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Commonwealth Bank of Australia (ASX: CBA) shares are moving higher today.

In late afternoon trade, the CBA share price is up 2.4%. That brings the price back above the psychologically significant $100 mark to $102.07 per share, at the time of writing.

A number factors have combined over the past year to give the big banks some healthy tailwinds.

Aussie property prices running red hot

Among the factors helping support the CBA share price (and that of its competitors) is the roaring Aussie property market.

You’re probably well aware that property prices across Australia are getting dearer.

But did you know just how much dearer?

The answer, from property research firm CoreLogic, may surprise you:

Australian housing values increased a further 1.6% in July, according to CoreLogic’s national home value index. The latest rise takes housing values 14.1% higher over the first seven months of the year and 16.1% higher over the past twelve months.

Did you catch that? Sixteen percent higher in 12 months. And during a year of COVID pandemic lockdowns. How did this happen?

“Demand is being stocked by record low mortgage rates and the prospect that interest rates will remain low for an extended period of time,” says CoreLogic’s research director, Tim Lawless.

Galloping housing prices have resulted in a big uptake in Australian banks’ mortgage balances.

As BankingDay reports, RBA lending data shows that “lenders’ mortgage balances grew by 0.7 percent in June, compared with the previous month – the highest level of monthly growth since 2010.”

According to APRA latest monthly ADI data, Commonwealth Bank, National Australia Bank Ltd. (ASX: NAB), and Westpac Banking Corp (ASX: WBC) are a little ahead of the system for the month of June – all recording mortgage balance growth of 0.9 per cent.

Longer term, the lenders’ mortgage balance grew by 5.3% over the 12 months to 30 June, the fastest annual rate in three years.

The CBA share price has likely enjoyed a boost over its major competitors this past year as CommBank has managed to post larger growth in its mortgage balance. CommBank’s book grew by 6.7% compared to a 1.6% increase for NAB and a 2.3% growth rate for Westpac.

CBA share price snapshot

CBA’s share price has gained 46% over the past 12 months, far outpacing the 26% gains posted by the S&P/ASX 200 Index (ASX: XJO).

Year to date, the CBA share price has continued to charge higher, up 22% so far in 2021.

The post CBA (ASX:CBA) share price lifts amid soaring property prices appeared first on The Motley Fool Australia.

More reading

• ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high
• Top brokers name 3 ASX shares to sell next week
• What’s moving the Commonwealth Bank (ASX:CBA) share price this week
• Should you buy CBA (ASX:CBA) shares in July 2021 for the dividend yield?
• CBA (ASX:CBA) share price wobbles amid regulatory confusion over Apple

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 Bruce Jackson.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on the verge of starting the week with a strong gain. At the time of writing, the benchmark index is up 1.35% to 7,492.1 points

Four ASX shares that re climbing more than most today are listed below. Here’s why they are charging higher:

A2 Milk Company Ltd (ASX: A2M)

The a2 Milk share price is up over 3% to $6.05. This gain appears to have been driven by a broker note out of Citi this morning. According to the mote, the broker has upgraded the infant formula company’s shares to a neutral rating with a $6.05 price target. This follows an update by rival Danone which revealed a return to growth for its infant formula sales during the second quarter.

Afterpay Ltd (ASX: APT)

The Afterpay share price has rocketed 20% higher to $116.08. Investors have been fighting to get hold of the company shares after it received a $39 billion takeover proposal by US payments giant Square. The Afterpay Board is recommending investors accept an offer of 0.375 shares of Square Class A common stock for each Afterpay share they hold. Based on the latest Square share price of US$247.26, this implies a transaction price of approximately $126.21 per Afterpay share.

Dicker Data Ltd (ASX: DDR)

The Dicker Data share price has jumped 16% to $13.46 after announcing a key acquisition. The IT distributor has entered into a binding agreement to acquire the Exeed Group business operating across Australia and New Zealand for $68 million. This transaction will see Dicker Data’s New Zealand business become the second largest IT distributor in that market with estimated revenue of over NZ$500 million for the combined entities.

Oil Search Ltd (ASX: OSH)

The Oil Search share price has stormed 5% higher to $4.00. This follows news that Santos Ltd (ASX: STO) and Oil Search have reached an agreement on the merger ratio for a potential merger. Under the revised merger proposal, Oil Search shareholders will receive 0.6275 new Santos shares for each share held. This implies a transaction price of $4.29 per Oil Search share.

The post Why a2 Milk, Afterpay, Dicker Data, & Oil Search shares are charging higher appeared first on The Motley Fool Australia.

More reading

• Surging Afterpay (ASX:APT) share price reinvigorates BNPL sector
• Why the Oil Search (ASX:OSH) share price is roaring 5% higher today
• ASX 200 midday update: Afterpay to be acquired by Square, Oil Search to merge with Santos
• What is the outlook for the Afterpay (ASX:APT) share price?
• Dicker Data (ASX:DDR) share price sets record high on acquisition update

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 AFTERPAY T FPO and Dicker Data. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO and Dicker Data. The Motley Fool Australia has recommended A2 Milk. 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 Tempus Resources Ltd (ASX: TMR) share price has soared into the green in afternoon trading.

Today’s gain comes as Tempus released an update on its Elizabeth gold project, located in Canada.

Let’s walk through what the announcement entails.

Quick recap on Tempus Resources

Tempus Resources is in the minerals exploration business and has expertise in developing minerals such as gold and copper.

The company has several projects focused on these minerals dotted across Ecuador, Canada and Australia.

At the time of writing, Tempus has a market capitalisation of around $22 million.

What did Tempus announce?

Tempus has provided readouts from its “first-ever high resolution airborne magnetic and radiometric geophysical surveys” that were completed at Elizabeth.

The company describes its Elizabeth gold project as a “relatively under-explored high-grade mesothermal gold system”.

Tempus states the geological characteristics at this site show similarities to a neighbouring system, which was “mined to a depth of approximately 2,000 metres” and produced a mammoth 4 million ounces “over 50 years”.

The surveys identified the potential for “a much larger scale gold system” at the site, which equates to an increased “footprint and depth extensions of potential gold mineralisation”.

In addition, the surveys found “two additional anomalies” that show “strong continuity” at a reasonable depth.

Speaking on the readouts, Tempus CEO Jason Bahnsen mentioned:

The results of the geophysical surveys show that the intrusive system that hosts the gold veins at Elizabeth is much larger and extends much deeper than previously thought. There are also two additional large-scale anomalies within the project licence. The results highlight the potential for Elizabeth to complement its high-grade nature with very large scale.

Investors have continued buying the company’s shares this afternoon, pushing the Tempus Resources share price 16% higher on the day.

Tempus Resources shares are now exchanging hands at 21.5 cents apiece, just off their intraday high of 22 cents.

Tempus Resources share price snapshot

The Tempus Resources share price has posted a loss of 82% since January 1, extending the previous 12 month’s loss of 33%.

These returns have lagged the S&P/ASX 200 index (ASX: XJO)’s return of around 23% over the past year.

Despite these returns, Tempus shares have climbed 28% into the green over the last month and more than 15% into the green over just the past week.

The post Tempus Resources (ASX:TMR) share price jumps 19% on survey results appeared first on The Motley Fool Australia.

More reading

• How is the IAG (ASX:IAG) share price performing against the financial services sector?
• FY 2021 results preview: What is built into the Telstra share price?
• Why the Argosy Minerals (ASX:AGY) share price has surged 17% today
• Bitcoin price tumbles 6% after 10 days of gains…now what?
• Up 275% today, Red Hill Iron (ASX:RHI) share price enters stratosphere

Motley Fool contributor Zach Bristow 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 share price of ASX 200 financials giant Insurance Australia Group Ltd (ASX: IAG) is having a pretty ordinary year on the ASX.

So far, it’s gained just 4.03% since the start of 2021. IAG shares are currently trading for $4.91 apiece.

In the same time, the S&P/ASX 200 Index (ASX: XJO) has gained 12.18%. But even the ASX 200 has been beaten by the financial sector.

During the period, the S&P/ASX 200 Financials Index (ASX: XFJ) has gained 18.68%, leaving IAG’s shares in its dust.

So, why is the ASX 200 insurance giant’s share price lagging behind? Let’s take a look.

What’s holding IAG back?

While the IAG share price has been showing some volatility this year, it’s been relatively restricted.

Its met resistance at $5.50, while its lowest point of support has been $4.38.

Yet, it’s been bouncing around in-between those points pretty much non-stop.

And the reason behind IAG’s furious stagnation? Likely, a lacklustre performance. IAG hasn’t released much in the way of jaw dropping news this year.

One of the most notable movements from IAG’s shares came after the company announced its half year results in February. The IAG share price jumped 4.55% on the back of the results.

Its positive results included a 33% increase in to its insurance profits, yet it didn’t manage to break even.

As a result, it gave its shareholders a 7-cent unfranked dividend. That represents a 1.44% dividend yield.

The company states, since it handed out its last franked dividend in early 2020, it hasn’t earned a profit.

Recently, IAG released slightly disappointing preliminary results for the 2021 financial year. While the results were within a bulls roar of what analysts had predicted, they didn’t quite hit the mark.

Additionally, IAG didn’t provide guidance for the 2022 financial year. However, it did forecast its reported insurance margin would be between 13.5% and 15.5% and it’s looking to increase its natural perils allowance to $765 million.

After IAG released its preliminary results, its share price slipped slightly before recovering to finish 1% higher.

IAG share price snapshot

While the IAG share price has posted a slight year to date gain, it is currently 3.73% lower than it was this time last year. It’s also fallen 2.96% over the last 30 days.

The post How is the IAG (ASX:IAG) share price performing against the financial services sector? appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Afterpay to be acquired by Square, Oil Search to merge with Santos
• ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high
• 5 things to watch on the ASX 200 on Monday
• These were the best performing ASX 200 shares in July
• These were the worst performing ASX 200 shares in July

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 owns shares of and has recommended Insurance Australia 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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All eyes will be on the Telstra Corporation Ltd (ASX: TLS) share price in just under a couple of weeks when its hands in its full year results.

The telco giant is due to release its results to the market on Thursday 12 August.

And with the Telstra share price up 26% since the start of the year, expectations certainly are high for this release.

What is the market expecting from Telstra in FY 2021?

Goldman Sachs has just released a note outlining what it expects Telstra later this month. Here’s a summary of its expectations:

• Total income down 11% to $23.2 billion. This compares to its guidance of $22.6 billion to $23.2 billion.
• EBITDA down 16% to $7.6 billion. This comprises underlying EBITDA down 8% to $6.81 billion (versus guidance of $6.6 billion to $6.9 billion) and NBN one-off earnings of $0.75 billion (versus guidance of $0.7 billion to $1 billion).
• Net profit after tax down 27% to $1.7 billion.
• A fully franked final dividend per share of 8 cents, bringing its full year dividend to 16 cents per share.

Telstra’s outlook

Something else that could influence the Telstra share price will be the company’s outlook.

According to the note, Goldman Sachs is forecasting a return to growth in FY 2022. The broker is forecasting EBITDA growth of 6% to $7.2 billion, compared to the market consensus of $7.18 billion. It is also in the middle of Telstra’s previously announced FY 2022 aspirations for mid to high single digit growth ($7 billion to $7.4 billion).

But the broker doesn’t expect Telstra to stop there and suspects that commentary could be given on its expectations for FY 2023. Once again, Goldman is more positive than the market consensus and is forecasting further EBITDA growth to $7.8 billion. This compares to the consensus estimate of $7.5 billion for FY 2023.

Finally, the broker has suggested that investors look out for commentary on the structure of its $1.35 billion buyback, its mergers and acquisition strategy, and details relating to the upcoming T25 strategy event.

Is the Telstra share price in the buy zone?

Analysts at Goldman Sachs believes the Telstra share price is in the buy zone ahead of its results.

The broker has retained its buy rating and $4.20 price target. Based on the current Telstra share price of $3.80, this implies potential upside of 10.5% over the next 12 months.

And if you include the 16 cents per share fully franked annual dividend Goldman expects to be paid through to FY 2023, this potential return stretches to 13.5%.

The post FY 2021 results preview: What is built into the Telstra share price? appeared first on The Motley Fool Australia.

More reading

• Leading brokers name 3 ASX shares to buy today
• ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high
• 2 ASX shares rated as strong buys by brokers
• Top ASX shares to buy in August 2021
• Telstra (ASX:TLS) share price slips as Optus teams up with Uber

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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Shares in Argosy Minerals Ltd (ASX: AGY) have soared into the green today.

The Argosy Minerals share price lift comes after the company provided an update to its Rincon Lithium project in Argentina.

Argosy shares are now exchanging hands at 13.72 cents apiece, up 14.%, after surging 17% higher to 14 cents around midday.

Quick refresher on Argosy Minerals

Argosy is in the lithium mining business. Its flagship project is the Rincon Lithium Project, where it holds a 77.5% interest.

In addition, Argosy wholly owns the Tonopah Lithium project in Nevada, United States.

Argosy Minerals has a market capitalisation of $150 million at the time of writing.

Progress at Rincon Lithium

Argosy announced it was still on schedule to realise “(greater than) >99.5% battery quality lithium carbonate product” at its Rincon Lithium project, from the midpoint of 2022.

The company said that around one-third of the total works had now been completed of the “modular 2,000tpa lithium carbonate” operation in Salta Province, Argentina.

The release outlined that “33% of the total works were now completed” there, and gave a breakdown of this completion.

For instance, Argosy stated the “design phase is 94% completed, and the construction phase was “at 34% completion”.

In addition, it also stated that the plant’s commissioning works – made up of “raw materials acquisition and tender works” – are 7% complete.

Moreover, Argosy also outlined several progress points achieved throughout the construction phase of the project.

It explained that the majority of earthworks and site works were now completed at Rincon, with 17% of the process plant also completed.

Speaking on the update, Argosy managing director Jerko Zuvela said:

With lithium market sentiment and lithium carbonate prices consolidating the strong gains made this year, and the company being fully funded to 2,000tpa scale production, Argosy remains a lithium sector peer leader that is the only new developer able to supply battery quality lithium carbonate product in the near-term.

Argosy Minerals share price snapshot

The Argosy Minerals share price has lifted almost 72% year to date, extending the previous 12 month’s return of 164%.

These returns have outpaced the S&P/ASX 200 index (ASX: XJO), which is up around 23% over the past year.

The post Why the Argosy Minerals (ASX:AGY) share price has surged 17% today appeared first on The Motley Fool Australia.

More reading

• Here’s why the Argosy Minerals (ASX:AGY) share price is soaring today
• Argosy Minerals (ASX:AGY) share price climbs following Rincon update
• Here’s why the Argosy (ASX:AGY) share price is surging 9% today
• Argosy (ASX:AGY) share price falls 9% despite positive update

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 Bitcoin (CRYPTO: BTC) price is down 6% over the past 24 hours, currently trading for US$39,743 (AU$54,442).

The retreating price puts an end to Bitcoin’s 10 days of consecutive gains, its longest winning streak since 2013.

Earlier today, the world’s biggest crypto by market cap traded as high as US$42,563. But its failure to hold above US$42,000 means it could continue to struggle to move higher.

Where to next for the Bitcoin price?

Forecasting the price moves of cryptocurrencies isn’t a precise science. To say the least.

However, technical analysis can offer some useful insights by studying how prices have moved in the past and, therefore, how they may move in the future.

On that front, analysts quoted by CoinDesk believe Bitcoin will continue to see stiff resistance in the low US$40,000 range until it decisively moves and holds higher.

According to digital-asset firm Eqonex, “BTC is potentially rangebound until it breaks and closes above $42,000. Trendline support has moved up to $38,200, with $36,500 the next support.”

Head of sales at crypto derivatives exchange FTX Jonathan Cheeseman appears to agree on the importance of the US$42,000 price target.

Addressing what was still an ongoing run higher on Saturday, Cheesman wrote (quoted by Bloomberg), “A run like this certainly suggests some flow backing. Of course, it now needs to stabilize here – and above the high from May 20 would be further confirmation.”

20 May saw Bitcoin trading above US$42,500.

What will it take to get back above US$64,829?

In mid-April, Bitcoin hit all-time highs of US$64,829. Despite the 10-day long rally just ended, the price remains down 39% since that record.

So what will it take to get the token back into record territory?

According to Pankaj Balani, CEO of crypto derivatives exchange Delta Exchange, it boils down to higher prices begetting still higher prices. Balani wrote:

It won’t be surprising to see Bitcoin expand the $30,000 to $42,000 trading range on the upside and attempt $45,000. However, breaking above $50,000 will take some doing for Bitcoin. Only a conclusive break above $50,000 would attract fresh flows and signal a change in the broader direction for the market.

With the price currently heading in the opposite direction, it remains to be seen when – or indeed, if – the break above US$50,000 occurs.

The post Bitcoin price tumbles 6% after 10 days of gains…now what? appeared first on The Motley Fool Australia.

More reading

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• 3 reasons why new ‘Britcoin’ will drive Bitcoin higher
• Bitcoin leaps 8% as Australia’s inflation surprises to the upside
• Bitcoin tumbles 9% following Amazon payment plans denial
• Bitcoin’s 12% daily price gain dwarfed by this lesser-known token

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin. 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 Red Hill Iron Limited (ASX: RHI) share price is putting all other ASX shares to shame today, rising an astonishing 275%. This comes after the junior miner is proceeding to sell its 40% interest in the Red Hill Iron Ore Joint Venture (RHIOJV).

At the time of writing, Red Hill Iron shares have accelerated on the announcement to $4.12, up 274.55%.

Details of the transaction

In a statement to the ASX, Red Hill Iron advised it has entered into a binding agreement with Mineral Resources Limited (ASX: MIN).

The deal will see Mineral Resources acquire the iron ore asset for $400 million over two instalments. The first $200 million will be paid in cash on completion of the sale agreement. The remaining $200 million will be due when the first commercial shipment of iron ore extracted from RHIOJV leaves the port.

In addition to the cash consideration, Mineral Resources will pay a royalty fee of 0.75% of free on board (FOB) revenue. This is based on all iron ore that is mined and sold from the Red Hill tenements and the company’s Bungaroo South tenement. The latter is dependent on the condition the Bungaroo South tenement is developed in association with the RHIOJV tenements.

It’s worth noting the sale is subject to shareholder approval and does not include other mineral rights over the RHIOJV tenements.

Red Hill has recommended its shareholders vote in favour of the proposed transaction. A meeting will be held on 2 September 2021 to allow shareholders to cast their votes on the sale.

The company noted that Mineral Resources has the necessary means to secure funding and develop the RHIOJV into production. As such, Mineral Resources intends to build a proposed private road, transporting ore to port within 2 years.

The RHIOJV tenements contain a mineral resource of 820 million tonnes (Mt) with a grade of 56.44% iron ore. Red Hill Iron owns a 40% stake while the remaining 60% interest is controlled by the Australian Premium Iron Joint Venture (APIJV).

About the Red Hill Iron share price

Shareholders will be gleefully smiling with Red Hill Iron shares zooming 275% higher today. Over the last 12 months, the company’s share price has recorded gains of 2,525% and year-to-date above 1,600%.

This means if you invested $1,000 in Red Hill Iron shares this time last year, you would be sitting on $24,000. Not a bad return for watching your portfolio grow.

The post Up 275% today, Red Hill Iron (ASX:RHI) share price enters stratosphere appeared first on The Motley Fool Australia.

More reading

• Why the Mineral Resources (ASX:MIN) share price will be on watch today
• ASX 200 shares in this sector pushing into record highs on Friday
• Why Janus Henderson, Mineral Resources, Telix, & Western Areas are rising
• ASX 200 midday update: NAB’s $2.5bn buyback, Origin shares sink
• Mineral Resources (ASX:MIN) share price hits another record high after quarterly update

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

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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

BlueBet Holdings Ltd (ASX: BBT)

According to a note out of Morgans, its analysts have retained their add rating and lifted their price target on this sports betting company’s shares to $2.44. This follows the release of a solid fourth quarter update last week, which revealed above prospectus growth. It was also pleased to see the company has started FY 2022 strongly. Looking longer term, it believes BlueBet is well-placed for growth thanks to Australian market share gains and its US market entry. The BlueBet share price is fetching $2.19 on Monday.

Telstra Corporation Ltd (ASX: TLS)

A note out of Goldman Sachs reveals that its analysts have retained their buy rating and $4.20 price target on this telco giant’s shares ahead of its full year results release. Goldman is expecting a result towards the high end of its FY 2021 guidance range. Looking ahead, it is expecting above consensus EBITDA guidance for FY 2022 and for management to guide to further growth in FY 2023. The Telstra share price is trading at $3.80 this afternoon.

Westpac Banking Corp (ASX: WBC)

Analysts at Citi have retained their buy rating and lifted their price target on this banking giant’s shares to $30.00. According to the note, the broker believes Westpac shares are trading at an attractive level for investors. Particularly given the prospect of capital management, cost reductions, and divestments. Citi is also forecasting fully franked annual dividend yields greater than 4.5% over the coming years. The Westpac share price is fetching $25.08 on Monday afternoon.

The post Leading brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

More reading

• ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high
• 2 ASX shares rated as strong buys by brokers
• Top ASX shares to buy in August 2021
• Westpac (ASX:WBC) and this ASX dividend share are rated as buys
• Telstra (ASX:TLS) share price slips as Optus teams up with Uber

Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. 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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The market may be charging higher today, but the same cannot be said for the Pro Medicus Limited (ASX: PME) share price.

In afternoon trade, the health imaging technology company’s shares are down 4% to $55.72.

This is an improvement on earlier in the day when the Pro Medicus share price was down 5.5% to $54.81.

Why is the Pro Medicus share price sinking?

The weakness in the Pro Medicus share price on Monday has been driven by a broker note out of Goldman Sachs.

According to the note, the broker has downgraded the company’s shares to a neutral rating with a $55.60 price.

This means the Pro Medicus share price is now trading broadly in line with this price target.

Why did Goldman Sachs downgrade its shares?

The note reveals that Goldman Sachs made the move on valuation grounds. This follows a strong gain by Pro Medicus’ shares over the last six months.

The broker said: “After a strong period of share price performance, PME’s market cap is now challenging the perceived TAM. Whilst Visage is naturally expanding the market through an improved value proposition and higher price point, valuation is clearly elevated (71.7x NTM EV/EBITDA GSe), now trading +63% above 5-yr avg. on our estimates.”

And while Goldman remains a big fan of the company, it doesn’t believe the risk/reward on offer is sufficient.

“Whilst we continue to view the stock and the market opportunity favourably, we view risk-reward at these levels as more balanced, and thus we downgrade from Buy to Neutral, with our new 12m TP of A$55.60 implying 5% downside vs coverage median of +3%. Since we added the stock to our Buy list on Feb 17, 2021, the shares are +30.4% vs. the S&P/ASX 200 +7.7%,” the broker explained.

Despite to today’s decline, Pro Medicus’ shares are still up 129% over the last 12 months.

The post Pro Medicus (ASX:PME) share price tumbles 5% on broker downgrade appeared first on The Motley Fool Australia.

More reading

• Why Fortescue, Over The Wire, Pro Medicus, & Whispir shares are dropping
• ASX 200 midday update: Afterpay to be acquired by Square, Oil Search to merge with Santos
• 5 things to watch on the ASX 200 on Monday
• These ASX 200 CEOs have the most wealth tied up in their companies
• Why the Pro Medicus (ASX:PME) share price is up 3% in a week

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 Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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