Tag: Motley Fool

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.

Despite its stock value having climbed more than 65% over the past year, online retail and tech titan Amazon (NASDAQ: AMZN) still has a gigantic growth spurt coming, one major analyst claims. Brent Thil, an analyst with Jefferies Financial Group, said in a research note today Amazon is likely to see a 70% rise over the next three years, and he sees a “pathway to $5,700” for the company, The Fly reports.

The official Jefferies price target for Amazon remains $4,000, a much more modest 17% rise from current share value. Thil’s speculative valuation, $1,700 higher than this point, doesn’t depend on any one facet of Amazon’s operations or situation, but is based on a “sum of its parts” view. He did, however, single out Amazon Web Services, or AWS, saying it is Amazon’s “most valuable business and is positioned for continued strength.”

Benzinga reports CNBC’s Jim Cramer provided some additional commentary on Thil’s $5,700 prediction. Cramer, pointing to Jefferies’ $1.25 trillion valuation of AWS, described the cloud platform as “an undervalued asset buried within this company.” He remarked Prime Video and Amazon’s advertising are two other sources of strength, and summed up Amazon by saying “I think it is going to prove to be an excellent long-term value.”

Notably, a previous bullish Amazon forecast from Jefferies came true. In April 2019, Brent Thil predicted the company’s shares would reach $3,000 in two years, a roughly 65% upside compared to the $1,828 stock price at the time. Amazon’s current value of $3,400 vindicates Thil’s optimism and the company’s possible telehealth expansion shows it’s still working to keep up the momentum. 

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

More reading

• The stock that I’d hold for the next 5 years: fundie
• Tesla and Palantir were some of the most popular US shares last week
• Better buy: Amazon vs. GameStop
• Better buy: Amazon vs. Kroger
• 2 investing approaches to help get you started on the ASX

Rhian Hunt 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 recommends Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. 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.

The post Analyst: Amazon still has a 70% upside potential over three years appeared first on The Motley Fool Australia.

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/3sgPEgq

The Universal Biosensors, Inc (ASX: UBI) share price is rising today, after good news from the company. It has entered into a distribution agreement with Chilean quality diagnostics, control and research company Singularity SpA.

The agreement will see Universal Biosensors’ wine testing platform device distributed in Chile for the first time.

Today’s news may herald another big day for the Universal Biosensors share price. It launched 9.6% higher yesterday following news the company made deals with Deakin University and the Swinburne University of Technology.

At the time of writing, the Universal Biosensors share price is 73 cents, up 6.6% from yesterday’s closing price.

Let’s look closer at today’s release from the company.

Cheers for Chilean wine testing

The distribution agreement with Singularity for Universal Biosensors’ wine testing platform device, Sentia, is for a 3-year term.

It will make Sentia available in Chile, the world’s 8^th largest wine-producing country.

The Sentia analyzer is a handheld device that can measure the free sulphur dioxide in post-fermentation red and white wine in under a minute.

Universal Biosensors is working towards making more wine analysis tests available on the device.

Commentary from management

Universal Biosensors CEO John Sharman welcomed the agreement, saying:

The launch of Sentia into Chile is another positive step in the commercialisation of Sentia globally. Chile is the 8th largest wine producing country in the world and Singularity is part of a leading group with diverse expertise in point-of-use devices with connections across Chile’s 200,000 hectares of vineyards.

The deal includes an initial commitment to purchase Sentia devices and strips which will be delivered over the course of the next few weeks.

Mr Sharman said the possibility of Sentia’s future testing capability for glucose, fructose, malic acid and others would “add significant value” to the winemaking industry.

We are negotiating terms with a number of key industry players around the world and look forward to reporting additional distribution partnerships in due course.

Universal Biosensors share price snapshot

The Universal Biosensors share price has performed well on the ASX lately, with today’s news bringing the latest boost.

It is currently up 51% year to date and has increased by a mammoth 294% over the past 12 months.

Universal Biosensors has a market capitalisation of around $120 million, with approximately 177 million shares outstanding.  

More reading

• Here’s why the Universal Biosensors (ASX:UBI) share price is soaring 10%
• Why the Universal Biosensors (ASX:UBI) share price is shooting 36% higher today
• Universal Biosensors (ASX:UBI) share price is lifting today. Here’s why

Motley Fool contributor Brooke Cooper 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.

The post Why the Universal Biosensors (ASX:UBI) share price is up 6% today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3tbG9jP

Capral Limited (ASX: CAA) shares are rocketing higher in early trade after the company confirmed it has received a non-binding, indicative proposal from a private equity firm. At the time of writing, the Capral share price is trading 20.52% higher at $7.40.

Let’s take a closer look at the Aussie aluminium products manufacturer’s news.  

Why is the Capral share price surging today?

In a pre-market update, Capral confirmed an approach from Allegro Funds Pty Ltd (Allegro) to acquire 100% of its shares. Allegro is proposing to pay $7.00 cash per share, which represents a significant premium to yesterday’s closing price of $6.14.

According to today’s release, the Allegro offer would be a 16.5% premium to the 1-day volume-weighted average price (VWAP) of $6.01 on 13 April 2021. It also represents a 17.6% premium to the adjusted 6-month VWAP of $5.95 on 13 April 2021.

That means shareholders will be keeping a close eye on the proposed takeover developments. The Capral share price has rocketed higher on the news, particularly given the board’s comments today.

The board believes the proposal “has the potential to provide shareholders with a liquidity event and the opportunity to realise a meaningful premium to the recent market value of their shares”.

It’s worth noting that the proposal remains non-binding and subject to several conditions. These include satisfactory completion of due diligence by Allegro, Allegro securing appropriate debt finance and both parties entering a binding scheme implementation.

However, the Capral share price has surged higher today in anticipation. The board has concluded that it is in the best interests of shareholders for Allegro to proceed with due diligence. That means the board will be engaging further with Allegro to progress this proposal.

Foolish takeaway

The Capral share price has leapt more than 20% higher at the open following the potential takeover news. The $7.00 per share cash offer represents a significant premium to yesterday’s closing price and would provide certainty to shareholders compared to a scrip consideration deal.

More reading

• Why the Dubber (ASX:DUB) share price is breaking out into record highs
• Why the Paradigm (ASX:PAR) share price is charging higher today
• Why the Empire Energy (ASX:EEG) share price is on watch today
• Fortescue (ASX:FMG) share price tumbles on broker downgrade
• The Johnson & Johnson COVID vaccine halt: here’s what investors need to know

Motley Fool contributor Ken Hall 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.

The post Why the Capral (ASX:CAA) share price is leaping 20% today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3wS19hK

The Dubber Corporation Ltd (ASX: DUB) share price has pushed into all-time record highs on Wednesday. This comes after the company announced that its unified call recording and voice AI features will extend to Zoom Video Communications Inc (NASDAQ: ZM). At the time of writing, the Dubber share price is trading at $2.08, up 6.12%.

Dubber share price higher with Zoom collaboration

Dubber with Zoom will offer key capabilities valued by enterprise and government clients. This includes features such as centralising a user’s Zoom Phone (voice) and Zoom Meeting (video/meeting data) cloud recordings.

Additionally, Dubber will also provide the capability to hold a user’s cloud recordings from Zoom, storing them centrally. This feature protects users for compliance purposes while making audio and video data available to users and other business applications. Dubber AI users can also access other features. These include transcriptions, sentiment data, real-time search, and more to enrich their Zoom recordings. 

Furthermore, Dubber with Zoom is available for order now. It can be acquired through registered Dubber resellers and partners. The flexible plan starts at US$14.95 per user/month and US$29.95 per user/month for Dubber AI. 

Management commentary  

Dubber CEO, Steven McGovern, commented on its availability with Zoom: 

Unified Call Recording with Zoom reflects the way employees work today – from anywhere and across many devices and solutions. Dubber has been chosen by over 150 telecommunications carriers and service providers as the recording and data capture platform for their networks. Many have embraced Zoom as an integral part of their business and communications infrastructure. The ability to capture recordings from Zoom and manage them centrally in the Voice Intelligence Cloud demonstrates the true value of Unified Call Recording.

Dubber share price snapshot 

The Dubber share price has been bouncing between the $1.50 and $1.90 levels since November 2020. This is despite a strong half-year results announcement in February. The company also highlighted a 61% increase in revenue to $10.1 million and a 14% improvement in loss after tax of $7.5 million. 

This week represents a significant breakout for the Dubber share price, with a move above $1.90 on Tuesday and making all-time record highs on Wednesday.

More reading

• Why the Capral (ASX:CAA) share price is leaping 20% today
• Why the Paradigm (ASX:PAR) share price is charging higher today
• Why the Empire Energy (ASX:EEG) share price is on watch today
• Fortescue (ASX:FMG) share price tumbles on broker downgrade
• The Johnson & Johnson COVID vaccine halt: here’s what investors need to know

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 Dubber. 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.

The post Why the Dubber (ASX:DUB) share price is breaking out into record highs appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3mI0pXZ

The Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price has been a positive performer on Wednesday.

In morning trade, the biopharmaceutical company’s shares are up 3% to $2.65.

Why is the Paradigm share price charging higher?

Investors have been buying Paradigm’s shares following an update on its knee osteoarthritis (OA) study.

According to the release, the company has enrolled its first patient in the exploratory PARA_OA_008 knee OA Biomarker study.

The release explains that the participant has been randomised and has begun study procedures, including joint aspiration to collect baseline biomarker synovial fluid Information, at Sportsmed Biologic in Box Hill, Victoria.

In addition, the treatment phase has now commenced, with the participant receiving the first dose of injectable Pentosan Polysulfate Sodium (iPPS) or placebo and will continue at two injections a week subcutaneously for a six-week period.

Positively, Paradigm revealed that additional participants have commenced the screening process and may also begin the treatment phase over the next few weeks. This is subject to meeting inclusion criteria.

Paradigm will update investors on key study milestones as they are achieved, with the primary endpoint data expected to read out in second half of calendar year 2021.

Paradigm’s CEO and Chairman, Paul Rennie, commented: “We are very pleased to have progressed to the treatment phase of the knee synovial fluid Biomarker study, by dosing of the first participant. This study has been designed to generate clinical data which will inform of the potential of Zilosul as the first in class disease modifying OA drug (DMOAD). Additionally, the data generated will form part of Paradigm’s submission package to the TGA for the next step of the provisional approval application.”

Shareholders will no doubt be hoping for strong study results later this year. Particularly given its sizeable market opportunity.

The company estimates that there are 14 million U.S. adults with symptomatic knee osteoarthritis at present that could benefit from this therapy.

More reading

• Paradigm (ASX:PAR) share price rises on partnership news
• Why Galaxy, HUB24, Paradigm, & Telstra shares are pushing higher
• Why the Paradigm (ASX:PAR) share price is charging 6% higher today

Motley Fool contributor James Mickleboro 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.

The post Why the Paradigm (ASX:PAR) share price is charging higher today appeared first on The Motley Fool Australia.

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

The Empire Energy Group Ltd (ASX: EEG) share price is on watch today.

This comes after the company entered a trading halt at its request pending a new announcement. Which in turn comes after it released a major acquisition announcement earlier this morning.

Below we take a look at the ASX energy share’s acquisition announcement, released shortly before it requested a trading halt.

What acquisition did Empire Energy report?

The Empire Energy share price remains in a trading halt after the company announced its intent to acquire an 82.5% interest in 5 oil and gas tenements in the Northern Territory’s Beetaloo sub-basin.

The company reported that its best estimate of Prospective Resources have more than doubled while its Contingent Resources have increased more than 350%.

Pangaea will receive $5 million cash and 140 million shares in Empire Energy once the transaction is complete. Pangaea will also receive 8 million unlisted options in Empire Energy with an exercise price of 70 cents per share.

Empire reported that the acquisition will give it numerous “drill-ready targets” and boost its early commercialisation plans for the Beetaloo.

Commenting on the acquisition, Empire Energy’s Managing Director Alex Underwood said:

This acquisition confirms Empire’s position as the leading Beetaloo independent. The transaction significantly increases Empire’s operated acreage, Prospective Resources and Contingent Resources in this key region.

Empire now controls a globally significant gas resource which strengthens our early commercialisation strategies. Pangaea’s tenements overlap the Amadeus Gas Pipeline, which in addition to the McArthur River Mine Gas Pipeline that crosses EP187, provides Empire with multiple pathways to market utilising existing infrastructure.

Underwood added that the resources contained in the tenements will help Australia and the wider Asian region meet their energy needs.

The acquisition remains subject to Empire Energy’s shareholder and Northern Territory government approvals. Empire expects the deal to be completed in June.

Amicaa is acting as financial advisor for Empire while Morgan Stanley is acting as financial advisor for Pangaea.

Empire Energy share price snapshot

Empire Energy shares have gained 98% over the past 12 months, far outpacing the 31% gains posted by the All Ordinaries Index (ASX: XAO).

Year-to-date the Empire Energy share price is up 4%.

More reading

• Fortescue (ASX:FMG) share price tumbles on broker downgrade
• The Johnson & Johnson COVID vaccine halt: here’s what investors need to know
• Ramsay (ASX:RHC) share price rises on acquisition speculation
• Why the Lithium Australia (ASX:LIT) share price is surging 7%
• Could this help the Zip (ASX:Z1P) share price catch up to Afterpay?

Motley Fool contributor Bernd Struben 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.

The post Why the Empire Energy (ASX:EEG) share price is on watch today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3tcvo0C

The Fortescue Metals Group Limited (ASX: FMG) share price has come under pressure on Wednesday.

In morning trade, the iron ore producer’s shares are down 2% to $19.98.

Why is the Fortescue share price tumbling lower?

Investors have been selling Fortescue’s shares this morning after it was the subject of a broker note out of Goldman Sachs.

According to the note, the broker has downgraded the company’s shares to a sell rating and cut the price target on them to $18.90.

This price target implies potential downside of 5.5% over the next 12 months.

Why did Goldman downgrade Fortescue’s shares?

There were a number of factors that led to Goldman Sachs downgrading the Fortescue share price this morning.

One of the main ones was its relative valuation. It notes that Fortescue’s shares are changing hands at 1.4x net asset value (NAV). This compares unfavourably to BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO), which are trading at 0.95x NAV.

Goldman also estimates that its shares will be trading at 8x estimated FY 2023 operating earnings when iron ore prices retreat to the US$80 per tonne to US$90 per tonne level. Whereas BHP and Rio Tinto’s shares will be trading at 4.5x to 5x operating earnings.

Why else is Goldman bearish?

The broker also has concerns over the widening of lower grade iron ore prices in comparison to benchmark iron ore.

It is expecting low grade 58% iron ore product discounts or realisations to widen from the current c~87%-90% level to 80% by the year-end. Combined with an expected ~35% drop in the benchmark 62% Index price, this doesn’t bode well for Fortescue.

Goldman explained: “China steel curtailments which could drive the steel price and margins higher making higher grade iron ore more favourable on a Value-in-Use (VIU) basis. We assume FMG’s realisations drop 10% from 91% achieved in Dec Q in 2020 to 81% by the end of 2021. We have already started to see steel mills switching to higher grade iron ore since Chinese steel mill gross profit margins have climbed above RMB500/t.”

All in all, Goldman doesn’t see enough value in the Fortescue share price now and recommends investors look elsewhere in the sector.

More reading

• Is the Fortescue (ASX:FMG) share price an attractive opportunity?
• Why are the big ASX mining share prices slipping today?
• ASX 200 Weekly Wrap: ASX sees 7,000 points once more
• 2 high yield ASX dividend shares rated as buys
• The new race between US and China is good news for these ASX shares

Motley Fool contributor James Mickleboro 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.

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

from The Motley Fool Australia https://ift.tt/32bIFdV

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.

Johnson & Johnson (NYSE: JNJ) has what many Americans want: a one-dose COVID-19 vaccine. I know people who waited on vaccination specifically to get the J&J jab. The U.S. Food and Drug Administration (FDA) granted the company Emergency Use Authorization in late February. That’s two months after the authorization of two-dose vaccines from Pfizer and Moderna. And last month the U.S. ordered an additional 100 million J&J doses. It ordered an initial 100 million doses last year.

The momentum slammed to a halt this week, though. The FDA and the Centers for Disease Control and Prevention (CDC) recommended a pause in the administration of the J&J vaccine after the occurrence of “rare and severe” blood clots in some people. Now investors may be wondering what this means for J&J’s future in the vaccine space — and its share price. Here’s what you need to know.

A rare occurence

First, we should put the situation into perspective. J&J has vaccinated more than 6.8 million people in the U.S. so far. Six cases of blood clots have been reported. So this remains an exceptionally rare occurrence. The FDA says it recommends the halt “out of an abundance of caution.”

The CDC is meeting with an immunization practices advisory committee on Wednesday to examine the cases. And the FDA is also investigating. The agencies recommend the vaccination halt until their review is complete.

The people who experienced the blood clots were women between the ages of 18 and 48. Symptoms appeared six to 13 days after vaccination. The blood clots — cerebral venous sinus thrombosis — are of a type usually treated with the anticoagulant drug heparin. But health officials say that in these cases heparin could be dangerous — and that means a different treatment must be used.

It’s impossible to predict the review’s outcome. But we can use the clues we have to imagine potential scenarios.

Considering there is a pattern so far — women in a certain age group — the agencies may allow vaccination to resume in those who aren’t in this group. It’s also possible the agencies will learn why the clotting events occurred and how to prevent them in the future. In that case, vaccination might resume in everyone age 18 and older.

It’s also possible experts won’t learn exactly why these events occurred. But due to their rarity, the agencies may allow vaccinations in all groups to resume — as long as healthcare providers have a blood clot treatment plan in place.

“Recognition and management”

The FDA emphasized the idea of awareness among practitioners. The agency said the vaccination pause is important “to ensure that the healthcare provider community is aware of the potential for these adverse events and can plan for proper recognition and management.”

So I’m optimistic this is about developing the best plan of use for the J&J vaccine — not about taking it off the market.

Now, investors may be wondering what this pause means for J&J earnings. The answer is: nothing. J&J has pledged to sell its vaccine without taking a profit during the pandemic. This means any dip in vaccine use or sales won’t hurt earnings.

J&J may raise the price of its vaccine after the pandemic is over — in which case gains or declines in sales will add to or reduce profit. But even at that point, J&J investors shouldn’t expect a huge impact. The company’s vast array of products means it doesn’t rely on just one for revenue or sales growth. For instance, J&J’s full-year 2020 revenue totaled more than $82 billion. And the company’s products span the categories of consumer health, pharmaceuticals, and medical devices.

How about share price? The shares may dip in the short term on this pause in vaccination. But I don’t expect any declines to last for very long. Pharmaceutical stocks haven’t been as sensitive to vaccine news as biotech stocks. Again, that’s because they don’t depend on just one product. So J&J shares remain a solid healthcare investment for the long term.

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

More reading

• U.S. gives Johnson & Johnson’s COVID-19 vaccine a timeout
• 2 top ASX ETFs to buy right now

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Johnson & Johnson and 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.

The post The Johnson & Johnson COVID vaccine halt: here’s what investors need to know appeared first on The Motley Fool Australia.

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/32alrFh

The Ramsay Health Care Limited (ASX: RHC) share price is pushing higher on Wednesday morning.

At the time of writing, the private hospital operator’s shares are up almost 1% to $67.99.

Why is the Ramsay share price rising?

Investors have been buying Ramsay’s shares today following speculation that it is looking to make a major acquisition in the Australian healthcare market.

On Tuesday evevning, the AFR was reporting that Ramsay is teaming up with private equity firm Pacific Equity Partners to acquire rival private hospital operator Healthe Care.

Healthe Care is the third largest private hospital operator in Australia. It employs 7,000 people across Australia and in New Zealand and operates a portfolio of 34 private healthcare facilities.

However, while Ramsay and Pacific Equity Partners are believed to be teaming up on the acquisition, they are not expected to own the hospitals together.

Instead, it is understood that Ramsay will acquire as much of Healthe Care’s portfolio as the ACCC allows, with Pacific Equity Partners snapping up the rest of the hospitals.

Surprisingly, Ramsay has not responded to the report. However, the speculation does make a lot of sense given that Healthe Care’s owner, China’s Luye Medical Group, is currently in the process of offloading these assets.

The report indicates that Luye Medical Group hired JPMorgan to auction them off, with the first round bids being made last week. Sources have told the media outlet that the auction will now move to a second and binding bid phase in coming weeks.

Healthe Care is estimated to be generating approximately $1 billion in revenue per year at present. Depending on how many of its operations Ramsay acquires, it has the potential to give its Australian revenues a nice lift in FY 2022 and beyond. Ramsay recorded revenue of $2.7 billion in Australia during the first half of FY 2021.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• 2 brilliant blue chip ASX 200 shares to buy
• Aussie dollar tipped to weaken and this ASX share stands to gain the most
• ASX 200 Weekly Wrap: ASX 200 gets its mojo back
• ASX dividend aristocrat? Here’s an ASX dividend share that has a shot

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Ramsay (ASX:RHC) share price rises on acquisition speculation appeared first on The Motley Fool Australia.

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

Lithium Australia NL (ASX: LIT) shares are on the move after the company released a positive update this morning. In early trade, the Lithium Australia share price is soaring 6.82% higher to 11.75 cents.

In today’s update, the company shared that its subsidiary, VSPC Ltd, has received encouraging results and can potentially commercialise its lithium ferro phosphate (LFP) products.

Let’s look closer at today’s news out of Lithium Australia.

What’s driving the Lithium Australia share price?

The Lithium Australia share price has bolted out of the gate this morning after the company advised a pre-feasibility study found VSPC’s LFP cathode powders to be of superior quality and performance than most other products available.

The study also gave VSPC information on the costs and benefits to begin commercially manufacturing its LFP cathode power.

Lithium Australia said steps towards the production of LFP cathode powder will likely begin shortly. It has a goal of producing 10,000 tonnes per year by 2026.

The study also found the most economically sound location to produce the product is in India. Although, the company is still contemplating other up and downstream opportunities that may exist if it is produced in Australia, the United States, South Korea or Europe.

Producing LFP cathode powder in India could see the company with earnings before interest, tax, depreciation and amortisation (EBITDA) of US$66 million a year, as well as a free cash flow of US$56 million per year. The plant itself would cost US$113 million and take two years to build.

Next, Lithium Australia will conduct a feasibility study and a business case review for basing the plant in India. It will also conduct a life cycle assessment analysis of the project to determine its carbon footprint and sustainability.

Is LFP the future of lithium technology?

In today’s release, Lithium Australia stated it believes LFP is set to become the dominant lithium-ion chemistry in China over the next few years. It expects this trend will become global, in which case VSPC is in a position to supply the market with little competition.

Lithium Australia said only 2% of LFP cathode products are produced outside of China. Due to China’s own electric vehicle (EV) industry, EV manufacturers in other nations, Europe and the US in particular, may seek out locally produced LFP cathode powders.

Volkswagen has recently announced its entry-level EVs will be powered by LFP. Lithium Australia hopes other EV manufactures will follow suit.

The company also noted that potential demand for LFP may come from creators of battery energy storage systems.

Commentary from management

Lithium Australia managing director Adrian Griffin said the pre-feasibility study demonstrated VSPC is able to produce some of the most advanced LFP cathode powders available. He said:

These major milestones have been achieved in an environment in which the largest electric vehicle producers are moving to incorporate LFP lithium-ion batteries into entry-level vehicles, due to their superior safety, lower cost, longer life and reduced exposure to conflict metals. These LFP attributes are also expanding its utilisation in stationary energy-storage applications. Indeed, major battery producers worldwide are racing to expand their LFP production to meet demand as LFP becomes the fastest growing sector of the battery industry.

At present there is little LFP production outside of China, with original equipment manufacturers striving to secure alternative supply chains. Lithium Australia and VSPC aim to provide that supply chain security.

Lithium Australia share price snapshot

The Lithium Australia share price has been soaring on the ASX lately and today’s news has provided a further boost.

As is the case for many ASX listed lithium producers, Lithium Australia shares have boomed in 2021. They are currently up by almost 96% year to date. The Lithium Australia share price is also up by 135% over the last 12 months.

The company has a market capitalisation of around $98 million, with approximately 897 million shares outstanding.

More reading

• Ramsay (ASX:RHC) share price rises on acquisition speculation
• Could this help the Zip (ASX:Z1P) share price catch up to Afterpay?
• Why the Woodside (ASX:WPL) share price is edging lower today
• Why the Telix (ASX:TLX) share price is storming 5% higher
• Why the BrainChip (ASX:BRN) share price is rocketing 27% higher today

Motley Fool contributor Brooke Cooper 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.

The post Why the Lithium Australia (ASX:LIT) share price is surging 7% appeared first on The Motley Fool Australia.

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