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Over the last five years, the Telstra Corporation Ltd (ASX: TLS) share price has thoroughly underperformed the Australian share market.

During this time, the telco giant’s shares have lost a disappointing 36% of their value.

As a comparison, the S&P/ASX 200 Index (ASX: XJO) has gained 38% during the same period. Both figures exclude dividends.

The tides are changing

However, the good news for shareholders is that 2021 has been very different for the Telstra share price.

In fact, the tides are now changing, and it is the Telstra share price that is outperforming the ASX 200. Since the start of the year, the company’s shares have risen 18%, compared to a gain of 9% by the ASX 200.

Why is the Telstra share price outperforming in 2021?

The catalyst for the Telstra share price rise in 2021 has been its significantly improved outlook and the belief that its dividend cuts are now over. This is due to the early success of its T22 strategy, its leadership position in 5G, asset monetisation plans, and rational competition in the telco industry.

Things are looking so positive that management is now talking about returning to growth again after years of declines.

In February, Telstra’s CEO, Andy Penn commented: “After a decade of disruption following the creation of the nbn, and with its rollout now declared complete, we can clearly see the path to underlying growth ahead of us.”

“Our investment in innovation and technology, digitisation and networks, improving our customer experience and being disciplined in our capital management, mean that at the start of this decade, as Australia digitises its economy, Telstra is in a strong position to grow,” he added.

Should you buy Telstra shares for its dividend yield?

Analysts at Goldman Sachs believe that Telstra would be a good option for income investors.

Earlier this month, the broker retained its buy rating and $4.00 price target on the company’s shares.

The broker also continues to expect fully franked dividends of 16 cents per share through to FY 2023, before a long-awaited increase to 18 cents per share in FY 2024. Based on the current Telstra share price of $3.57, this will mean annual yields of 4.5% until FY 2023 and then 5% thereafter.

The post Should you buy Telstra (ASX:TLS) shares for its dividend yield? appeared first on The Motley Fool Australia.

More reading

• Temple & Webster share price surges with other ASX COVID winners
• ASX 200 Weekly Wrap: Share market breaks 5 week winning streak
• Brokers name 2 ASX dividend shares to buy
• Is the Telstra (ASX:TLS) share price still good value?
• Here are 3 of the most heavily traded ASX 200 shares today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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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Bitcoin (CRYPTO: BTC) is edging higher, up 0.4% over the past 24 hours to US$34,659 (AU$45,604). That still leaves the world’s biggest token a long way off its mid-April record high of US$64,829.

Ethereum (CRYPTO: ETH) is having a stronger run, up 7.8% in 24 hours to US$2,126. That also remains well below Ether’s own mid-May record high of US$4,382.

Yet the recent falls don’t appear to be dissuading millions of retail investors from buying – or intending to buy – cryptocurrencies.

In fact, a recent survey conducted by cryptocurrency exchange Kraken and YouGov revealed 40% of Aussie millennials plan to invest in crypto assets as a way to save for a home.

And it’s not just Australians. According to Chainalysis, even gold-hungry Indians are snapping up crypto, with some US$40 billion worth of crypto investment over the past year.

With interest in Bitcoin, Ether and other cryptos showing no signs of abating, the Motley Fool reached out to Leigh Travers, CEO of blockchain consulting and development services company Digitalx Ltd (ASX: DCC), for his unique insight.

How China’s crackdown is long-term bullish for Bitcoin

You’ve likely heard about China’s crackdown on Bitcoin mining, along with the ban on Chinese financial institutions facilitating crypto transactions.

With 65% of global Bitcoin mining taking place in China in 2020, the crackdown has fuelled the price falls of the world’s biggest cryptos.

However, Travers told the Motley Fool he sees this as a short-term issue. In fact, he thinks Bitcoin and Ether are likely to come out better for it:

Our view on the two biggest risks for Bitcoin at the start of the year was China dominance in the market, as well as ESG (environmental, social, and corporate governance) headlines about carbon usage of Bitcoin mining.

The current short-term exodus of Bitcoin miners and Bitcoin traders out of China is absolutely long-term bullish. China had a significant percentage of Bitcoin miners that were powered by coal. That’s particularly true during their summer, as in winter it’s more hydro.

Travers points out that with Bitcoin miners fleeing Chinese soil, more activity is heading elsewhere in Asia and to the US state of Texas, with a greater percentage of renewable energy in the mix.

“To see how quickly both of these key risks are being reduced is giving us a significant increase in confidence for the long-term outlook for Bitcoin and the digital asset sector,” Travers told us. He added:

As Bitcoin moves towards a more renewable energy mix, and as Ether transitions towards a security model that utilises 99% less energy, the ESG concerns fade and some of the positive elements of ESG that digital asset markets provide will become evident.

El Salvador adopting Bitcoin as legal tender is one example of this, Travers said. He noted that financial inclusion in the Latin American country is only around 30%.

“A digital wallet that enables access to markets that have governance frameworks programmed is a positive opportunity for many,” he said.

Avoid these 2 big crypto pitfalls

While some crypto investors have made fortunes, others have lost some or all of the money they invested.

We asked Travers about the most common scam used to part would-be Bitcoin investors from their hard-earned money. He said:

Any direct emails from private cryptocurrency investment funds must be avoided. There are zero licensed private retail investment fund products in Australia, or the world, from my knowledge. At best they are offering you an unlicensed investment product. At worst, it could be a scam.

Travers also stressed never to invest more than you feel comfortable with:

The sector is highly volatile. If you haven’t done any research and the investment size is too large, you’re much more likely to be a seller when prices drop. If you have a strong investment thesis and your investment is sized appropriately, it is much easier to hold for your investment time horizon.

The best 3 cryptos to buy

We rounded off our questions by asking Travers which digital tokens he believes may outperform. He said:

Bitcoin and Ether are the digital assets experiencing the most institutional growth and really should be considered first before any other digital assets. We are seeing some incredible growth from Uniswap over the past 6 months, so that’s another that we like.

Uniswap (CRYPTO: UNI) is currently trading for US$18.30, up 8.0% in the past 24 hours.

According to CoinMarketCap, Uniswap is “a popular decentralised trading protocol, known for its role in facilitating automated trading of decentralised finance (DeFi) tokens”.

The post Investing in Bitcoin? How to avoid these 2 costly pitfalls appeared first on The Motley Fool Australia.

More reading

• What are meme coins, and can they make you rich?
• $4.7 billion of Bitcoin still missing in alleged mass fraud
• Cryptocurrency values plunged this past week. Should you change your investing strategy?
• ASX 200 Weekly Wrap: Share market breaks 5 week winning streak
• This crypto blew away Bitcoin’s 5% gains today

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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Independent oil and gas producer Santos Ltd (ASX: STO) has today launched the front-end engineering and design (FEED) phase for its Dorado project, located off the coast of Western Australia.

At the time of writing, the Santos share price is 1.24% in the red, currently trading at $7.16 per share.

What did Santos say?

Dorado is an integrated oil and gas project located in the Bedout Sub-basin, which is planned for 2 exploration and production phases. Santos has an 80% stake in the project and is also an operator, sharing the interest with Carnarvon Petroleum

Phase 1 of the project includes the production of oil and condensate through a floating production, storage and offloading facility (FPSO) and has an estimated cost of ~$2 billion.

Following a competitive phase amongst top-tier contractors, the tenders for the FPSO design are currently being finalised and are expected to be assigned over the next few months.

In today’s statement, Santos chief executive office Kevin Gallagher said:

Entering FEED for the Dorado project is a significant milestone and has the project on schedule for a final investment decision around mid-2022.

Dorado is on track to be the first development in the Bedout Sub-basin, with its high-quality
reservoirs and shallow-water setting, making it a very cost-competitive project globally.

The company is also seeking interest from market participants in non-operated equity interests in Dorado and other potential WA oil assets.

In the same release, Gallagher also commented on the potential of the project:

Potential nearby tie-in opportunities, starting with the Pavo and Apus prospects to be drilled early next year, could be easily tied-back into the Dorado infrastructure and materially increase the value of the project, due to the very low cost of development.

Santos share price snapshot

The Santos share price is down 1.24% intraday following the release, and is also in the red 3.5% over the previous 5 days at the time of writing.

Santos shares have climbed more than 11% year-to-date with a major jump from $6.77–$7.73 from 31 May–4 June, before pulling back to today’s level.

At a current share price of $7.16, Santos has a market capitalisation of $15 billion, and trades at a price-to-earnings ratio (P/E) of 12.84.

The post Santos (ASX:STO) share price sinks despite project update appeared first on The Motley Fool Australia.

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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 Australian Strategic Materials Ltd (ASX: ASM) share price has rocketed another 9.15% higher, trading at $7.75 the time of writing.

Shares in the integrated critical metals producer’s have spent most of this month in the green, surging more than 63% in June.

The company has not announced any price sensitive news this month, so let’s take a look at what else might be driving the Australian Strategic Materials share price run to record all-time highs.

What’s the latest?

Sustainable production of critical materials

Australian Strategic Materials has a “mine to manufacturer” business model, leveraging its rare earths and oxides resource at the Dubbo project to supply its strategic plants which refine the raw material into metals, alloys and powders.

According to its investor presentation on 11 May, the Dubbo project has received all required environmental approvals and ready for construction.

Additionally, the company said that the Dubbo project was targeting zero carbon emissions through large scale renewables.

In terms of its metallisation and refining plants, the company previously announced its first proposed Korean Metals Plant to produce high purity metals, alloys and powders.

Australian Strategic Materials has described this as:

A springboard for proposed global expansion in strategic locations, identifying partnership opportunities to push further downstream into magnets and other applications.

Right place at the right time

The Australian Strategic Materials share price isn’t the only ASX-listed producer of ‘critical metals’ running into record territory.

ASX lithium shares including Pilbara Minerals Ltd (ASX: PLS), Galaxy Resources Ltd (ASX: GXY) and Orocobre Limited (ASX: ORE) have all surged to multi-year highs this year. The jump in lithium miner valuations has been underpinned by higher lithium prices and strong demand across key markets.

A similar narrative is taking place for Lynas Rare Earths Ltd (ASX: LYC), the second largest producer of rare earths (ex-China).

The Lynas share price has lifted 33% year-to-date to an 8-year high of $5.60.

Globally, exchange-traded funds (ETFs) such as the Global X Lithium & Battery ETF and Invesco Solar ETF have lifted ~80% and ~147% respectively since February 2020.

It appears the Australian Strategic Materials share price is reflecting the overall bullish performance of renewable related industries.

The post Up 63% this month, Australian Strategic Materials (ASX:ASM) share price rockets higher appeared first on The Motley Fool Australia.

More reading

• Here are 3 of the most actively traded ASX 200 shares today
• Pilbara Minerals (ASX:PLS) shares are the most traded on the ASX 200 today
• 2 high performing ASX lithium shares tipped by top fund manager
• Here are some of the most actively traded ASX 200 shares today
• The Pilbara Minerals (ASX:PLS) share price is up 12% in a week

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

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is off its lows but still trading notably lower. At the time of writing, the benchmark index is down 0.5% to 7,267.5 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are storming higher:

Core Lithium Ltd (ASX: CXO)

The Core Lithium share price has risen 2% to 23.5 cents. This morning this lithium explorer revealed that leading global environmental and sustainability consultants ERM Group has completed its Greenhouse Gas Assessment of Finniss Project. According to the release, the study found that the project has lower emissions that its Western Australian peers and the lowest transport-related emissions than any other Australian lithium project.

Life360 Inc (ASX: 360)

The Life360 share price is up 4% to $6.21. Investors have been buying the family app maker’s shares following the release of a broker note out of Morgan Stanley. According to the note, the broker has initiated coverage on Life360 with an overweight rating and $8.60 price target. The broker believes that the market under appreciates the quality of Life360 and its significant user base.

Marley Spoon AG (ASX: MMM)

The Marley Spoon share price has stormed 4.5% higher to $2.95. This is despite there being no news out of the meal kit delivery company. However, with lockdowns occurring in Australia, investors may believe that demand for its meal kits will surge again.

Metcash Limited (ASX: MTS)

The Metcash share price has pushed 3% higher to $3.80. Investors have been buying the wholesale distributor’s shares after brokers responded positively to its full year results release. Credit Suisse and Morgan Stanley were among the most positive brokers. They have retained their equivalent of buy ratings and lifted their price targets to $4.16 and $4.15, respectively.

The post Why Core Lithium, Life360, Marley Spoon, & Metcash are storming higher appeared first on The Motley Fool Australia.

More reading

• Core Lithium (ASX:CXO) share price gains on project’s sustainability rating
• ASX 200 down 0.9%: Big four banks drop, Metcash charges higher
• ASX 200 flat, e-commerce ASX shares soar, Metcash rises
• These are the 10 most shorted shares on the ASX
• Why Atomo, Metcash, Temple & Webster, & Woolworths are pushing higher

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 recommended Life360, Inc. The Motley Fool Australia has recommended Marley Spoon AG. 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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Investors of ASX-listed bank shares have enjoyed the spoils of a rebounding economy. Yet, the best may still be to come as the big four Aussie banks deliberate over how to return an estimated $34 billion of excess capital to shareholders.

Analysts are already debating whether the returns will be via beefed-up dividends or share buybacks.

Let’s look at what analysts are expecting.

Big bucks from ASX bank shares

Despite a global pandemic, all of the big four banks delivered share price returns in excess of 40% over the past year. For shareholders, it has been somewhat bittersweet. While enjoying capital appreciation, they have had to suffer a hit to dividend payments.

However, with the economy springing back, those dividend cuts quickly stacked up as spare cash. Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking GrpLtd (ASX: ANZ), National Bank of Australia Ltd (ASX: NAB), and Westpac Banking Corp (ASX: WBC) are now all flushed with cash.

Analysts over at Morningstar estimate around $34 billion of excess capital will be returned to shareholders over the next few years. But the real question is, how will the spoils be shared?

Equity analyst, Nathan Zaia expects that all the ASX’s major bank shares will make off-market buybacks in the next 12 months. Zaia forecasts the remaining capital to be returned through bigger annual dividends between 2021 and 2024. Additionally, Zaia sees on-market buybacks occurring once franking balances are run dry.

We think the Commonwealth Bank could kick things off in August 2021 with an approximate AUD 5.5 billion off-market buyback. However, the bank’s conservatism around loan loss provisioning and dividends during 2020 and 2021 suggests shareholders may need to wait until 2022.

Divs or buybacks for CBA?

Morningstar analysts estimate Commonwealth Bank has around $10 billion of excess capital.

Based on the research firm’s numbers, it considers CBA to be trading a significant premium to its fair value estimate of $77 a share.

Hence, Morningstar would prefer Australia’s biggest bank to return capital via dividends. If the bank pursued this path, analysts estimate it could cover a 100% dividend payout ratio through to 2023.

At the time of writing, ASX bank shares are in the red. Furthermore, CBA is trading 0.40% lower to $99.47.

The post ASX bank shares weigh up $34 billion dosh-dishing decision appeared first on The Motley Fool Australia.

More reading

• ASX 200 down 0.9%: Big four banks drop, Metcash charges higher
• Genworth (ASX:GMA) share price dives 17% after CBA contract update
• Investors push Australia’s largest ASX shares to disclose climate risks
• Bank of Queensland shares outperforming all ASX 200 banks this month
• Why analysts rate Westpac (ASX:WBC) and this dividend share as buys

Motley Fool contributor Mitchell Lawler owns shares of Commonwealth Bank of Australia. 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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Shares in Core Lithium Ltd (ASX: CXO) are gaining today while the company is celebrating its Finniss Lithium Project’s sustainability evaluation results. At the time of writing, the Core Lithium share price is 24 cents – 2.17% higher than its previous close.

Let’s take a look at the latest news from Core Lithium.

One of Australia’s least carbon-intensive lithium mines

Core Lithium has announced its Finniss Lithium Project has been found to have less scope 3 emissions per tonne of product produced than other Australian lithium projects.

Additionally, only one noted Australian lithium project had fewer scope 1, 2, and 3 emissions per tonne of product produced than the Finniss Lithium Project.

Scope 1 emissions are from a company’s direct business, while scope 2 emissions are from creating the power a company uses. Finally, scope 3 emissions are those found in the rest of a company’s value chain.

The Finniss Lithium Project’s location means its emissions from transport are much lower than other lithium projects. It lies just 25km from a port, a power station, a gas source, and a railway. It’s also just 1 hour’s drive on a sealed road from Darwin Port and its workforce’s accommodation.

The assessment, produced with environmental and sustainability consultants ERM Group, looked at the Finniss Project’s carbon footprint, life cycle, and sustainability.

The report considered all activity at the mine site, including land clearing, fuel consumption, electricity usage and blasting. It also looked at scope 3 emissions created by transporting products, business travel, and employee commutes.

Core Lithium said it’s looking into ways to further reduce its carbon footprint. It plans to revegetate the mine site. It’s also considering powering the site with renewable energy and utilising electric vehicles.

Commentary from management

Core Lithium’s managing director Stephen Biggins said of the mine’s sustainability results:

Core Lithium has always been aware of the inherent environmental, social and infrastructure advantages associated with the Finniss Lithium Project. Work performed to date by ERM Group supports the company’s push towards greater sustainability transparency and greater focus is being placed on improving the company’s relatively low-carbon footprint.

Core Lithium share price snapshot

Today’s news has given yet another boost to the Core Lithium share price.

It’s currently 42% higher than it was at the start of 2021. It has also gained 384% since this time last year.

The company has a market capitalisation of around $270 million, with approximately 1.1 billion shares outstanding.

The post Core Lithium (ASX:CXO) share price gains on project’s sustainability rating appeared first on The Motley Fool Australia.

More reading

• Why Afterpay, Core Lithium, De Grey Mining, & Pro Medicus are storming higher
• Here’s why the Core Lithium (ASX:CXO) share price is lifting off today
• Core Lithium (ASX:CXO) share price rebounds on positive update

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

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Well, the news is coming thick and fast out of Wilson Asset Management (WAM) on the ASX this week. Yesterday, we covered the ASX debut of WAM’s newest Listed Investment Company (LIC), WAM Strategic Value Ltd (ASX: WAR). Today, we got some more dramatic news out of WAM. This time surrounding WAM Global Ltd (ASX: WGB).

WAM Global is one of WAM’s newer LICs, only hitting the ASX back in 2018. It was a first for the fund manager, considering WAM Global would be the first Wilson LIC to focus on companies outside the ASX (hence the name).

Since its ASX IPO back in June 2018, WAM Global has gone on to deliver an average performance of 12.1% per annum since. This includes some healthy dividend growth as well. WAM Global shares today offer a fully franked trailing yield of 3.5%.

WAM’s ASX wedding bells toll

Well today, it seems WAM Global is set to grow even larger. In an ASX announcement this morning, WAM Global told investors it has entered into a scheme with Templeton Global Growth Fund Ltd (ASX: TGG). This will allow the two funds to merge. Under the scheme, all Templeton shareholders will receive WAM Global shares and options. Shareholders can also choose to have their shares bought back by WAM for a cash consideration if the scrip offer isn’t appealing.

The exact cash/scrip numerations have yet to be determined. But WAM Global has stated that the scrip offer will be “calculated by reference to the relative NTA [net tangible assets] per share after tax, but before deferred taxes of WAM Global and TGG”. The cash offer, should investors choose to take it, will consist of shareholders receiving “cash equal to the NTA per [Templeton] share after all current and deferred taxes and associated transaction costs”.

Until the review of an “independent expert” over the deal, Templeton Global Growth Fund’s board has given their initial approval. They have told investors that they intend to vote in favour of the merger.

WAM Global founder and chair Geoff Wilson stated the following:

The WAM Global Board of Directors believe that the Scheme will be beneficial to both companies and result in a superior merged entity leveraging Wilson Asset Management’s proven investment strategy. We look forward to welcoming TGG shareholders to the Wilson Asset Management family as we continue to grow WAM Global.

WAM Global estimates that if all goes to plan, the merger can be implemented by the end of October 2021.

What would a combined LIC look like?

As we touched on earlier, WAM Global invests in companies mostly outside the ASX and Australia. Its current portfolio (as of 31 May 2021) is weighted 56.4% to US companies, 10.4% to German companies and 7.5% to British shares, amongst others. Some of WAM’s top holdings at the current time include Chinese giant Tencent Holdings ADR (OTCMKTS: TCEHY). As well as payments behemoth Visa Inc (NYSE: V) and gaming titan Electronic Arts Inc. (NASDAQ: EA).

Meanwhile, Templeton Global Growth’s top holdings (also as of May) include JPMorgan Chase & Co. (NYSE: JPM), Samsung Electronics Co Ltd (OTCMKTS: SSNLF), American Express Company (NYSE: AXP) and Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM). Templeton is also weighted heavily to the USA, which has a 36.9% weighting in the fund. Other significant geographical exposures come from Britain, Germany, Japan and South Korea.

The post WAM Global (ASX:WGB) swallows Templeton in massive ASX merger appeared first on The Motley Fool Australia.

More reading

• WAM’s WAR on the ASX! Wilson’s new LIC hits the share market
• Up another 6%, Oneview (ASX:ONE) share price hits 10-bagger status today
• Is Facebook about to finally launch its cryptocurrency?
• 5 international value shares with a positive outlook: analyst
• The Novatti (ASX:NOV) share price has hit an all-time high

American Express is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Sebastian Bowen owns shares of American Express, JPMorgan Chase, Visa, and WAMGLOBAL FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Taiwan Semiconductor Manufacturing and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Electronic Arts. 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 ResMed Inc (ASX: RMD) share price is out of form on Tuesday.

In afternoon trade, the sleep treatment focused medical device company’s shares are down 2.5% to $31.82.

Despite this decline, the ResMed share price is still up over 17% since the start of the month.

Why is the ResMed share price dropping?

Today’s decline appears to have been driven by a combination of broad market weakness and a broker note out of Citi.

In respect to the latter, this morning analysts at Citi downgraded the company’s shares to a neutral rating with an improved price target of $32.50.

This was broadly in line with the ResMed share price prior to today’s decline.

Why did Citi downgrade its shares?

According to the note, the broker made the move on valuation grounds after a strong gain by the ResMed share price this month.

It notes that this has been driven by news that rival Philips has recalled its DreamStation CPAP devices. And while the broker has upgraded its earnings estimates to reflect its belief that this development could be a short term boost to ResMed’s sales, it feels this is now reflected in its shares.

Citi commented: “The recall of Philips’ DreamStation CPAP devices creates an opportunity for RMD to fill the void in the short term and potentially make long-term market share gains. Philips is unlikely to be able to supply new patients until Jan 2022 as it ramps up production of its DreamStation 2 – new patients account for ~80% of Philips’ CPAP devices sales.”

“We upgrade FY22-23e EPS by 5%/10%, increase our TP to $32.50 (from $28.50) but downgrade to Neutral as the share price now reflects our base-case scenario. We assume RMD can increase its CPAP devices and masks manufacturing capacity by 20% and that Philips won’t re-enter the new patient market for 12 months – these two variables are the main unknowns. RMD has not made any comments on the situation and will report FY21 in August,” it concluded.

The post ResMed (ASX:RMD) share price tumbles on broker downgrade appeared first on The Motley Fool Australia.

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• ASX 200 down 0.9%: Big four banks drop, Metcash charges higher
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• Why Actinogen, Novonix, ResMed, & Zip shares are pushing higher
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• Top brokers name 3 ASX shares to buy 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 recommended ResMed. The Motley Fool Australia has recommended ResMed Inc. 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 Medibank Private Ltd (ASX: MPL) recovered from a poor start this morning following news the company will be returning around $105 million to its customers.

At the time of writing, the Medibank share price is $3.16 – 0.48% higher than its previous close.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is down 0.67% right now.

Let’s take a look at today’s news from the healthcare and health insurance company.

Medibank’s COVID-19 support

Medibank has announced it will be returning $105 million in COVID-19 net claims savings. Around 2 million of its customers will be eligible for the give back.

Medibank customers with extras-only policies will receive up to $52, while those holding hospital and extras policies could get $175.

It will also be postponing premium increases for 6 months.

Additionally, ahm customer extra limits will be extended by a year as many customers couldn’t use their extras during COVID-19 lockdowns.

The give back will be funded through a partial release of the savings Medibank made when customers were forced to defer their claims because of COVID-19.

Australian Medibank and ahm customers who held policies between 1 July 2020 and 30 June 2021 are eligible for the support. Most customers will receive the financial support by the end of September.

The company has now handed out $300 million worth of COVID-19 support.

Medibank doesn’t expect COVID-19 to impact its operating earnings for the 2021 financial year.

Commentary from management

Medibank’s CEO David Koczkar said of the company’s financial support package:

We’ve been there for our customers to help them navigate through this challenging time, and this give back is just another example of how we are supporting our customers…

We said right from the start of the pandemic that we would not profit from COVID-19, and that we were committed to returning any COVID-19 savings back to our customers because it is the right thing to do. And today’s announcement shows that we have done what we said we would.

Medibank Private share price snapshot

Lately, the Medibank share price has been performing well on the ASX. It’s currently 4% higher than it was at the start of 2021. It has also gained 7% since this time last year.

The company has a market capitalisation of around $8.6 billion, with approximately 2.7 billion shares outstanding.

The post Medibank (ASX:MPL) share price up as customers get millions in support 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 Bruce Jackson.

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