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Australia’s biggest bank has gotten a whole lot bigger this year. Following a strong rally in the Commonwealth Bank of Australia (ASX: CBA) share price, its market capitalisation is now within arm’s reach of $200 billion.

However, the bank’s valuation is not the only growing aspect of the company. In an interview with The AFR, CommBank’s Chief Information Officer Brendan Hopper described a growing emphasis on technology and innovation internally.

Banking on tech

Commonwealth Bank has not so secretly been building out its digital offerings. The bank already boasts the largest internal technology team in Australia with around 4,000 engineers.

However, Mr Hopper revealed this will grow by more than 650 additional engineers over the coming months. The bold hiring program comes as the bank shifts its internal software development team to a more traditional tech company structure.

Currently, the Commonwealth Bank is hiring two engineers per day. While this might seem high already, the bank is looking to increase that rate dramatically. Commenting on the hiring spree, Hopper said:

It is also part of a wider tech simplification journey, where another part is about moving the enterprise to the cloud piece by piece, eliminating the problem of needing to have data centres and shifting hardware around, because cloud just lets you treat everything as a software problem

These engineers will be working on a range of digital products under the bank’s umbrella.

Building beyond banking

This news follows Commonwealth Bank CEO, Matt Comyn’s digital banking initiatives presentation held in May. In this presentation, Comyn announced the launch of a pilot program that allows customers to view account balances from other eligible financial institutions directly in the CommBank app.

Additionally, it was revealed Commonwealth Bank had acquired a 23% shareholding in online shopping start-up Little Birdie. Subscription-based wholesale electricity provider, Amber, was also added to the bank’s investments.

These acquisitions and integrations are a part of CBA’s attempt to push beyond simply being an ASX-listed bank. Instead, the company sees its future as being a customer-facing tech platform. Offering an ecosystem that engages consumers beyond their banking experience.

CBA tops ASX most valuable

With the Commonwealth Bank share price soaring to recorded highs in recent weeks, the bank is now ASX’s most valuable company. At the time of writing, its market capitalisation is hovering around $178 billion.

The valuation puts ASX-listed CBA just outside the top 100 largest listed companies in the world. Its value wedges it between US giants Starbucks and IBM.

The post CBA (ASX: CBA) tech hiring to amp-up as it nears $200 billion valuation appeared first on The Motley Fool Australia.

More reading

• ASX 200 up 1.3%: Soul Patts-Milton merger, IGO jumps
• Leading brokers name 3 ASX shares to sell today
• Top broker says the Commonwealth Bank (ASX:CBA) share price is still overvalued
• Why are blue-chip ASX 200 shares selling off today?
• ASX 200 drops, CBA sinks, Boral sells US division

Motley Fool contributor Mitchell Lawler owns shares of Commonwealth Bank of Australia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Starbucks. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: short July 2021 $120 calls on Starbucks. The Motley Fool Australia has recommended Starbucks. 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 Propel Funeral Partners Ltd (ASX: PFP) are climbing slighty today. This comes after the company and an independent expert both recommended Propel’s shareholders vote in favour of its internalisation strategy.

At the time of writing, the Propel share price is $3.81 ­– 0.79% up on yesterday’s close.

Propel’s internalisation strategy will see the company take control of its management from Propel Investments Pty Ltd.

When Propel debuted on the ASX, it signed a 10-year agreement with the managing company. Now, due to share price woes, Propel wants to terminate the agreement.

Shareholders will vote on the internalisation strategy on 22 July.

Let’s take a closer look at what the strategy could mean for Propel.

What’s behind Propel’s internalisation strategy?

According to Propel, its management situation doesn’t align with the market’s environmental, social, and governance (ESG) expectations.

Propel believes that, since its initial public offering (IPO) in 2017, the growth of its share price hasn’t reflected its earnings.

Propel thinks its share price’s sluggishness could be due to its management style being misaligned with ESG expectations.

Additionally, the company believes many institutional investors are unable or unwilling to invest in Propel due to its external management.

What will change?

Currently, the management company is owned by entities associated with 3 of Propel’s co-founders-turned-executives.

As part of the internalisation strategy, the 3 co-founders will become employees of Propel.

Propel will also change its constitution to allow for 3 more board members, making an 8-person board.

Propel will pay a $15 million fee to terminate the agreement. Half of the fee will be paid in cash and the other half will be paid with Propel shares.  

The termination will see Propel avoiding the management fees it is currently paying. However, it will then be liable to pay its executives’ wages.

Since its IPO, Propel has paid its managing company $4.9 million, excluding GST. The 3 executives’ wages will cost Propel $1.6 million annually.  

The strategy will also see 14,732,667 escrowed shares released early. Half of the escrowed shares will be released next year and the other half in 2025.

An independent expert found the internalisation strategy isn’t fair, but it is reasonable. The expert also found the strategy’s advantages outweigh its disadvantages.

Propel’s independent directors have encouraged shareholders to vote in favour of the strategy.

Propel share price snapshot

Propel shares have been performing well on the ASX lately.

Currently, they are 33% higher than they were at the start of 2021. They have also gained 26% since this time last year.

The company has a market capitalisation of around $377 million, with approximately 99 million shares outstanding.

The post What’s driving the Propel (ASX:PFP) share price today? appeared first on The Motley Fool Australia.

More reading

• Why Bravura, Costa, Inghams, & Propel shares are pushing higher
• Why the Propel Funeral (ASX:PFP) share price is leaping higher
• Got money to invest for dividends? Here are 2 ASX shares that could be buys

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 recommended Propel Funeral Partners 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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At lunch on Tuesday, the S&P/ASX 200 Index (ASX: XJO) is bouncing back from yesterday’s selloff. At the time of writing, the benchmark index is up 1.3% to 7,331.9 points.

Here’s what is happening on the market today:

Soul Pattinson-Milton merger

The Milton Corporation Limited (ASX: MLT) share price is surging higher today after announcing a proposed merger with investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). The two companies intend to merge under an arrangement that will see the latter acquire 100% of the share capital in Milton it does not already own. The all-scrip proposal values Milton at approximately $6.00 per share. Both companies share the same chairman, Robert Millner.

IGO lithium transaction nears completion

The IGO Ltd (ASX: IGO) share price is charging higher today after revealing that a key condition precedent to forming a new lithium joint venture with Tianqi Lithium Corporation has progressed. In light of this, the clean energy focused mining company expects the transaction to complete on or before 30 June. The joint venture will initially be focused on the commissioning of Train 1 at the Kwinana Lithium Hydroxide Refinery.

Bank shares rebound

It has been a much more positive day of trade for Australia’s big four banks on Tuesday. All four are recording solid gains and helping to drive the ASX 200 higher. The best performer in the group has been the Commonwealth Bank of Australia (ASX: CBA) share price with a gain of 2.5%. This is despite Morgan Stanley maintaining its bearish view on the company’s shares.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Tuesday has been the Milton share price with a 12% gain. This follows the announcement of merger plans. The worst performer has been the Tyro Payments Ltd (ASX: TYR) share price with a 4% decline on no news.

The post ASX 200 up 1.3%: Soul Patts-Milton merger, IGO jumps appeared first on The Motley Fool Australia.

More reading

• Milton share price rockets 14% after Soul Patts merger news
• 3 top ASX shares in sector selling at 30% discount: expert
• Leading brokers name 3 ASX shares to sell today
• Iluka (ASX:ILU) share price jumps even as it pours water on M&A rumours
• Top broker says the Commonwealth Bank (ASX:CBA) share price is still overvalued

James Mickleboro does not own any shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Tyro Payments. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company 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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Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and Milton Corporation Limited (ASX: MLT) shares are in the spotlight today following an announcement the two companies have agreed to merge.

The Soul Patts share price has remained relatively steady, lifting 0.46% at the time of writing, whereas the Milton share price has rocketed 14.40% in morning trade.

The two investment companies have signed a binding scheme implementation agreement (SIA) for Soul Patts to buy all the Milton shares it doesn’t already own.

Let’s take a closer look at today’s news from the two investment companies.

Soul Pattinsons to merge with Milton

According to Soul Pattinsons’ release, the merger will create a diversified investment company focused on long-term market performance, dividend growth, and new portfolio additions.

The merger will see Milton shareholders given a combination of Soul Pattinson’s scrips and three fully franked dividends worth up to 45 cents per share.

Combined, the offered scrips and dividends are worth $6 per share – a 20% premium on the Milton share price as of yesterday’s close.

After the merger, Soul Pattinsons will boast a market capitalisation of $10.8 billion – increasing from $7.2 billion. Its increased market capitalisation could also see Soul Patts with more index participation.

It also expects to have higher cash generation and a lower cost base from an increased portfolio of dividends.

Finally, the merger will see Soul Pattinsons with around 60,000 shareholders, which it believes will increase its liquidity.

Milton’s independent directors have recommended the merger to shareholders, as long as it doesn’t receive a better offer.

Additionally, the merger is subject to Milton shareholder approval and an independent expert’s judgment to see if the scheme is in Milton shareholders’ best interests and that no adverse changes affect either company until the merger is complete.

Soul Pattinson is one of the only ASX-listed companies to have never skipped paying a dividend. Additionally, it’s increased its dividend each year for the last 20 years.

The merger is expected to be complete by early October.

Commentary from management

Soul Pattinson’s managing director Todd Barlow commented on the merger:

This is a transformative merger bringing together two of Australia’s great investment companies to create a $10 billion group with enhanced liquidity, diversification, and access to a broad range of asset classes.

Milton’s CEO and managing director Brendan O’Dea said:

The transaction would create a unique investment company by bringing together Milton’s demonstrated long-term capabilities in listed equities and [Soul Pattinsons’] successful record of generating strong returns for shareholders across a range of actively managed public and private investments.

Soul Pattinsons share price snapshot

It’s been a tough year so far for the Soul Pattinsons share price.

It has gained 0.30% since the beginning of the year. However, it’s gained 55.71% since this time last year.

Milton share price snapshot

With today’s gains, the Milton share price is up 19.92% since the start of 2021.

It has also gained 38.16% over the last 12 months.

The post Milton share price rockets 14% after Soul Patts merger news appeared first on The Motley Fool Australia.

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• 2 ASX dividend shares with very long dividend growth records
• The Brickworks (ASX:BKW) share price hit an all-time high today. Here’s why
• 3 reasons why Soul Patts (ASX:SOL) can be a good ASX dividend share
• 3 ASX shares that keep growing their dividends every year
• 2 ASX dividend shares that could provide steady income in retirement

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 Washington H. Soul Pattinson and Company 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 Australian share market has reached all-time highs, but according to one expert, there is still one sector that’s selling at a 30% discount.

There is constant commentary about the ageing population and the need for investment catering to older Australians.

So Citi senior investment specialist Mahjabeen Zaman is puzzled by how health shares have struggled recently.

“Australian healthcare stocks, which include some leading global companies, have underperformed our primary share market index, the S&P/ASX 200 Index (ASX: XJO), by 30% over the past 12 months,” he said on a Citi blog post.

“It is not a phenomenon restricted to Australia. In the United States, Bloomberg data shows the price of healthcare stocks, based on forward earnings estimates, trade at a 30% discount to the S&P 500 Index (SP: .INX).”

Zaman added that this situation provides investors with a golden opportunity to buy in for cheap.

“Healthcare will be a global focus for a long time to come… Life expectancy globally increased from 52 years in 1960 to nearly 73 years in 2019,” he said.

“Citi views increasing longevity as one of our unstoppable trends, which are long-term forces that revolutionise the way we live and do business globally.”

Zaman’s team reckons growth in healthcare revenues and profits will outpace other sectors just because of the ageing global demographics.

“Also, the potential ‘value’ of healthcare shares stands out, as most other sectors are trading at high valuations,” he said.

“Historically, healthcare has shown resilience on the downside when broader markets correct.”

3 leading ASX healthcare shares

Zaman especially likes 3 ASX stocks in particular — CSL Limited (ASX: CSL), Resmed CDI (ASX: RMD) and Sonic Healthcare Limited (ASX: SHL).

“A shared trait is they derive the majority of revenue from US sales, placing the companies in a prime position to do well as the US recovers from the pandemic.”

Resmed’s ungeared balance sheet and strong cash flow is attractive to Citi.

“We expect continued share buybacks likely in the absence of meaningful acquisition opportunities.”

The prospect of plasma donors in American returning in the post-COVID era gives CSL tremendous comeback potential.

“Plasma fractionation accounts for about 85% of CSL’s earnings,” said Zaman.

“We expect that as the year progresses plasma donors will return in the US, and that plasma collections will increase towards normal, leading to earnings upgrades next year.”

Sonic Healthcare is the third largest pathology services provider in the world, according to Zaman.

“Sonic owns the biggest privately held pathology lab in the US, Clinical Pathology Laboratories, as well as one of Europe’s largest, Bioscientia Healthcare,” he said.

“Management has made it clear the company’s balance sheet is under geared, and have a pipeline of merger and acquisition opportunities. It is actively bidding on a number of opportunities [for] mergers and acquisitions, contracts and joint ventures in Australia, UK, USA and Canada.”

Sonic’s shares were up 1% on Tuesday morning, trading at $37.92. They’re up 15% this year.

CSL stocks plunged 1.64% in early trade on Tuesday, to go for $299.98. That’s 5% up year-to-date.

Shares for Resmed rose 1.27% on Tuesday morning, selling for $31.86. They’ve ascended 16% this year so far. 

The post 3 top ASX shares in sector selling at 30% discount: expert appeared first on The Motley Fool Australia.

More reading

• Iluka (ASX:ILU) share price jumps even as it pours water on M&A rumours
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 drops, CBA sinks, Boral sells US division
• Why Seven (ASX:SVW) has slammed the Boral deal today
• 2 blue chip ASX shares rated as buys

Tony Yoo 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 CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has recommended ResMed Inc. and Sonic Healthcare 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 BetMakers Technology Group Ltd (ASX: BET) share price opened in positive territory on Tuesday after the company announced an update for fixed odds wagering in New Jersey.

At the time of writing, the BetMakers share price is up 1.69%, trading at $1.20 after touching an intraday high of $1.26 this morning.

What did BetMakers announce?

Investors are buying the BetMakers share price this morning after the company advised that the ‘Fixed Odds Bill’ to authorise “fixed odds wagering on horse races through a fixed odds wagering system“ was passed unanimously in both the Senate and General Assembly in New Jersey this morning.

In today’s statement, the company advised that Senate voted 40-0 in favour of the Fixed Odds Bill, after amendments were made to accommodate the horsemen groups and stakeholders.

The Fixed Odds Bill was then successfully passed through the General Assembly, after a unanimous 71-0 vote in favour.

The Bill will now go to Governor of New Jersey, Phil Murphy, for approval to become law.

If successful, New Jersey will be the first state to offer fixed odds betting options for horse racing.

BetMakers is eager for the passing of this Bill, with an exclusive 10-year agreement with the New Jersey Thoroughbred Horsemen Association and Darby Development LLC, the operator of Monmouth Park racetrack, to manage its fixed odds thoroughbred horse racing.

What did management say?

BetMakers CEO Todd Buckingham welcomed the news, saying:

We are pleased that the Bill, after minor amendments, has now passed full votes on the floor of the Senate and General Assembly in New Jersey. The legislative process has been thorough and exhaustive in terms of our consultative approach with lawmakers and stakeholders in the New Jersey racing industry.

We have done this with a view to setting the right legal and commercial framework for introducing Fixed Odds betting into the US through New Jersey.

Buckingham said the support for fixed odds “as a solution to facilitate growth in the horse racing industry in the US” was gaining momentum throughout the industry.

We are excited about what this opportunity means for the racing industry in New Jersey and more broadly in the US. We are also excited about what it enables for BetMakers as a Company, and our shareholders

BetMakers share price staging a comeback

BetMakers’ Tabcorp Holdings Limited (ASX: TAH) Wagering and Media business takeover offer plunged its share price from $1.60 on 27 May to a low of $1.015 on 7 June.

The Betmakers share price has since staged a minor comeback, bouncing more than 20% off lows to $1.20 at the time of writing.

The recent rally has been supported by a stream of positive news, including the completion of its Sportech acquisition and today’s Fixed Odds Bill milestone.

The post BetMakers (ASX:BET) share price lifts on wagering milestone appeared first on The Motley Fool Australia.

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Kerry Sun 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 Betmakers Technology Group Ltd. The Motley Fool Australia has recommended Betmakers Technology Group 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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On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below. Here’s why these brokers are bearish on these ASX shares:

Commonwealth Bank of Australia (ASX: CBA)

According to a note out of Morgan Stanley, its analysts have retained their underweight rating and $89.50 on this banking giant’s shares. This follows news that Commonwealth Bank has signed an agreement to sell its general insurance business to Hollard Group for an upfront consideration of $625 million. While Morgan Stanley expects this to boost the bank’s CET1 ratio and allow it to undertake a $5 billion share buyback in August, it isn’t enough for a more positive rating. The broker still believes its shares are overvalued at the current level. The Commonwealth Bank share price is trading at $99.93 today.

Rio Tinto Limited (ASX: RIO)

A note out of UBS reveals that its analysts have downgraded this mining giant’s shares to a sell rating with a $104.00 price target. According to the note, the broker suspects that the iron ore price could retreat by as much as 50% over the next 18 months. This is due to increasing supply in Brazil, growing stockpiles at Chinese ports, and Chinese regulators trying to subdue commodity prices. The broker notes that a decline of this level would make Rio Tinto’s dividend unsustainable. The Rio Tinto share price is currently fetching $121.99.

Scentre Group (ASX: SCG)

Analysts at Macquarie have retained their underperform rating and $2.62 price target on this shopping centre operator’s shares. According to the note, Macquarie is cautious on large retail assets ahead of results season. It doesn’t believe that strong retail sales growth is leading to meaningful improvements in leasing spreads. Its analysts fear this is placing pressure on mall operators’ underlying cash flows. The Scentre share price is trading at $2.86 today.

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

More reading

• Iluka (ASX:ILU) share price jumps even as it pours water on M&A rumours
• Top broker says the Commonwealth Bank (ASX:CBA) share price is still overvalued
• Why are blue-chip ASX 200 shares selling off today?
• Rio Tinto (ASX:RIO) share price sinks on broker downgrade
• ASX 200 drops, CBA sinks, Boral sells US division

James Mickleboro does not own any shares 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 Iluka Resources Limited (ASX: ILU) share price surged this morning even after management dismissed speculation that it could have found a buyer for its troubled Sierra Leone asset.

The Iluka share price jumped 4.1% to $8.11 in morning trade, which makes it the fourth best performer on the S&P/ASX 200 Index (Index:^AXJO).

Coincidentally, all the best performers on the index are mining shares. The leader is the IGO Ltd (ASX: IGO) share price with a 6.1% rally. It’s followed by the Chalice Mining Ltd (ASX: CHN) share price and the Pilbara Minerals Ltd (ASX: PLS) share price.

Iluka share price jumps on divestment rumour

The big rally follows the drubbing on the ASX yesterday and investors won’t let the quashing of a rumour spoil their bounce-back party.

Iluka acknowledged media speculation that it was moving closer to selling its rutile operations in the African nation. But management said it has nothing new to report.

A number of news outlets, including The Australian, wrote that a number of potential suitors may be knocking on Iluka’s door.

Divestments are an exciting business for ASX companies. Remember that Iluka only recently successfully spun-off Deterra Royalties Ltd (ASX: DRR).

Sierra Rutile on the auction block

Iluka said last month that it informed the Sierra Leone government that it was considering mothballing the money-losing mine by November.

In the meantime, Iluka would look at ways to keep the mine operating. This includes bringing in a partner or selling the asset.

Assets in Africa aren’t typically the easiest to flog given the continent’s volatile geo-political environment.

Cashed-up and motivated Chinese buyer

But The Australian reported that China’s Lomon Billions may be a hot contender. There are a few reasons to believe why Lomon could be eager.

Firstly, the Shenzhen-listed major is eyeing a secondary listing on the Hong Kong stock exchange. Using its large war chest to add assets ahead of the new float would attract better support from Hong Kong investors.

Further, China seems to have a smoother relationship with Africa than with many other parts of the world.

This makes Sierra Rutile a more palatable buy for Lomon than other assets in Australia or India – countries that Lomon said it was looking at.

Other potential suitors

But Chinese suitors may not be the only ones willing to run the ruler over Sierra Rutile. European major Kronos Worldwide isn’t spared from the rumour mill. Kronos already has an offtake agreement with Iluka at Sierra Rutile.

It may be tempted to move up the value chain, particularly at a time when commodity prices are buoyant.

This takes me to a more important point. The real reason Iluka’s share price may be running could be due to speculation about a profit upgrade.

A better reason for Iluka’s share price rally

Iluka may be able to negotiate a substantial increase in zircon prices as contracts come up for renewal.

Some media reports suggest Iluka could add around US$125 a tonne as zircon supply is tightening. This is in part due to problems at the Richard’s Bay operations in South Africa, which is owned by Rio Tinto Limited (ASX: RIO).

At least speculation about the price increase seems to be on more solid footing than rumours about looming asset sales.

The post Iluka (ASX:ILU) share price jumps even as it pours water on M&A rumours appeared first on The Motley Fool Australia.

More reading

• Leading brokers name 3 ASX shares to sell today
• Here’s why the IGO (ASX:IGO) share price is racing 9% higher today
• 5 things to watch on the ASX 200 on Tuesday
• Why are blue-chip ASX 200 shares selling off today?
• Rio Tinto (ASX:RIO) share price sinks on broker downgrade

Brendon Lau owns shares of Iluka Resources Limited, Rio Tinto Limited, Deterra Royalties Limited and IGO Ltd. Connect with me on Twitter @brenlau.

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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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.

Volatility has returned to the stock market, but finally, the Nasdaq Composite (NASDAQINDEX: ^IXIC) is starting to make waves once again. The tech-heavy index is making a run toward all-time highs, trading within 1% of its high-water mark on Monday afternoon. As of just before 2 p.m. EDT today, the Nasdaq was higher by three-quarters of a percent.

It wasn’t that long ago that investors figured that stocks of COVID-19 vaccine manufacturers had already seen their best days. Companies like Moderna (NASDAQ: MRNA) and BioNTech (NASDAQ: BNTX) had seen their share prices start to give up ground as many believed that a vaccinated world would eventually cause revenue and profits to dry up for the vaccine makers. Now, though, it’s becoming increasingly clear that the two companies could well have a much brighter future than many had thought.

More moves for Moderna and BioNTech

Shares of the vaccine manufacturers were among the leaders on the Nasdaq today. Moderna’s gains amounted to more than 5%, while BioNTech boasted gains of 6% or more on the day.

The general sentiment toward BioNTech and Moderna has been positive because of just how effective their vaccines have been. Last month, the U.S. Centers for Disease Control and Prevention released the latest figures on efficacy for the messenger-RNA-based vaccines from the two companies. Data from real-life use showed a reduction in infection risks of 91%. Those who got infected had a 60% lower risk of showing symptoms, and they spent on average six days fewer being sick and two days fewer stuck in bed recovering.

In addition, the companies have benefited from sustained demand for COVID vaccines from countries around the world. On Monday, BioNTech said that it had received provision approval of its vaccine from regulators in New Zealand. Over the weekend, the government of the Philippines announced a 40-million-dose agreement with BioNTech and Pfizer (NYSE: PFE) for more vaccine doses as well.

More broadly, some health officials have started talking about the potential need for vaccine booster shots. It’s uncertain at this point whether and how quickly antibody levels from initial vaccinations decline, and so it’s entirely possible that even those who’ve already received vaccinations could need additional doses in the future. From a business standpoint, that would create even further demand for Moderna and BioNTech that could dramatically lengthen the expected flow of revenue stemming from COVID vaccines.

Will existing vaccines be enough?

The biggest threat on the COVID front comes from the potential for the virus to mutate into more-dangerous variants. Already, the Delta variant has proved to be more easily transmitted among infected patients and with more-severe health impacts. Future variants could prove even more problematic, and there’s no guarantee that existing vaccines will provide protection against them all.

For the most part, both Moderna’s and BioNTech’s stock prices seem to reflect little expectation of success beyond the current COVID vaccine products. Yet if anything, COVID has proved that the broader-based investing thesis behind mRNA-based treatment development is sound. Both companies have plans for vaccines and other treatments for a wider variety of different medical conditions, and success anywhere on that front could provide the positive surprise investors need to gain confidence in the long-term futures of these stocks.

If you made the mistake of thinking that COVID vaccine stocks would be done once much of the U.S. population had been vaccinated, you aren’t alone. But you might be surprised at how much staying power BioNTech and Moderna could have — especially if a few things end up working out in their favor.

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

The post If you thought these 2 big Nasdaq winners were done, think again appeared first on The Motley Fool Australia.

More reading

• Moderna files for FDA approval of its COVID vaccine in teens
• Here’s how Moderna plans to beat the biggest threat to its vaccine
• Moderna’s teen COVID-19 vaccine trial hits high marks

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Moderna Inc. 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.

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

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The Adairs Ltd (ASX: ADH) share price is climbing on Tuesday following an update on the acquisition of Mocka.

Founded in 2007, Mocka is an online furniture business based in Brisbane, Australia, and in Christchurch, New Zealand. The company sells home furniture and décor as well as kids and baby products.

In mid-morning trade, Adairs shares are up 1.53% to $4.64.

Let’s take a closer look and see what the company announced.

Adairs brings forward Mocka acquisition

Investors are snapping up Adairs shares after the company provided some positive news.

According to its release, Adairs stated that it has entered into an agreement with the vendors of Mocka to bring forward a settlement.

Back in November 2019, Adairs signed a purchase agreement for the deferred consideration component of Mocka. The 35% interest was to be split across two tranches on 30 September 2021 (15%), and in September 2022 (20%). The payable amount was based on the previous years of underlying earnings before interest and tax (EBIT).

However, under the revised agreement, Adairs will pay NZ$48 million (A$45 million) in September 2021 to acquire the entire 35% stake. This will be funded by the company’s existing cash and term debt facilities.

In total, Adairs will have paid NZ$100 million (A$95 million) for the whole of Mocka following the September 2021 payment. This equates to around 7 times FY21’s EBIT forecast for Mocka.

Adairs managing director and CEO, Mark Ronan commented:

This is a positive development for Adairs. Mocka has performed ahead of the expectations we had of the business when we acquired it in December 2019. Since then, our understanding of and confidence in the potential for the business has continued to develop, especially the scope for substantial further growth in Australia.

The early settlement of the deferred consideration enables the business to continue to invest in the short-term to realise the long-term potential that is beyond the time horizon of the founders. The total consideration paid for the business represents excellent value for Adairs shareholders.

In addition, Adairs noted that it expects to announce a new CEO for Mocka in August 2021. In the interim, the founders will remain in the business to support the transition until 30 September 2021.

Adairs share price review

It has been a strong 12 months for the Adairs share price, reaching a record high of $4.97 in late April. The company’s shares have continued their upwards trajectory, gaining almost 40% in 2021 alone.

Based on today’s price, Adairs commands a market capitalisation of roughly $772 million, with approximately 169 million shares outstanding.

The post Why the Adairs (ASX:ADH) share price is edging higher today appeared first on The Motley Fool Australia.

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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 recommended ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended ADAIRS FPO. 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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