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TechnologyOne Ltd (ASX: TNE) shares have been halted after the S&P/ASX 200 Index (ASX: XJO) tech stock revealed that it is responding to a cyber attack.

There have been a number of cyber attacks on Australian businesses in recent times, including Medibank Private Limited (ASX: MPL), Optus, Latitude Group Holdings Ltd (ASX: LFS), and IPH Ltd (ASX: IPH).

For readers who don’t know, TechnologyOne is an enterprise resource planning (ERP) software business for organisations. Among its customers are the University of Melbourne, the Australian Bureau of Statistics (ABS), Noosa Council, and Brookfield.

Cyber attack on TechnologyOne

The ASX 200 tech stock said it has detected “an unauthorised third-party acted illegally to access its internal Microsoft 365 back-office system”.

It emphasised that its customer-facing software as a service (SaaS) platform is not connected to the Microsoft 365 system and therefore has not been impacted.

But, the company has “acted with urgency” to investigate the issue, including initiating its cyber response strategy, appointing third-party experts, and isolating affected systems.

TechnologyOne has reported the incident to the relevant authorities and continues to “not only comply but go beyond its regulatory obligations”, it says.

The business said in its statement to the ASX that once the investigation is “further progressed”, it will be in a position to contact those who “may be affected with them on the ongoing safety of their data”.

The ASX 200 stock apologised to impacted individuals for any concern this incident may cause. It will provide further updates through the ASX and on its website as they become available.

How long will TechnologyOne shares remain halted?

The business has requested that the trading halt continue until the earlier of a further announcement by the company or the start of normal trading on Friday 12 May 2023.

What could this mean for the ASX 200 stock?

Looking at the hack effect on the Medibank share price, it caused a sizeable drop when trading resumed. However, the private health insurer has now recovered amid return policyholder growth.

But the reaction for the TechnologyOne share price could depend on the details and what the impacts of the cyber incident are.

Time will tell how much of a long-term impact this has on the business. Prior to this, the ASX 200 stock had risen by close to 50% over the last 12 months, with strong growth of revenue and profit in its recent financial results.

The post ASX 200 stock Technology One halted following cyber attack appeared first on The Motley Fool Australia.

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More reading

• Keen for $1,000 of monthly passive income? Buy 38,462 shares of this ASX 200 stock
• 3 ASX 200 building shares that could rise now that house prices have bottomed
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

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 positions in and has recommended Technology One. The Motley Fool Australia has recommended IPH and Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Appen Ltd (ASX: APX) share price has come under significant selling pressure on Wednesday.

In morning trade, the artificial intelligence data services company’s shares are down 22% to $2.50.

This means the Appen share price is now down over 60% since this time last year, as you can see on the chart below.

Why is the Appen share price crashing?

Investors have been hitting the sell button today after the company revealed that its performance has continued to deteriorate.

In February, management advised that it expected a soft start to FY 2023 and for that to lead to underlying EBITDA being materially lower than the prior corresponding period.

Clearly, expectations were already low. But even these low expectations appear to have been wide of the mark, which explains the weakness in the Appen share price today.

According to the release, challenging external operating and macroeconomic conditions have led to a sharp drop in revenue and earnings for the first four months of FY 2023. Appen has reported:

• Revenue down 21.4% to US$95.7 million
• Gross profit down 24.7% to US$35.8 million
• Constant currency underlying EBITDA down to negative US$12.4 million from positive $7.9 million

What’s next?

One positive is that management revealed that its focus on establishing a greater level of operational rigour is in progress with the previously identified ~US$10 million of cost savings to be implemented over the course of FY 2023.

In addition, a series of significant measures to achieve further annualised cost savings of approximately US$36 million have been identified and will be delivered over the course of FY 2023. The first full year impact of these measures is expected in FY 2024.

If all goes to plan, Appen expects to exit the current financial year with an annualised run-rate cash operating cost base of approximately $113 million. This is expected to lead to Appen “exiting FY23 with a return to underlying EBITDA and underlying cash EBITDA profitability on an annualised, run-rate basis.”

Outlook

Although there clearly has not been any immediate positive impact to its performance from the emergence of ChatGPT and other generative AI tools, management continues to believe it has a major opportunity in this side of the industry and is very positive on the launch of its new Large Language Model (LLM) data products.

Nevertheless, it has warned that it expects “revenue to decline materially in FY23 compared to FY22.” Though, with an “improvement in 2H FY23 revenue relative to revenue achieved in 1H FY23.”

Appen’s CEO, Armughan Ahmad, commented:

Appen has tremendous potential. These important initiatives announced today represent a refresh of the business. We are highly focused on the areas that are within our control and have taken the necessary steps to align our cost structure with current revenue expectations and now expect to exit 2023 as an underlying EBITDA and cash EBITDA positive business. With this stronger foundation, we look to the future to fully capitalise on the exciting growth opportunities enabled by generative AI.

The post Appen share price crashes 22% amid ‘materially’ declining revenue appeared first on The Motley Fool Australia.

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More reading

• Why Appen, Megaport, Mirvac, and Pilbara Minerals shares are pushing higher today
• Down 60% in a year, are Appen shares a bargain buy?

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 positions in and has recommended Appen. 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 Scott Phillips.

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There could be big returns lurking at the small end of town according to analysts at Morgans.

Here’s what it is expecting from these small cap ASX healthcare shares:

Aroa Biosurgery Ltd (ASX: ARX)

The first small cap ASX healthcare share that Morgans is bullish on is Aroa Biosurgery.

The broker highlights that Aroa Biosurgery is a regenerative medicine company engaged in developing, manufacturing, and distributing medical devices for wound and tissue repair. It does this with extracellular matrix (ECM) technology in the United States and internationally.

The company has a range of products. These include Endoform Natural and Endoform Antimicrobia Restorative Bioscaffold for treating acute and chronic wounds; Myriad Matrix, an engineered ECM for soft tissue repair, reinforcement, and complex wounds; Myriad Morcells, a morcellized (powdered) format of Myriad Matrix for soft tissue repair and complex wounds; and Reinforced Bioscaffolds, a surgical product for use in ventral hernia repair and abdominal wall reconstruction.

The broker is positive on Aroa Biosurgergy for a number of reasons. These include its low product price point, manufacturing capacity, and product pipeline. It explains:

Aroa has developed a cost effective technology which is estimated to be 30% cheaper than existing products. Sufficient manufacturing capacity through 2 facilities with enough capacity for $100m sales. ARX have a pipeline of new products through both Oroa and TelaBio supported by strong clinical data, we anticipate further news on Symphony and Enivo products.

Morgans currently has an add rating and $1.57 price target on its shares. This implies potential upside of 54% for this small cap ASX healthcare share over the next 12 months.

Volpara Health Technologies Ltd (ASX: VHT)

Another small cap ASX healthcare share that Morgans is tipping as a buy is Volpara.

It is a digital health company offering an increasingly popular solution that improves clinical decision making for early detection of breast cancer. Morgans notes that its products are approved for sale in key regions and provide objective evidence that can be used by relevant specialists including the woman herself to make informed decisions about further screening.

Its analysts have been impressed with the company’s performance, which has been underpinned by a strategy shift. It commented:

VHT continues to focus on the most profitable products and markets as well as focusing on larger value customers in line with their revised strategy. The second consecutive quarter of positive net operating cashflow is ahead of management’s guidance for 4Q24. We continue to expect the sales pipeline to grow and remain comfortable in guidance to have sufficient cash on hand to maintain net operating cashflow break-even.

Morgans has an add rating and $1.21 price target on this small cap ASX healthcare share. This implies potential upside of 59% for investors over the next 12 month.

The post Morgans says these small cap ASX healthcare shares are buys with 50% upside appeared first on The Motley Fool Australia.

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• I’d invest $10,000 into these excellent ASX shares for the long-term
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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 positions in and has recommended Volpara Health Technologies. The Motley Fool Australia has positions in and has recommended Volpara Health Technologies. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Fortescue Metals Group Ltd (ASX: FMG) share price is marching higher in early trading on Wednesday.

Shares in the S&P/ASX 200 Index (ASX: XJO) miner closed yesterday trading for $20.58 each. Shares are currently changing hands for $20.60 apiece, up 0.1%.

For some context, the ASX 200 is down 0.32% at this same time.

The Fortescue share price looks to be getting support from some big renewable energy spending plans contained in the 2023 federal budget.

$2 billion for green hydrogen in 2023 budget

Well, the 2023 budget is out.

And as you’d expect with any multi-billion-dollar federal government spending package, there are winners and losers.

Many companies involved in renewable energy look to be on the winners’ side of the coin, with Treasurer Jim Chalmers unveiling plans to invest an additional $4 billion in Australia’s renewable energy sector.

In what could provide some ongoing tailwinds for the Fortescue share price, that spending includes $2 billion to support green hydrogen production in a new program called Hydrogen Headstart.

The Australian government is playing catchup with the United States. The Biden administration recently passed the Inflation Reduction Act, which includes more than $500 billion in green energy incentives.

Commenting on the green hydrogen funding contained in the 2023 budget, Energy Minister Chris Bowen said (quoted by The Australian Financial Review):

Our regions need to be supported to harness their immense potential, build new industries and create jobs – because the regions that power Australia today will be the regions that power Australia tomorrow…

Renewable hydrogen is a critical enabler for future manufacturing of green metals and other products the world needs as the transformation to net-zero by 2050 gathers pace.

The government is forecast to commence direct investments into renewable hydrogen in 2026.

Why could this benefit the Fortescue share price?

The Fortescue share price could be a long-term winner from the 2023 budget via the company’s green energy branch, Fortescue Future Industries (FFI).

FFI is a front-runner in Australia in the production of green hydrogen.

Hydrogen can be created by running electricity through water, which divides the water into hydrogen and oxygen. That hydrogen carries the vaunted green label if the electricity is tapped from renewable sources, like solar, wind, hydropower, or geothermal energy.

According to the Fortescue website, “Through FFI, Fortescue will use green hydrogen to decarbonise the company’s mining and shipping fleet including trucks, drill rigs and trains.”

Founder Andrew Forrest is also keen on producing green iron. In March, the ASX 200 miner announced a major breakthrough in its green iron production plans.

FFI director Guy Debelle called the 2023 budget’s green energy funding, which looks to be supporting the Fortescue share price today, “a great first step”.

According to Debelle (quoted by the AFR), “It shows the government recognises the importance of the green hydrogen economy. It’s about future prosperity and decarbonising the economy.”

Fortescue share price snapshot

The Fortescue share price is up 8% over the past 12 months, handily outpacing the 3% gains posted by the ASX 200 over that same period.

The post Fortescue share price lifts on 2023 budget’s $2 billion hydrogen program appeared first on The Motley Fool Australia.

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More reading

• What’s the forecast for the Fortescue share price this month?
• 5 things to watch on the ASX 200 on Wednesday
• Fortescue’s Twiggy could wipe this ASX 300 share from the bourse. Here are the details
• Why the iron ore price is ‘not out of the danger zone’
• Here’s what brokers are saying about the Fortescue share price in May

Motley Fool contributor Bernd Struben 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 Scott Phillips.

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The Bank of Queensland Ltd (ASX: BOQ) share price has come under pressure on Wednesday morning.

At the time of writing, the regional bank’s shares are down 4% to $5.65.

Why is the Bank of Queensland share price tumbling?

The good news for shareholders is that today’s weakness has nothing to do with another banking collapse.

In fact, while nobody likes to see a share decline, this one is arguably a positive for shareholders.

That’s because today is the day that the bank’s shares to trade ex-dividend.

When a share trades ex-dividend, it means that the rights to an upcoming dividend payment are now settled. In light of this, a share will usually decline in line with the dividend to reflect this.

After all, if you were a buyer of its shares today, you wouldn’t be entitled to receive this dividend, so why would you pay for it?

The Bank of Queensland dividend

Last month, Bank of Queensland released its half-year results and reported a 4% decline in cash earnings to $256 million. While its earnings were supported by margin tailwinds, a 7% increase in expenses offset this.

As you might expect, this earnings decline led to the Bank of Queensland board cutting its fully franked interim dividend. It came in 9% lower year over year at 20 cents per share.

Though, despite this cut, this still represents an attractive 3.4% yield based on where the Bank of Queensland share price was trading on Tuesday.

Eligible shareholders can now look forward to receiving this dividend in their bank accounts at the very start of next month on 1 June.

And if analysts at Morgans are on the money with their estimates, they can also look forward to another 20 cents per share fully franked dividend later this year when the bank releases its full-year results.

The post Why is the Bank of Queensland share price taking a 4% tumble today? appeared first on The Motley Fool Australia.

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• Hoping to bag the next Bank of Queensland dividend? You’d better be quick
• The Bank of Queensland share price crumbled 11% in April. Here’s why
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• Why did the Bank of Queensland share price just hit a new 52-week low?
• Bought $2,000 of Bank of Queensland shares five years ago? If so, here’s how much dividend income you’ve earned

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 Scott Phillips.

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The Dicker Data Ltd (ASX: DDR) share price is pushing higher on Wednesday.

In morning trade, the ASX tech share is up 6% to $8.88.

Why is this ASX tech share rising today?

Investors have been bidding Dicker Data’s shares higher today after they responded positively to the release of the computer hardware and software distributor’s first-quarter update.

According to the release, for the three months ended 31 March, Dicker Data delivered a 14.7% increase in total revenue to $772.3 million and 6.7% lift in net profit before tax to $25.4 million.

In respect to its revenue growth, management advised that this growth was driven partly by a full quarter contribution from Hills acquisition that was not in the comparative period.

The balance is attributable to organic growth from existing and new vendors and increases in other income, representing year on year organic growth of 9.7%.

One of the reasons the company’s profits did not grow in line with revenue was its DAS business. It reported quarterly revenue of $33.4 million but has yet to deliver a profit. However, management advised that the first quarter was focused on cost rationalisation and it now expects the unit to be profitable from the second quarter.

Positively, the tech share reported an increase in its gross margin to 9.2%. This was in line with expectations and up from 8.6% a year earlier.

Dicker Data Chairman and CEO, David Dicker, commented:

We delivered a pleasing result in the first quarter of 2023, buoyed by a strong monthly revenue result in March. Revenue was up by 14.7% on the prior corresponding period and profit before tax remained strong increasing 8.8%, excluding one-off costs. We expect to see the upside of operational refinements undertaken during the first quarter within the next three to six months, putting us in a strong position to deliver on shareholder expectations in FY23.

Finally, the ASX tech share expects to continue paying out 100% of after-tax profits in FY 2023. This is expected to see three interim dividends of 10 cents per share before a final dividend in March 2024.

The post Here’s why this ASX tech share is storming 6% higher on Wednesday appeared first on The Motley Fool Australia.

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• These ASX income shares have very big forecast dividend yields
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• Get a passive income boost from these ASX dividend shares: analysts

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

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The S&P/ASX 200 Index (ASX: XJO) stock Pinnacle Investment Management Group Ltd (ASX: PNI) could be a smart buy to achieve considerable monthly passive income as dividends.

Just to be clear, the business doesn’t actually pay a dividend every single month. But, investors can use the annual dividend payment and then split that into 12 equal monthly amounts.

What does Pinnacle do?

Pinnacle is an investment business that has a growing “family” of investment management businesses (affiliates). The ASX 200 stock has stakes in its affiliates, and provides “seed funding, global institutional and retail distribution, and industrial grade middle office and infrastructure services”.

Some of the businesses that it’s involved with include Aikya, Antipodes, Coolabah, Firetrail, Five V, Hyperion, Langdon, Long Wave, Metrics, Plato, Solaris, and Spheria.

The company benefits from the funds under management (FUM) growth of the underlying businesses, and every so often it invests in a new fund manager which opens up a new growth avenue.

Monthly passive income goal

To create $1,000 of monthly income, we’re talking about $12,000 of annual income from the ASX 200 stock.

Commsec numbers suggest that Pinnacle could pay an annual dividend per share of 31.2 cents in FY23. That means investors would need to own 38,462 Pinnacle shares to get $12,000 of annual income in cash, excluding the franking credits.

To buy that many Pinnacle shares, it would currently cost around $340,000. That’s a big investment.

But FY24 isn’t far away, so let’s use the projected numbers for the upcoming financial year.

According to Commsec, Pinnacle is projected to pay an annual dividend per share of 35.9 cents per share in FY24. That would mean that we’d only need to buy 33,427 Pinnacle shares. This would be a total cost of around $295,000, which is clearly a fair bit less expensive, but still a hefty investment.

However, the business could continue to grow its dividend in the coming years.

What could drive the Pinnacle passive income higher?

Pinnacle’s earnings have fallen in the short term as the company’s investment managers suffered from falling asset prices and limited performance fee revenue.

However, FUM could return to growth if asset prices stop falling and go back to long-term growth. FUM could also rise if investors start allocating money to fund managers again. Those existing fund managers could also launch new funds and we could also see Pinnacle invest in new fund managers.

I think the future looks very bright for this ASX 200 stock and I believe the next two years look promising for the business and the passive income it could generate.

The post Keen for $1,000 of monthly passive income? Buy 38,462 shares of this ASX 200 stock appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 200 building shares that could rise now that house prices have bottomed
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• No savings at 40? Here’s how I’d aim to build a passive income of $3,000 a month

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 positions in and has recommended Pinnacle Investment Management Group. The Motley Fool Australia has positions in and has recommended Pinnacle Investment Management Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Two ASX 200 travel stocks have just received a broker upgrade from the team at Citi.

Flight Centre Travel Group Ltd (ASX: FLT) and Corporate Travel Management Ltd (ASX: CTD) could be a buy.

Flight Centre shares shed 1.01% to $21.52 on Tuesday, while Corporate Travel Management shares slid 0.91% to $20.71.

Let’s take a look at what could be ahead for these two ASX travel stocks.

Travel shares could rebound

Flight Centre and Corporate Travel have both been upgraded to buy from neutral by the team at Citi.

Citi vice-president Sam Seow is forecasting a boost in passenger numbers, more corporate travel and greater supplier margins in FY24 if travel goes back to normal, The Australian reported. In quotes cited by the publication, he said:

Looking forward, our view is relatively simple. We estimate the business models most impacted at the start of the recovery should be the winners at the end.

He has placed a $23.80 price target on Flight Centre shares, which applies a 10.6% upside based on the company’s last closing price. Meanwhile, he has elevated Corporate Travel to a $25.50 price target, implying an upside of about 23%.

Tourism Research Australia is forecasting total visitor spending (domestic and international) to top pre-COVID-19 levels in 2023 and hit $227.7 billion by the year 2027. Domestic overnight and day trip spending is already higher than before COVID-19, while international expenditure is expected to exceed pre-COVID in 2024.

Flight Centre’s total transaction volume in the 10 months to April 30 was in line with the company’s record FY19.

The company upgraded its FY23 guidance to an EBITDA between $270 and $290 million, up from a previous guidance of $250 to $280 million.

Corporate Travel Management advised it had won a major contract with the UK government in April. This is worth about £1.6bn (nearly $3 billion Australian dollars).

Meanwhile analysts at Morgans have also recently named Corporate Travel Management as an “ASX growth stock to buy”. The broker has a $24 price target on the travel company’s share price. Morgans said:

TD should be a materially larger business post COVID given it has made two highly accretive acquisitions during the downturn. 

Share price snapshot

Flight Centre shares have risen 3.96% in the last year.

Corporate Travel Management shares have lost 3.72% in the last year.

The post 2 ASX 200 travel stocks (not Qantas!) just upgraded by Citi appeared first on The Motley Fool Australia.

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More reading

• Buy these top ASX growth stocks: experts
• The Flight Centre share price just rocketed to a new 52-week high. Here’s why
• Which ASX 200 travel share has already taken off by 48% in 2023?
• Here are the 10 most shorted ASX shares
• ‘We’ve learnt the hard way’: 3 ASX shares that can grow in tough times

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Corporate Travel Management and Flight Centre Travel Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The last five years have been rough for the Suncorp Group Ltd (ASX: SUN) share price. Stock in the financial services conglomerate has tumbled to trade at $12.53 as of Tuesday’s close.

However, looking back to May 2018, an investor sinking $9,000 into the stock likely would have snapped up 629 shares, paying $14.30 apiece.

Today, that parcel would be worth around 12% less – just $7,881.37.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has lifted 19% in that time.

Fortunately, Suncorp shares have proven to provide consistent dividends over the years. Here’s how much dividend income an investor who bought into the stock five years ago has likely realised.

All dividends paid to holders of Suncorp shares since 2018:

Here are all the dividends paid to those invested in Suncorp shares since May 2018:

Suncorp dividends’ pay date	Type	Dividend amount
March 2023	Interim	33 cents
September 2022	Final	17 cents
April 2022	Interim	23 cents
September 2021	Final and special	40 cents and 8 cents
April 2021	Interim	26 cents
October 2020	Final	10 cents
March 2020	Interim	26 cents
September 2019	Final	44 cents
May 2019	Special	8 cents
April 2019	Interim	26 cents
September 2018	Final and special	40 cents and 8 cents
Total:		$3.09

As readers can see, each Suncorp share has yielded $3.09 of dividend income over the last five years. That negates any share price losses experienced in that time.

It also means our figurative investment has provided a total of $1,943.61 in dividends over its life.

That brings its return on investment (ROI), considering both share price gains and dividend income, to 9.2%.

And that’s before considering the potential benefits the payments could have brought for some investors at tax time. All the dividends paid to those holding Suncorp shares over the last five years have been fully franked.

Right now, Suncorp shares offer a 3.99% dividend yield.

The post Invested $9,000 in Suncorp shares in 2018? Here’s how much dividend income you’ve realised appeared first on The Motley Fool Australia.

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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 Scott Phillips.

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The Commonwealth Bank of Australia (ASX: CBA) share price has dropped 3% since 1 May 2023 and it is down 11% from 14 February 2023.

The last few months have been very interesting for the ASX bank share sector. When CBA released its FY23 first-half result in February, CEO Matt Comyn talked about intense competition in the sector. It sounded like bad news for a lot of the sector.

Earlier this week, the bank released its FY23 third-quarter update.

Let’s have a quick reminder of some of those quarterly numbers.

Earnings recap

It made $2.6 billion of cash net profit in the three months to 31 March 2023. This was a 10% increase year over year.

But, compared to the FY23 first-half quarterly average, cash net profit only grew by 1%. The bank said its income was flat – there was volume growth and higher non-interest income, but there were two fewer days in the quarter and lower net interest margins (NIM) from “competitive pressures”.

But, expenses were also flat.

CBA reported a loan impairment expense of $223 million, which saw collective and individual provisions “slightly higher”. The ASX bank share said that portfolio credit quality remained “sound”.

The capital position on the bank’s balance sheet is “strong”, with a common equity tier 1 (CET1) ratio of 12.1%.

What to make of this?

Brokers were a bit mixed on what to think about this result and the CBA share price.

The Australian reported on comments by Citi’s Brendan Sproules. He suggested that the CBA NIM in the third quarter was “surprisingly weak” at around 2.05%. Sproules said:

A soft result relative to market expectations, although not surprising given the context of recent peer results.

We think the implied NIM of about 2.05% for the quarter and lower monthly exit NIM implies a 4Q NIM that starts closer to about 2%.

Coupled with the funding task, this would explain CBA’s price leadership on deposits, and also their recent flagged decision to moderate mortgage cash backs.

The Citi analyst suggests that the market is forecasting a NIM of 2.11% in the FY23 second half, which may mean the market reduces its profit expectations in the current half.

Citi currently has a sell rating on the business, with an $80 CBA share price target. That suggests a fall of around 18% over the next 12 months.

But, The Australian reported on UBS analyst John Storey’s comments, who also noted the decline of NIM, which is also being seen by peers. But, it was noted that CBA’s loan book is holding up well, which is supporting cash earnings.

But, Storey thinks that the bank is going to be able to hit the cash earnings target in the fourth quarter of FY23.

For UBS, the CBA share price target is $100 and it has a neutral rating. That suggests a possible rise of around 2.7%.

CBA share price snapshot

Since the start of the year, the CBA share price is down around 7%.

The post Is the CBA share price running out of steam? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• CBA share price slips today despite $2.6 billion cash profit
• What’s the outlook for the CBA share price in May?
• Banking crisis continues: What’s up (and down) with ASX 200 bank shares today?
• Here’s how I’d aim for $200 a month in passive income using ASX 200 bank shares

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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