Tag: Motley Fool

The Butn Limited (ASX: BTN) share price has had a reasonably subdued start to life as a listed company.

The business-to-business transactional funder’s shares landed on the ASX boards on Tuesday at an offer price of 50 cents per new share.

This morning the Butn share price is trading at 50.5 cents, up a modest 1% from its offer price.

The Butn IPO

Butn’s IPO raised $20 million at 50 cents per share. Management notes that the IPO was oversubscribed and received strong support from institutions, high net worth individuals, and retail investors. It also was supported by accounting platform provider MYOB Australia, which has increased its strategic investment in Butn to 19.9%.

Based on the current Butn share price, this gives the company a market capitalisation of ~$81 million.

According to the release, the IPO funds will be used to invest in Butn’s core business model, including receivables book growth, accessing new markets, and expanding its Platform Partnerships

What is Butn?

Butn was founded by joint CEOs and Executive Directors Rael Ross and Walter Rapoport. It helps small and medium enterprises (SMEs) through their working capital constraints, providing them with business transactional funding. To date, Butn has financed more than $500 million of business transactions since 2015.

In 2020, the company launched its fintech solution which digitises and automates the process. This includes customer on-boarding, credit and risk assessment, funding and collections, providing business funding at the click of a button.

The company highlights that the Butn fintech solution is built to integrate with strategic Platform Partners, such as MYOB Australia, allowing for rapid scalable distribution of its funding products.

Joint CEO Rael Ross said: “Australian SME funding is a $300 billion market opportunity which is under- serviced by traditional financiers. Our proprietary Butn fintech solution, our proven track record and the successful IPO all position us strongly for future growth alongside our Platform Partners and shareholders.”

Butn share price performance

While today has been subdued, day one was a little more eventful for the Butn share price.

It was up as much as 10% yesterday before fading back down to its offer price. Shareholders will be hoping the early gain on Tuesday is a sign of things to come.

The post Butn (ASX:BTN) share price edges higher following IPO appeared first on The Motley Fool Australia.

More reading

• Why the Lark (ASX:LRK) share price just jumped 26% to a new all-time high
• CBA (ASX:CBA) economists expect inflation sooner than RBA
• Challenger (ASX:CGF) share price jumps 14% on Athene/Apollo news
• Why eBay gained 15% in June
• Why the CleanSpace (ASX:CSX) share price is freefalling 23% today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia 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.

from The Motley Fool Australia https://ift.tt/3Ayq7EI

Senior economists from the Commonwealth Bank of Australia (ASX: CBA) expect inflationary conditions in the Australian economy to be met earlier than the RBA’s initial forecasts, a new report from Commsec details.

In the release, economists Craig James and Ryan Felsman spell out the Commonwealth Bank’s views on the cash rate, the jobless rate numbers moving forward, interest rates decisions, and inflationary expectations for the coming periods.

Let’s take a look at what the report captures in closer detail.

Inflation sooner than RBA expectations

Commentary within the report alludes to the RBA’s expectations of holding the cash rate at 0.10% all the way until 2024:

The Reserve Bank (RBA) doesn’t expect to start lifting the cash rate until 2024 at the earliest.

But James and Felsman retort the RBA’s posture on the cash rate, stating:

However we believe that the risks are tilted to unemployment surprising on the downside and wage and price inflation surprising on the upside.

The research also indicates the RBA ideally wants to observe the jobless rate fall towards 4% (considered full-employment of the economy by RBA standards). Only when this occurs, the RBA views wage growth of ~3%.

In fact, according to the report, CommSec analysts view the following three “pre-conditions” necessary to occur before an early hike to the cash rate:

• Annual inflation sustained between 2-3%
• Growth in annual wages lifted to 3%
• Full employment as measured by the jobless rate ~4%.

“And when these [three] conditions hold, the RBA expects inflation to sustainably hold between 2-3%,” the duo state in the report, pointing out the RBA also doesn’t expect this to occur until 2024.

However, CBA economists anticipate these circumstances to align earlier, estimating the RBA will begin normalising the cash rate from the back end of 2022 if, and only if, the three conditions outlined above are met.

Should these conditions align before 2024, the CBA economists are confident the Australian economy will absorb inflationary pressures as early as 2022, ahead of the RBA’s schedule.

Additional commentary

The report also outlines additional CBA expectations regarding the outlook of the Australian economy.

The economists view the jobless rate to finish this year at 4.5%, before declining to 4% at the end of 2022.

Consequently, the analysts believe annual wage growth will expand from 1.5% to 2.9% by the end of 2022, reaching 2.4% by the end of 2021.

The bank also expects the Australian economy to grow by 3.9% in 2021-22, but notes several risks factors:

Risks to the forecasts include virus outbreaks; slow vaccine take up or vaccine shortages; policy mistakes on the removal of support measures; Chinese political tensions and extended delays in the re-opening of foreign borders.

Finally, the economists “conservatively forecast” the S&P/ASX 200 Index to hover within the ranges of 7,400 to 7,700 by the first half of 2022.

The post CBA (ASX:CBA) economists expect inflation sooner than RBA appeared first on The Motley Fool Australia.

More reading

• Forget CBA! Here are the 5 best performing ASX bank shares of FY21
• Leading brokers name 3 ASX shares to sell today
• Here’s what leading brokers are saying about the Commonwealth Bank of Australia (ASX:CBA) share price in July 2021.
• PEXA (ASX:PXA) share price jumps to new heights on first ‘normal’ trading day
• ASX 200 Weekly Wrap: ASX finishes FY21 on a high

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.

from The Motley Fool Australia https://ift.tt/3jKv3Au

The Challenger Ltd (ASX: CGF) share price has been a very strong performer on Wednesday.

In early trade, the annuities company’s shares are up 14% to $6.22.

Why is the Challenger share price racing higher?

Investors have been fighting to get hold of Challenger shares on Wednesday after it revealed a major new shareholder.

According to the release, leading US-based retirement services company Athene, together with its strategic partner Apollo Global Management, has agreed to acquire a 15% minority interest in Challenger from Caledonia (Private) Investments.

When combined with other Challenger shares acquired by Athene and Apollo, the acquisition of the 15% equity interest will result in a total expected minority economic interest of 18% for approximately A$720 million (or US$540 million).

A separate announcement shows that Athene paid $6.00 per share, which represents a premium of 9.7% to Challenger’s last close price.

Why is Athene investing in Challenger?

The release explains that Athene and Apollo, which are in the process of merging, see attractive long-term opportunities in partnering with and supporting Challenger’s continued growth as minority shareholders.

Athene notes that both it and Challenger share the same mission – to provide customers with financial security for retirement.

Athene’s CEO, Jim Belardi, commented: “Investing in Challenger represents an exciting opportunity for us to support a well-established platform within the Australian market, a geography we have been studying given the current economic conditions and compelling demographic fundamentals.”

“In many ways, Challenger is the perfect partner for us – the company is led by an experienced management team, has a strong market position, attractive growth prospects, and shares our deep commitment to retirees. Together, we believe we can help Challenger continue to build long-term value, similar to what we’ve been able to achieve in building Athene’s business in the U.S. and supporting the growth of our sister company Athora in Europe, where we are also minority shareholders,” he added.

Challenger’s Managing Director and Chief Executive Officer, Richard Howes, welcomed the investment.

He said: “Today’s announcement by Athene is a strong endorsement of Challenger’s market position and long-term growth prospects from a leading international retirement services provider. We look forward to working with Athene and Apollo as we continue to pursue our shared purpose of providing customers financial security for a better retirement.”

The post Challenger (ASX:CGF) share price jumps 14% on Athene/Apollo news appeared first on The Motley Fool Australia.

More reading

• 6 more shares that haunt fund managers
• This ASX share is the perfect inflation fighter, experts say
• Why CBA, Challenger, Newcrest, & Santos are dropping today
• ASX 200 drops, Sonic acquires, Challenger down
• Challenger (ASX:CGF) share price dips after revised capital measures

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 Challenger Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/36hnV6H

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of eBay (NASDAQ: EBAY) gained 15.3% last month, according to data provided by S&P Global Market Intelligence. The rally, which was spurred by a series of developments, not only unwound a couple of sizable pullbacks the stock suffered earlier in the year, but carried it well into record-high territory.

So what

Don’t look for any single catalyst. Rather, a series of bullish headlines all contributed to eBay’s strong June performance.

That series began with the official announcement that eBay would offer guaranteed authentication of luxury handbags sold via its e-commerce platform. While that’s an encouraging development in and of itself, it’s also reflective of a more sweeping overhaul at the company that is allowing it to do something that bigger rival Amazon (NASDAQ: AMZN) still struggles to do: offer some guarantees about the quality of products sold by third parties on its platform.

Now, ebay.com offers certified refurbished electronics as well as certified refurbished home goods, among others — and the latter category also launched less than a month ago.

Perhaps the biggest driver of eBay’s share price boost in June was the ongoing streamlining of the entire company. There was news that regulators will not seek to prevent the sale of eBay’s classified ads business to Norway’s Adevinta (OB: ADE). Further, the company is selling most of its South Korean business to Shinsegae Group’s E-Mart and search engine operator Naver. As is the case with the introduction of authenticated handbags, these planned divestitures reflect a bigger philosophical shift — in this case, toward a tighter focus on its e-commerce and online auction platform.

Finally, though it was announced in May, eBay’s foray into the non-fungible token (NFT) market likely contributed to last month’s big gain, by virtue of putting the company closer to the center of new sorts of digital consumerism and speculation.

Now what

These moves (and others) are steps in the right direction for the company, which arguably hasn’t made the most of how it differs from powerhouse Amazon — its focus on the sale of one-of-a-kind goods that require custom-crafted listings. But eBay is starting to do a better job of that, and at the same time is shedding business lines and units that aren’t adding enough long-term value to the company to justify holding on to them. Considering that context, this e-commerce company is a quality growth stock worth owning.

Would-be investors would be wise to exercise patience, however. With June’s gains in the books, eBay shares are now up by 165% from last March’s low and up by 50% from November’s low… and they are showing some profit-taking pressure. Notable pullbacks from rallies have been the norm for a year now, and this rally isn’t likely to yield a different result.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why eBay gained 15% in June appeared first on The Motley Fool Australia.

More reading

• Amazon, major retailers embrace crypto payments

James Brumley has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended eBay and has recommended the following options: long January 2022 $1,920 calls on Amazon, short January 2022 $1,940 calls on Amazon, and short June 2021 $65 calls on eBay. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

from The Motley Fool Australia https://ift.tt/3xngHKl

Sydney Airport Holdings Pty Ltd (ASX: SYD) shares have had a monumental week so far on the back of a proposed acquisition by a consortium of infrastructure investors and a super fund.

The Sydney Airport share price soared 33.9% on Monday after the indicative takeover proposal was released to the market. After finishing Friday’s previous session at $5.80, it reached $8.04 in intraday trade on Monday before closing at $7.78.

The airport’s share price dropped slightly, finishing Tuesday’s trade at $7.71. That’s still 32.9% higher than Friday’s close.

But does the $8.25 per share – roughly $22 billion in total – offered to Sydney Airport’s shareholders take the true value of the airport into consideration? Let’s take a look.

Are shareholders being ripped off?

Sydney Airport is one of only a handful of listed airports in the world. It sits 8 kilometres from the Sydney CBD, owns 7 hectares of land, and has what is effectively a 99-year lease which was signed in 2018, on the other 900 hectares it occupies.

It also has an approved commercial development plan that could see 2 hectares of business facilities built alongside its international terminal.

Right now, the Sydney Airport has a market capitalisation of around $21 billion.

However, in December 2019, while reports of a virus that would go on to be dubbed COVID-19 were beginning to swirl, the Sydney Airport share price hit an all-time high of $9.20.

If its share price was to reach that price again, the Sydney Airport’s market capitalisation would be roughly $24.8 billion.

According to reporting by the Financial Review, numerous experts agree that the offered amount is taking advantage of the pandemic’s effects and fails to account for the airport’s underlying worth.

The publication also claims the consortium might have to up its offer to convince one of Sydney Airport’s major shareholders, UniSuper. UniSuper owns roughly 15% of the company’s shares. The consortium’s offer is conditional upon it continuing to hold that level of investment in the airport.

Sydney Airport has yet to respond to the buyout offer. The question of whether its board believes the offer undervalues the airport will be answered in due time.

Sydney Airport share price snapshot

2021 hasn’t been a great year for ASX travel shares. Luckily, the Sydney Airport share price’s recent bump has herded it back into the green.

Currently, shares in Sydney Airport are 20% higher than they were at the beginning of this year. They have also gained 44% since this time last year.

The post Could Sydney Airport’s (ASX:SYD) buyout offer be selling investors short? appeared first on The Motley Fool Australia.

More reading

• Here are 3 ASX 200 shares that were on the move today
• Sydney Airport (ASX:SYD) takeover bid indicates funds are looking forward
• ASX 200 up, Sydney Airport soars, Airtasker rises
• Here are 3 ASX 200 shares making moves on the share market today
• Auckland Airport (ASX:AIA) share price jumps 6% on travel bubble news

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.

from The Motley Fool Australia https://ift.tt/3hAI0dq

The CleanSpace Holdings Ltd (ASX: CSX) share price is plummeting during early morning trade. This comes after the respiratory protection equipment company announced its unaudited results for the second-half of the 2021 financial year.

At the time of writing, CleanSpace shares are down 21.37% to $1.49.

How did CleanSpace perform in the second-half of FY21?

Investors are heading for the hills, selling CleanSpace shares following its latest performance update to the ASX.

For the 6 months ending 30 June 2021, CleanSpace reported revenue to fall at $10.2 million. This is a significant drop from the $39.7 million recorded in the first-half of the 2021 financial year. CleanSpace stated that United States vaccination rollout programs, oversupply of disposable masks, and extended lockdown restrictions impacted its result.

The company maintained a gross margin of 72% for H2 FY21, broadly in line with the prior period of 78%. This is encouraging despite the shift in sales mix from higher margin healthcare to industrial sales.

Statutory earnings before interest, tax, depreciation and amortisation (EBITDA) are estimated to come at a loss. The business is forecasting negative $2.1 million to negative $1.9 million after accounting adjustments are made. The disappointing result will drag down overall EBITDA between $17 million to $17.2 million for the entire FY21.

CleanSpace declared a cash balance of $38.2 million at the end of June, after paying a $5.2 million tax liability. Complementing the healthy balance sheet, the business minimised cash outflows whilst investing in the sales capability and other growth initiatives.

During the second-half, CleanSpace continued to increase unit sales from an improved customer base across its Healthcare and Industrial segment. It added over 50 new hospitals in the United States, more than 20 in Europe, and above 200 in Asia. In the Industrial sector, the business saw 8 new United States mining customers included in the mix.

Pleasingly, the United States government is seeking to protect COVID-19 frontline healthcare workers with powered air-purifying respirators or elastomeric respirators. This is expected to benefit CleanSpace, as it holds clinically designed best-in-class powered air-purifying respirators.

What did the CEO say?

CleanSpace CEO, Dr Alex Birrell noted that the operating environment has been challenging. However, the business is advancing its programs to support growth in the current climate. He said:

The business is committed to accelerated growth for market adoption by expanding our pipeline through aggressive sales and marketing activity, stakeholder engagement and our R&D roadmap.

CleanSpace is pleased to see countries with high vaccination rates that underpin the path to economic recovery; with customers and policy makers (as seen by the new OSHA Standard) now far more educated about respiratory protection, our technology is well positioned both in health and industry to meet their needs.

The company did not provide a guidance for the 2022 financial year, given the uncertain trading conditions.

About the CleanSpace share price

Over the last 12 months, CleanSpace shares have underperformed the broader ASX market, down almost 80%. Most of these losses have come this year after its massive fall in late March following a trading update.

On valuation grounds, CleanSpace presides a market capitalisation of roughly $145 million, with approximately 77 million shares outstanding.

The post Why the CleanSpace (ASX:CSX) share price is freefalling 23% today appeared first on The Motley Fool Australia.

More reading

• Telstra (ASX:TLS) to repay up to $25 million to customers for slow internet
• Woodside (ASX:WPL) share price lower despite acquisition update
• Brokers think these 2 top ASX shares are buys in July 2021
• Nanosonics (ASX:NAN) share price sinks 7% on broker downgrade
• Why the Splitit (ASX:SPT) share price is pushing higher today

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 recommended CleanSpace Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/2SX6hlK

Brokers have been looking for ASX shares that might be worth buying for investors. July 2021 could be the month to find these opportunities.

Some businesses have large growth plans for the long-term. If they’re able to achieve those goals, then that could lead to pleasing profit growth.

Here are two ASX shares that might be options:

FINEOS Corporation Holdings PLC (ASX: FCL)

FINEOS is a global software business that aims to provide modern customer-centric core software to the employee benefits and life, accident and health industry. It says it helps customers move on from outdated legacy administration systems to its purpose-built, software for new business, billing, claims, absence and policy administration, which improves operational efficiency.

It’s currently rated as a buy by brokers at Macquarie Group Ltd (ASX: MQG) with a price target of $4.63. That suggests a potential return of around 17% over the next 12 months if Macquarie is right. The broker believes that FINEOS is capable of more winning more contracts over time and continue increasing in size.

FINEOS says that it’s expecting organic subscription revenue growth of 30% for FY21, demonstrating “strong and consistent” software as a service (SaaS) revenue growth. Over 70% of its business is cloud-based revenue. The ASX share is expecting to see an acceleration of cloud adoption in FY22 by its ANZ clients.

A couple of months ago it announced the acquisition of Spraoi, which focuses on the employee benefits and life assurance marketplace. FINEOS said the Spraoi machine learning platform leverages carrier data to learn and generate insights, while the portal infrastructure normalises and improves the customer experience for stakeholders across the value chain.

Baby Bunting Group Ltd (ASX: BBN)

Baby Bunting is one of the faster growing ASX retail shares. It sells a wide range of products for babies and toddlers. The business has a national store network of around 60 stores. It has plans to see a network of over 100 stores around Australia.

Morgans is one of the brokers that likes Baby Bunting with a price target of $6.39, which suggests a potential upside of more than 10% over the next 12 months.

The broker is attracted to the profit growth potential of the business, with the addition of New Zealand expansion an attractive idea.

Baby Bunting said in its half-year result that it has assessed the NZ$450 million New Zealand market opportunity. The ASX share is planning to launch a multi-channel retail proposition with the first store anticipated in FY22 as part of a network plan of at least 10 stores.

The company is experiencing profit margins with greater scale and growth of its private label products. Whilst FY21 half-year revenue grew 16.6%, pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) grew 29.7% and pro forma net profit rose 43.5% to $10.8 million. Total online sales soared 95.9%, making up 19.7% of total sales.

According to Morgans’ estimates, the Baby Bunting share price is currently valued at 24x FY22’s forecast earnings.

The post Brokers think these 2 top ASX shares are buys in July 2021 appeared first on The Motley Fool Australia.

More reading

• 2 ASX shares that multiple brokers think could be buys

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 recommended FINEOS Corporation Holdings plc. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Baby Bunting and FINEOS Corporation Holdings plc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/2TAnVw0

Telstra Corporation Ltd (ASX: TLS) will have to refund its customers up to $25 million after an adverse finding by the communications industry watchdog.

The Australian Communications and Media Authority (ACMA) found between the years 2018 and 2020, Telstra omitted to tell almost 50,000 customers that maximum internet speeds it advertised were not possible at the time.

Under ACMA rules, telcos must verify maximum internet speeds and notify customers when speeds cannot meet those advertised. Customers are then entitled to move to a cheaper plan or exit the contract without cost.

ACMA says it expects the company to repay “around $25 million” to its affected customers. That figure includes additional cases beyond those ACMA considered. The authority says Telstra is working regularly with it on this issue and that remediations are already underway.

If Telstra fails to comply, it could be slapped with an additional $10 million fine. It remains to be seen what this could mean for the Telstra share price.

ACMA and Telstra responses

In a statement, ACMA chair Nerida O’Laughlin said:

The ACMA is very concerned with this conduct as these customers have been paying for a level of service they were not receiving.

Telstra denied these customers the opportunity to downgrade their plan or exit their contract.

She added:

We will take a very close look at the results of the independent audit to make sure we are satisfied that the action Telstra has taken will adequately address the flaws that led to the problems.

In a blog post from last month, Telstra executive Sanjay Nayak said the company was “very sorry” for letting customers down. He further said Telstra is making “significant improvements” to the way it communicates NBN speeds to its customers.

When contacted by Motley Fool Australia for additional comment, a spokesperson for the company said Telstra self-reported these breaches and it was “disappointing that the regulator as [sic] singled out Telstra and rewarded our self-reporting in this way”.

Telstra share price snapshot

Over the past 12 months, the Telstra share price has increased by 8.82%. Only yesterday, the business reached its 52-week high of $3.79 per share.

In other news affecting Telstra shares, the company announced last week it would sell a 49% interest in its mobile towers business to a cadre of investors for nearly $3 billion.

Telstra has a market capitalisation of $44 billion.

The post Telstra (ASX:TLS) to repay up to $25 million to customers for slow internet appeared first on The Motley Fool Australia.

More reading

• Telstra (ASX:TLS) share price hits 52-week high: Can it go higher?
• 2 blue chip ASX dividend shares rated as buys
• ASX 200 Weekly Wrap: ASX finishes FY21 on a high
• Why the Telstra (ASX:TLS) share price outlook suddenly improved last week
• Top brokers name 3 ASX shares to buy next week

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.

from The Motley Fool Australia https://ift.tt/3AsJizI

The Woodside Petroleum Limited (ASX: WPL) share price has come under pressure on Wednesday after a pullback in oil prices overnight offset the release of a positive announcement.

At the time of writing, the energy producer’s shares are down 2% to $23.63.

What did Woodside announce?

This morning Woodside announced that it has completed the acquisition of the entire participating interest of FAR Senegal in the Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore (RSSD) joint venture.

According to the release, the purchase price was US$45 million plus a working capital adjustment of approximately US$167 million. The latter is to reflect the acquisition effective date of 1 January 2020.

However, the final completion payment to FAR Senegal, after adjustments and the remedying of FAR Senegal’s defaults under the joint operating agreement, was approximately US$126 million. Additional payments of up to US$55 million are contingent on future commodity prices and timing of first oil.

Major milestone coming

Woodside’s Acting CEO, Meg O’Neill, was pleased with the news and notes that the Sangomar project is proceeding as planned.

She said: “The continued safe execution of the Sangomar project is a key priority for Woodside in 2021. A major milestone is expected tomorrow with the arrival of the Ocean BlackRhino drillship in preparation for commencement of development drilling next week.”

“The construction of the floating production storage and offloading facility, which is a converted oil tanker, is well underway and we are receiving delivery of subsea equipment in Senegal.”

O’Neill spoke very positive about the resource and expects it to be a boost to its revenues from 2023. She explained: “Sangomar is a world-class resource which will deliver near-term production and revenue for Woodside. We are targeting first oil in 2023.”

The Sangomar Field Development Phase 1 will comprise a stand-alone floating production system with a production capacity of approximately 100,000 barrels per day, 23 subsea wells, and supporting subsea infrastructure.

As a result of this acquisition, Woodside’s participating interest in the RSSD joint venture has increased to 82% for the Sangomar exploitation area and to 90% for the remaining RSSD evaluation area. However, it still intends to sell down its participating interest to approximately 40% to 50% in the second half of 2021.

The post Woodside (ASX:WPL) share price lower despite acquisition update appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Why ASX energy shares are set to rise again today
• 5 things to watch on the ASX 200 on Tuesday
• ASX energy shares in hotseat as OPEC+ struggles to contain crisis
• ASX 200 Weekly Wrap: ASX finishes FY21 on a high

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.

from The Motley Fool Australia https://ift.tt/3ACIHeK

The Nanosonics Ltd (ASX: NAN) share price has come under pressure on Wednesday morning.

At the time of writing, the infection prevention company’s shares are down 7% to $5.01.

Why is the Nanosonics share price sinking?

The catalyst for the weakness in the Nanosonics share price today has been a broker note of Goldman Sachs.

According to the note, Goldman has downgraded the company’s shares to a sell rating and cut the price target on them to $4.93.

Based on the current Nanosonics share price, this implies potential downside of 1.5% following today’s decline.

Why did the broker downgrade its shares?

There are a few key reasons why Goldman Sachs believes the Nanosonics share price is now overvalued. These include its slowing sales, a shallower than expected growth recovery, and the lack of a game-changing product launch.

Goldman explained: “Whilst financial/operating conditions across the US hospital channel have markedly improved, we increasingly believe NAN will be unable to recover the hardware deficit in full (we estimate +4.8k units in FY20-21E vs. initial expectations of +6k)”

“More recent data points suggest the recovery in elective procedure volumes is lagging expectations […]. We believe the biggest risk to a Sell thesis in NAN is a material, successful product launch. However, we also believe that the probability of this occurring in the near term has been reduced by last week’s launch of AuditPro,” it added.

This has seen the broker make meaningful downward revisions to its sales and earnings estimates through to FY 2023, which ultimately led to the downgrade to a sell rating.

Goldman commented: “Overall, we reduce FY21-23E sales/EBITDA/EPS by an average of (14)%/(30)%/(32)%, driving a (10)% downgrade in our 12m Target Price to A$4.93, which implies an -8% potential return, vs. a median +3% for our coverage. We now forecast (21)% below consensus EBITDA in FY21E and (35)% below in FY23E. Downgrade to Sell from Neutral.”

Competitive risks

Goldman Sachs also has concerns over competitive risks from new technologies.

It explained: “Looking forward, we believe NAN is exposed to an intensification of competitive risks, such as: i) continued growth of alternative approaches (e.g. UV-C based HLD); ii) NAN expects to soon be operating beyond ultrasound probes (i.e. facing new competitive dynamic which we cannot yet assess); iii) handheld ultrasound could continue to take share from the conventional market (i.e. which could present opportunities/risks).”

It notes that UV-C based HLD is a disinfection method that uses short-wavelength UV light to penetrate the cell walls of microorganisms. Once the light is absorbed by the nucleic acids within the microorganisms, the microorganisms become inactivated or killed.

While Nanosonics’ trophon technology may have better efficacy, the costs and processing time of UV-C based HLD is much lower. As a result, it fears that the “value proposition may be skewed more to convenience than efficacy.”

The Nanosonics share price is now down ~40% since the start of the year.

The post Nanosonics (ASX:NAN) share price sinks 7% on broker downgrade appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• 5 worst-performing ASX 200 healthcare shares of FY21
• 2 ASX healthcare shares analysts rate highly
• Brokers name 3 ASX shares to buy today
• Top broker gives its verdict on the Nanosonics (ASX:NAN) share price

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

from The Motley Fool Australia https://ift.tt/3jPYZv6