Tag: Motley Fool

The AMP Ltd (ASX: AMP) share price is under a cloud as a broker warns that it’s selling assets too cheaply.

The news puts AMP shareholders between a rock and a hard place, and I’ll explain why in a moment.

It was the analysts at Macquarie Group Ltd (ASX: MQG) that was sounding the alarm when it looked at the proposed joint venture (JV) between AMP and Ares Management Corp Class A (NYSE: ARES).

AMP’s crown jewels going for a song

The broker found that AMP may be selling a majority stake in its prized private market business at around a whopping 25% discount to Ares!

The business, which forms part of the AMP Capital division, is estimated to generate 91% of divisional earnings before interest and tax (EBIT), according to Macquarie.

If so, the private market unit is being priced on a trailing EBIT multiple of around 16.9 times. This is substantially higher than the multiple of around 12.7 times proposed for the joint venture.

AMP’s turn to reject Ares?

This isn’t an exact science. The difference may be due to the ongoing deterioration in AMP Capital with institutions pulling their mandates.

But even accounting for this risk, Macquarie believes a very material discount exists.

“On our numbers, we do not see how AMP could agree to the deal in the form disclosed to the market,” said Macquarie.

“Should the jewel in the AMP crown be sold at such a steep discount, it would signal an even worse underlying state of the Group (and AMP Capital division) than we are forecasting.”

Shareholders’ dilemma clouds the AMP share price

But herein lies the dilemma for shareholders. AMP needs the JV to proceed to unlock value in the asset after Ares walked away from an earlier proposal to buy the entire group.

The AMP share price slumped the US suitor turned its back and AMP failed to attract any other interested parties.

This puts Ares in the box seat to get their hands on what many call the best bits of AMP at a fire sale price.

Are there any long-term investors left in AMP?

While Macquarie is urging AMP to break off the engagement, shareholders might be less willing to do so.

The AMP share price is sure to tumble if management pulls the plug on the $2.3 billion JV, which would lead to a $1.6 billion cash payoff for the beleaguered wealth manager.

On the other hand, if AMP elected to call off the deal and work on turning around the AMP Capital business, the AMP share price could eventually recover.

But that will take quite a while. For most investors, that might be too long a wait.

More reading

• Bank of Queensland (ASX:BOQ) share price rises as it inks office deal with AMP (ASX:AMP)
• Demoted AMP exec paid $1m bonus for 53 days’ work
• Why the Macquarie (ASX:MQG) share price just hit a record high
• Why the Rio Tinto (ASX:RIO) share price is among the worst performers today
• International Women’s Day: The female CEOs of the ASX

Motley Fool contributor Brendon Lau owns shares of AMP Limited and Macquarie Group Limited. Connect with me on Twitter @brenlau.

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

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The Woolworths Group Ltd (ASX: WOW) share price is down today as the Australian Financial Review (AFR) reports the retailer is looking to purchase Oakridge Wines.

As of writing, the Woolworths share price is down 0.51% to $38.67. In comparison, the S&P/ASX 200 Index (ASX: XJO) is 0.23% lower.

Endeavour Group wants Oakridge

Woolworths’ Endeavour Group, which the company will spinoff later this year, is looking to purchase the La Trobe Valley winemaker as it faces increasing competition. Endeavour, which is both a producer and seller of wine, wants to strengthen its wine portfolio. The group’s range of wine brands include Chapel Hill, Barossa Valley, Marlborough, and Coonawarra.

Ilana Atlas and Tony D’Aloisio, owners of Oakridge, both declined to comment when approached by the AFR. Endeavour likewise did not respond to the rumours.

Endeavour, which owns BWS, Dan Murphy’s, and Woolworths’ hotel and hospitality venues, was initially supposed to demerge from the supermarket giant in 2020. The COVID-19 pandemic forced the company to delay the move for at least 12 months.

The AFR is also reporting the spinoff may not even happen at all. Instead, private equity firms Carlyle Group and BGH Capital are “considering making offers” for $13 billion business. Woolworths may not take this deal, however, to avoid a hefty capital gains taxbill.

Woolworths financial performance

In its FY21 half-year report, Woolworths reported a 9.4% jump in gross profit on the prior corresponding period (pcp). Revenues were up 10.5% on the pcp to equal $35.8 billion.

Earnings per share (EPS) came to 90.5 cents – a 28.1% lift on the pcp.

Earnings before interest, tax, depreciation and amortisation (EBITDA) was up 8.7% at $3.4 billion for the six months ending 31 December 2020.

For Endeavour Group, sales for the period totalled $5.7 billion – up 19.0% on the pcp. The group’s EBITDA came in at $564 million,  21.6% higher on the pcp.

Woolworths share price snapshot

The Woolworths share price has been trending downwards for the last month or so. During January and February, Woolworths hit its 52-week record high share price of $42.05. One year ago, shares in the company were swapping hands for $36.05. In percentage terms, the share price has increased by 7.18% over that time.

Woolworths has a market capitalisation of $48.9 billion.

More reading

• International Women’s Day: The female CEOs of the ASX
• ASX 200 up 1.6%: Appen rebounds, ALS acquires Investiga, Woolworths upgraded
• International Women’s Day: Which ASX companies are fighting gender inequality?
• Leading broker upgrades Woolworths (ASX:WOW) shares to buy rating
• ASX 200 Weekly Wrap: ASX finishes higher, despite tech selloff

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Woolworths (ASX:WOW) share price down as it savours potential Oakridge Wines purchase appeared first on The Motley Fool Australia.

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The Pro Medicus Limited (ASX: PME) share price is edging lower with the market on Thursday.

In afternoon trade, the health imaging company’s shares are down 0.5% to $43.11.

However, despite this, the Pro Medicus share price is still up a sizeable 23% since the start of the year.

Why is the Pro Medicus share price up 23% in 2021?

Investors have been fighting to get hold of the company’s shares this year thanks to a solid half year result, a series of major new contract wins, and a bullish broker note.

In respect to its first half performance, for the six months ended 31 December, Pro Medicus reported a 7.8% increase in revenue to $31.6 million and a 29% (constant currency) increase in underlying profit before tax to $19.7 million.

Positively, since the end of the half, the company has signed two major new contracts. One was a $40 million 7-year deal with Intermountain Health and the other was a $31 million 7-year deal with a large University Health System.

Can Pro Medicus shares go higher?

The good news for investors is that one leading broker believes the Pro Medicus share price can still go higher from here.

That broker is Goldman Sachs. Last month its analysts upgraded the company’s shares to a buy rating with a $53.80 price target.

Based on the current Pro Medicus share price, this implies potential upside of 25% over the next 12 months.

Why is Goldman so positive?

Goldman Sachs has been impressed with the way the company continues to win large contracts despite the difficult operating environment. The broker feels this leaves it well-positioned to grow its earnings at a rapid rate over the coming years.

And although the Pro Medicus share price trades at a premium to the market average, Goldman believes its growth profile justifies this.

It commented: “Whilst not cheap in absolute terms, our new estimates imply a +42% EBITDA CAGR (FY20-23E). In the context of ASX Healthcare, which trades at a ‘multiple to growth’ ratio of 2.9x, we do not see PME’s ratio of 1.4x as demanding, particularly given its position as a technology leader in a market we believe is set for further technology upgrades, and a recurrent revenue model with inherent upside. We upgrade to Buy.”

So, while Pro Medicus shares has been on fire in 2021, it appears as though they may still have further to run in the coming months.

More reading

• Is it ok to buy ASX 200 shares at a 52-week high?
• ASX 200 rises, Afterpay sinks, Vocus jumps
• 5 ASX shares to buy in a market crash
• 2 strong ASX healthcare shares to buy this month
• Is it time to buy these 2 hot ASX healthcare shares?

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Pro Medicus Ltd. The Motley Fool Australia has recommended Pro Medicus Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Wide Open Agriculture Ltd (AXS: WOA) shares are surging today after the company provided investors with a market update. At the time of writing, the Wide Open Agriculture share price is trading 10.77% higher at 72 cents.

At one stage during earlier trade, the regenerative food and farming company’s shares had surged by nearly 17% to 76 cents before retreating to their current level.

Let’s take a closer at the highlights of Wide Open Agriculture’s presentation to investors.

What did Wide Open Agriculture announce?

The Wide Open Agriculture share price is storming higher as investors seem excited about the company’s future prospects.

According to its presentation, Wide Open Agriculture highlighted has achieved sustained growth over the past six quarters with its ‘Dirty Clean Food’ brand portfolio. In the midst of COVID-19, the company recorded $980,000 in revenue per quarter in the final months of 2020. This was underpinned by an uptick in consumer demand for plant-based protein.

In addition, the company noted its ability to quickly adapt to changing trends with launches such as its ‘Oat Up’ milk product. This took a period of under 12 months from conception to initial sales.

Wide Open Agriculture is seeking to penetrate the largest and fastest-growing food and beverage markets through its food technology programs. Research into lupin beans began in May 2020 with the company producing a lupin-based protein at pilot-scale in December.

Furthermore, Wide Open Agriculture revealed that more global food companies are partnering with plant-based businesses. In the United States alone, 9 out of 10 meat companies either launched, bought, or worked together with plant-based meat brands in 2019.

To validate claims that plant-based protein is the next big thing, conventional meat sales lifted 40% in year-to-year sales for the month of March 2020. In comparison, plant-based meat sales rocketed by 231% over the same time frame.

Market opportunity

A report published by PV Plant Milk indicated that the market for plant-based meat is expected to reach US$28 billion by 2025. This is more than double the current market of US$12.1 billion.

The global oat milk market was estimated to be worth around $3.7 billion in 2019, growing at a compound annual growth rate (CAGR) of 9.8%. This by far outpaced other milk alternatives such as hazelnut, coconut, almond, rice, hemp, and soy products.

About the Wide Open Agriculture share price

The Wide Open Agriculture share price has taken over in the past 12 months, gaining by nearly 530%. The company’s shares reached an all-time high of $1.85 in August 2020 before trending lower.

Based on the current share price, Wide Open Agriculture commands a market capitalisation of roughly $60 million.

More reading

• Future proofing: Should you invest in a sustainable ASX portfolio?

Motley Fool contributor Aaron Teboneras 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 Here’s why the Wide Open Agriculture (ASX:WOA) share price is up 11% today appeared first on The Motley Fool Australia.

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The Bank of Queensland Limited (ASX: BOQ) share price is up 0.23% today to $8.85. One reason this may be happening is the regional bank signing a new lease with AMP Ltd (ASX: AMP) subsidiary AMP Capital.

AMP is not having such a hot day on the market. As of writing, the company’s share price is down 1.58% to sit at $1.44. 

For comparative purposes, the S&P/ASX 200 Index (ASX: XJO) is down 0.21%.

The deal

The Sydney Morning Herald (SMH) is reporting the bank has signed a 10-year lease to move its head office in Sydney to 255 George Street. The deal covers 4 floors and includes the building signage.

The building is already home to Bank of Queensland subsidiary Virgin Money Australia. The move will bring the two companies under one roof for the first time. It is currently undergoing a redevelopment.

AMP Capital head of real estate, Kylie O’Connor, said the agreement with the Bank of Queensland highlighted “the importance of workplace accommodation for collaboration.”

Bank of Queensland’s chief financial and chief operating officer Ewen Stafford told the SMH: “In selecting the right space to bring our multi-brand teams together in the one location, we wanted a building that provided a market-leading level of amenities to our people,”

He added: “As more of our people return to the workplace, and with the pandemic changing the way we do business, we’re looking forward to collaborating in new ways and our future home at 255 George Street will purposefully serve our future workplace needs and allow us to prosper.”

The high office building vacancy rate

SMH is reporting the national office vacancy rate is 11.7% – its highest level in 24 years. The Australian Financial Review (AFR) has the rate in the Sydney CBD at 8.6%. That’s up from 5.6% in the previous reporting period and the 3.9% rate recorded pre-COVID pandemic.

The premium-grade office vacancy rate rose to 6.2% while A-grade vacancy more than doubled to 9.7%.

To further compound the already suppressed office building market, approximately 110,000 new square metres of office were built in the Sydney CBD. Increasing supply and decreasing demand means lower rental rates.

AMP and Bank of Queensland share price snapshots

Just last week, the Bank of Queensland achieved its 52-week share price record of $9.44. The last time the bank broke its 1-year record was 1 week prior.

AMP’s 52-week record of $1.97 was last achieved in June 2020. Since then, the AMP share price has valleyed and troughed. AMP is currently in the process of selling most of its business.

The Bank of Queensland has a market capitalisation of $4.8 billion, while AMP’s is $4.9 billion.

More reading

• Demoted AMP exec paid $1m bonus for 53 days’ work
• AMP (ASX:AMP) share price on watch as second buyer for its asset could emerge
• ASX 200 sinks 2.4%, Afterpay plunges, AMP jumps
• ASX 200 down 2.3%: Afterpay & Kogan sold off, Orica smashed, AMP pushes higher
• Why AMP, Bubs, BWX, & Lynas shares are pushing higher

Motley Fool contributor Marc Sidarous 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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If you’re wanting to add some growth shares to your portfolio in March, then you might want to consider the ones listed below.

Here’s why they have been tipped as the shares to buy:

Nearmap Ltd (ASX: NEA)

Nearmap is an aerial imagery technology and location data company with operations in both the ANZ and North American markets. It provides businesses with instant access to high resolution aerial imagery, city-scale 3D datasets, and integrated geospatial tools.

Although it was targeted by a short seller earlier this year, the market doesn’t appear concerned by this report following a stronger than expected half year update in February. Not only did Nearmap outperform expectations, the part of the business that was heavily criticised by the short seller did the heavy lifting.

This went down well with analysts at Goldman Sachs. In response to its results, it put a buy rating and $2.95 price target on Nearmap’s shares.

It believes the headwinds Nearmap has been facing will ease in 2021, which should have a positive impact on demand. Looking further ahead, the broker believes the company’s balance sheet is strong enough to see it through to profitability in FY 2023.

Xero Limited (ASX: XRO)

Another ASX growth share that Goldman is a fan of is Xero. It is a provider of a cloud-based business and accounting solution to small and medium sized businesses around the world.

Despite the pressures that small businesses have been under during the pandemic, Xero has continued to perform strongly over the last 12 months.

In fact, it has even continued to add subscribers at an impressive rate. For example, at the end of the first half of FY 2021, Xero had grown its subscribers by 19% year on year to 2.45 million. This supported a 21% increase in half year operating revenue to NZ$409.8 million and a 15% lift in total subscriber lifetime value to NZ$6.2 billion.

Since then, the company has announced the acquisition of Planday for a total potential consideration of ~A$285 million.

Goldman Sachs believes this acquisition will provide it with a meaningful step into Europe. In addition, it expects it to help Xero build out its app ecosystem. This is a big positive as the broker believes that monetising its app ecosystem has the potential to be a key driver of growth in the future.

At present, Goldman Sachs has a buy rating and $157.00 price target on its shares. It believes Xero is capable of delivering strong revenue growth over multiple decades.

More reading

• Why Afterpay, Nearmap, Temple & Webster, & Z Energy are tumbling lower
• Could Australia be the next tech hub? Afterpay (ASX:APT) CEO thinks it should be
• Here are some of the best performing ASX tech shares today
• ASX 200 rises, Afterpay sinks, Vocus jumps
• Why ASX 200 tech shares could be in for another wild session

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia owns shares of Xero. The Motley Fool Australia has recommended Nearmap 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 Wednesday 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 ASX shares that have just been given sell ratings by brokers are listed below. Here’s why these brokers are bearish on them:

Galaxy Resources Limited (ASX: GXY)

According to a note out of Morgan Stanley, its analysts have retained their underweight rating and $1.50 price target on this lithium miner’s shares. This follows Galaxy’s announcement that it plans to push ahead with the basic engineering phase of its James Bay project in North America. The results of the Preliminary Economic Assessment were in line with what the broker was expecting. As such, no changes have been made to its recommendation at this point. It holds firm with its underweight rating for valuation reasons. The Galaxy share price is fetching $2.31 this afternoon.

Treasury Wine Estates Ltd (ASX: TWE)

Analysts at Citi have retained their sell rating and $9.30 price target on this wine company’s shares following its update on its Americas strategy. While the broker sees a lot of positives on its premiumisation strategy in the region, it isn’t enough for a change in its rating. Especially given how its restructuring still has long way to go. The Treasury Wine share price is trading at $11.49 on Thursday.

Zip Co Ltd (ASX: Z1P)

A note out of UBS reveals that its analysts have downgraded this buy now pay later provider’s shares to a sell rating with an improved price target of $6.40. According to the note, the broker was pleased with its strong growth during the first half. It also appears to believe more of the same is coming in the near term. However, it does have concerns by rising bond yields. This is due to the impact they could have on funding and its valuation. The Zip share price is fetching $8.42 on Thursday afternoon.

More reading

• The Zip (ASX:Z1P) share price just keeps on falling
• Is it ok to buy ASX 200 shares at a 52-week high?
• ASX 200 down 0.9%: Flight Centre & Webjet jump, Afterpay sinks
• Is Afterpay (ASX:APT)’s BNPL competition heating up?
• ASX 200 drops, Zip down, Afterpay soars

James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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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Betashares’ latest exchange-traded fund (ETF) has just hit the ASX. The Climate Change Innovation ETF (ASX: ERTH) offers one-trade exposure to 90 global companies that derive at least 50% of their revenues from products and services that help address climate change and/or other environmental issues.

It is very much a macro play on arguably one of the most significant current addressable market opportunities there is.

What companies are in ERTH?

The ASX ERTH ETF is comprised of 90 companies that are substantially diversified in terms of industries and what they do. These range from car manufacturers and digital signature providers to vegan ready-to-eat meals and air conditioner manufacturers.

You get the idea, it’s pretty broad — and rightly so. The climate challenge is not limited to petrol-guzzling cars on our roads, it permeates nearly every nook and cranny of society.

The top ten holdings in the ERTH ETF are as follows:

• Trane Technologies PLC (NYSE: TT)
• Infineon Technologies AG (ETR: IFX)
• Zoom Video Communications Inc (NASDAQ: ZM)
• Cie De Saint-Gobain SA 
• DocuSign Inc (NASDAQ: DOCU)
• Tesla Inc (NASDAQ: TSLA)
• East Japan Railway Co 
• Nio Inc (NYSE: NIO)
• Vestas Wind Systems 
• Plug Power Inc

As you can see, ERTH extends much further than the ASX. Most people will have heard of Tesla, and Zoom, possibly even the digital signature provider DocuSign. But I doubt you’ve heard of the largest holding in this ETF, Trane Technologies… Well fortunately for you, I used to work as a mechanical engineer in a previous life!

Trane Technologies provides a range of heating, ventilation, and air conditioning (HVAC) products. HVAC systems actually play a large role in the energy consumption and energy efficiency of most buildings in the world. Hence, as emission targets tighten, HVAC producers find themselves at the forefront of having to invent more energy-friendly products.

The market opportunity

Companies that address climate change in some way are gaining momentum. Furthermore, more money is being poured into the sector as the world slowly but surely recognises the problem. Even the ASX’s latest debutant, ERTH, already has over $7.5 million in assets under management. 

The not-for-profit Carbon Disclosure Project (CDP) released a report in 2019 indicating that 215 of the world’s biggest companies reported almost US$1 trillion at risk from climate impacts.

Billionaire investor, Chamath Palihapitiya, has poured billions into investments seeking to address climate change. The venture capitalist even expects the first trillionaire to be made in climate change. 

The world’s first trillionaire will be made in climate change.

— Chamath Palihapitiya (@chamath) October 21, 2020

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However, buying the ERTH ETF probably won’t make you a trillionaire. At the time of writing, ERTH is down 0.4% to $12.75.

More reading

• Why the Invictus Energy (ASX:IVZ) share price is up 100% this year
• Will the Afterpay (ASX:APT) share price bounce back?
• Worried about rising interest rates impacting ASX 200 shares? Read this…
• ASX stock of the day: Event (ASX:EVT) shares are shooting higher
• The Zip (ASX:Z1P) share price just keeps on falling

Mitchell Lawler owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends DocuSign, Tesla, and Zoom Video Communications. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of NIO Inc. The Motley Fool Australia has recommended Zoom Video Communications. 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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It’s been a big year so far for the Invictus Energy Ltd (ASX: IVZ) share price, which has doubled since the beginning of 2021.

In the independent oil and gas exploration company’s final announcement for 2020, its managing director, Scott Macmillion, stated it was on “a positive path for a transformational 2021”.

The question now is: What has it been doing to make this wild prediction come true?

What has Invictus Energy been up to since the new year?

Just 3 trading days before the ASX closed for 2020, Invictus Energy announced it had received a farm-in offer to Geo Associates’ Cabora Bassa Project.

A farm-in offer is a conditional grant of ownership to a project. In this case, Invictus Energy has an 80% stake in the Cabora Bassa Project.

The Carbora Bassa Project encompasses the Mzarabani Prospect, which is potentially the largest undrilled onshore structure in Africa. It is estimated to be able to produce over 1 billion barrels of oil equivalent.

Geo Associates had already signed a petroleum exploration development and production agreement (PEDPA) with the Republic of Zimbabwe, allowing the project to progress.

Invictus Energy has since undertaken detailed traversing and mapping across the area, identifying the optimal acquisition routes. It stated it was planning to carry out more testing at the end of the rainy season (October to April).

The company has not yet announced when it plans to begin drilling on the Cabora Bassa Project.

Commentary from management

Managing Director of Invictus Energy, Scott Macmillian, commented on the project’s timeline in December: “The Company is working to complete the various agreements as soon as possible in order to conclude a transaction, commence the seismic acquisition and basin opening high impact drilling campaign.”

Invictus Energy share price snapshot

The Invictus Energy share price is soaring today. At the time of writing, it is 13% up from yesterday’s closing price. Though impressive, the company is no stranger to huge gains.

Year to date, the Invictus Energy share price is up 100%. Having started the year at 5 cents, it’s currently sitting at 10 cents.

The company has a market capitalisation of $41.75 million with approximately 474 million shares outstanding.

More reading

• Freshly listed Climate Change ETF (ASX:ERTH) making the ASX greener
• Will the Afterpay (ASX:APT) share price bounce back?
• Worried about rising interest rates impacting ASX 200 shares? Read this…
• ASX stock of the day: Event (ASX:EVT) shares are shooting higher
• The Zip (ASX:Z1P) share price just keeps on falling

Motley Fool contributor Brooke Cooper has no position in any of the shares 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 Invictus Energy (ASX:IVZ) share price is up 100% this year appeared first on The Motley Fool Australia.

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It certainly has been a volatile day for the Afterpay Ltd (ASX: APT) share price.

At one stage today the buy now pay later provider’s shares were down as much as 9% to $105.11.

The Afterpay share price then recovered to be down just 2.5% to $112.33 before falling back to be down 4.5% to $110.00 at the time of writing.

This means its shares are now down 31% from their record high of $160.05.

Why is the Afterpay share price under pressure?

Investors have been selling Afterpay shares in recent weeks amid concerns over rising bonds yields.

Rising bond yields are bad news for richly valued growth stocks as they form part of analysts’ valuation models. Essentially, as the riskfree rate rises, the premium that investors are willing to pay to put their money into risk assets decreases.

And given the extreme multiples that Afterpay and Zip Co Ltd (ASX: Z1P) shares trade on, it’s not a big surprise to see their shares come under pressure.

Is this a buying opportunity?

A number of brokers believe the recent weakness in the Afterpay share price is a buying opportunity.

One of those is Ord Minnett. Last week its analysts retained their buy rating and lifted their price target on the company’s shares to $150.00.

Based on the current Afterpay share price, this represents potential upside of 36% for its shares over the next 12 months.

Elsewhere, analysts at Morgan Stanley have an overweight rating and $159.00 price target, Wilsons has a buy rating and $160.20 price target, and Bell Potter has a buy rating and $168.50 price target.

In respect to the latter, Bell Potter is particularly positive on the company’s expanding product range. This follows its collaboration with Westpac Banking Corp (ASX: WBC), which will see the launch of Afterpay Money in the near future. It suspects that this could be the first of several new products, potentially even home loans.

If Bell Potter is on the money with its recommendation, then the Afterpay share price could be hitting a new record high later this year. Shareholders certainly will be hoping this proves to be the case.

More reading

• Why Afterpay, Nearmap, Temple & Webster, & Z Energy are tumbling lower
• Could Australia be the next tech hub? Afterpay (ASX:APT) CEO thinks it should be
• Is it ok to buy ASX 200 shares at a 52-week high?
• ASX 200 down 0.9%: Flight Centre & Webjet jump, Afterpay sinks
• Is Afterpay (ASX:APT)’s BNPL competition heating up?

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T 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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