash earnings growth to continue. It has pencilled in cash earnings of $467 million. This will be an increase of 15% and includes the benefits of the recent acquisition of ME Bank.

All in all, the broker appears to believe this makes the Bank of Queensland share price good value at the current level.

The post Top broker tips Bank of Queensland (ASX:BOQ) share price as a buy appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• If you invested $1,000 in Bank of Queensland (ASX:BOQ) shares a decade ago, here’s what it would be worth now
• Why Bank of Queensland (ASX:BOQ) shares are up 66% in the past 12 months
• The ASX 200 banks may be in danger as half of mortgage-stressed households have “borrowed to the hilt”
• Confirmed: APRA is planning action on home loans, ASX 200 banks drop

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 Telstra Corporation Ltd (ASX: TLS) share price was a relatively positive performer in September.

The telco giant’s shares pushed 2.3% higher over the month. This compares to a 2.6% decline by the S&P/ASX 200 Index (ASX: XJO) over the same period.

This latest gain means the Telstra share price is now up 29% in 2021.

Why did the Telstra share price push higher last month?

The catalyst for the rise in the Telstra share price in September was the release of its investor day update in the middle of the month. At the event, the telco giant unveiled the T25 strategy that will replace its highly successful T22 strategy at the end of FY 2022.

Telstra’s CEO, Andrew Penn, highlighted that T22 was based on transforming the company, whereas T25 will be about driving growth.

He revealed that Telstra will aim for sustained growth and value by targeting mid-single digit underlying EBITDA and high-teens underlying earnings per share compound annual growth rates (CAGR) from FY21 to FY25.

Commenting on the future, the CEO said: “Through T22 we have set the foundation for our future success. We have simplified our operations and products, improved customer experience and reduced our cost base and our InfraCo plans are well progressed, helping us deliver value to shareholders. While T22 has been a success, we have more to do. We are determined to finish the job.”

“Today’s announcement of T25 marks our transition from transformation to growth, from a strategy we had to do, to a strategy we want to do to focus on growth. It is a strategy that builds on the strong foundations we have built over the last three years and remains focussed on what matters most – our customers, our people, our shareholders and on supporting the creation of a vibrant digital economy for Australia,” Mr Penn added.

Is it time to invest?

The good news is that this update went down well with brokers. One of those was Morgans. In response to the update, the broker retained its add rating and lifted its price target to $4.44.

Based on the current Telstra share price of $3.89, this implies potential upside of 14% over the next 12 months.

In addition, the broker is forecasting a 16 cents per share dividend again in FY 2022. This will mean an attractive fully franked 4.1% yield for investors, which stretches the total potential return to over 18%.

The post Here’s what happened to the Telstra (ASX:TLS) share price in September appeared first on The Motley Fool Australia.

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• When was the worst ever day on the Telstra (ASX:TLS) share price chart?
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• 2 ASX dividend shares with fully franked yields of more than 5% today
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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 shares of and has recommended Telstra Corporation 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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