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Fortescue Metals Group Limited (ASX: FMG) has had a blockbuster year thanks to surging iron ore prices. The Fortescue share price’s rapid appreciation ranks it as one of the best performing ASX 200 shares. Not only that, but its significant cash flow has also translated to a generous, market-leading dividend yield of 12.1%. 

Despite the standout performance and continuation of higher iron ore prices, analysts at Bell Potter have lowered their Fortescue share price targets with a hold rating. 

Record half-year performance 

Fortescue delivered a record-breaking result for the six months ended 31 December. The company had a 44% increase in revenue to US$9,335 million and a 66% lift in net profit after tax to US$4,084 million.

As the financial performance was largely in-line with Bell Potter’s expectations, the broker shifted focus to the progress update for Iron Bridge and the outlook for Fortescue Future Industries (FFI).

The broker noted that the resignations of COO Greg Lilleyman and other key personnel were triggered by a lapse in values, specifically communication. This related to a 15% CAPEX increase (from US$2.6 billion to US$3.0 billion) and scheduled production delay (from mid-CY22 to 2HCY22) at Iron Bridge. 

The resignations saw the Fortescue share price sink 3% lower last Tuesday. Bell Potter described the situation as a “dent in Fortescue’s excellent track record of project delivery” that added uncertainty to the project’s final costs and timing. However, it also believes the technical risks are well understood and shouldn’t pose a threat to the project’s completion. 

Fortescue Future Industries 

Fortescue Future Industries was established late last year with the hopes to deliver high-quality green hydrogen and green ammonia from projects across the globe.

In Fortescue’s HY21 results, guidance cited that up to 10% of NPAT could be made available for FFI to invest in renewable energy and green hydrogen projects. Previous updates had indicated that ~US$90 million would cover FFI’s assessment of project study and evaluation costs.

Based on Bell Potter’s FY21 NPAT forecast of US$7.8 billion, this implies ~A$1 billion in potential investments into these projects – a much larger commitment than previously envisaged by the market. However, it was emphasised that any investments would have to compete through the company’s capital allocation process and offer comparable returns.  

Fortescue share price target lowered with hold rating 

Fortescue’s record first-half FY21 financial performance clearly reflects excellent operational performance, cost control and the strong iron ore market.

Bell Potter lifted its earnings for FY21 by 6% and for FY22 by 2%. The increase to Fortescue’s assumed dividend payout ratio, combined with higher earnings, sees dividends lift 12% and 36% in FY21 and FY22, respectively, for yields of 12.1% and 6.7%. 

The broker lowered its NPV-based valuation by 3% to $20.05, down from $20.63. Despite the slight share price cut, it cited Fortescue as a clear leader on the ASX in terms of dividend yield, and its forecast 12.1% fully franked yield continues to support a hold rating.

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Motley Fool contributor Kerry Sun 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 SEEK Limited (ASX: SEK) share price is under pressure on Tuesday following the release of its half year results.

At the time of writing, the job listings giant’s shares are down almost 3% to $29.57.

This is a big improvement from very early on when the SEEK share price sank 10% to $27.84.

This decline appears to be related to news that Founder and CEO, Andrew Bassat, will be stepping down from the role at the end of the financial year, rather than its performance during the first half. More on that development is coming up.

What happened in the first half?

For the six months ended 31 December, SEEK reported a 6% decline in total revenue to $819.1 million This was driven largely by weaker revenues from its international businesses due to COVID-19 headwinds.

But thanks largely to a strong performance by its SEEK Investments segment, the company’s earnings before interest, tax, depreciation and amortisation (EBITDA) was down just 1% on the prior corresponding period to $245.9 million. Positively, SEEK’s EBITDA was up 1% in constant currency.

Finally, on the bottom line, partly due to higher depreciation and amortisation, SEEK reported an 8% decline in net profit after tax to $69.7 million.

No interim dividend was declared by the SEEK Board. However, the Board intends to recommence payment of ordinary dividends with its full year results. This is subject to ongoing improvements in the macroeconomic conditions across its key markets.

Some shareholders may have been hoping for an interim dividend. So this news could also be weighing a touch on the SEEK share price today.

Management commentary

Outgoing CEO Andrew Bassat was pleased with the half year result given the tough trading conditions.

He commented: “We were pleased to deliver a H1 21 result that was broadly in line with H1 20, a period which was unaffected by COVID-19. This result demonstrates the strength of our key businesses and validates the decisions we made during the pandemic in regard to people, customers and re-investment. If the economies in which we operate continue their recovery, you should expect SEEK to perform well.”

Zhaopin sell down

Mr Bassat also revealed that the company is looking to sell down its stake in China-based Zhaopin. 

He advised that SEEK and other Zhaopin shareholders are in advanced discussions with a consortium looking to acquire an ownership interest in Zhaopin. The transaction will value Zhaopin at ~A$2.2 billion.

The company notes that if the proposed transaction completes, it expects to reduce its stake to ~23.5%. None of the investors will hold a controlling interest.

Management notes that the transaction will allow SEEK to realise a strong financial return, rebalance its portfolio exposure, and create capital management flexibility.

However, it has warned that there is no guarantee that these advanced discussions will result in a transaction. 

Outlook

Not even an upgrade to its guidance has been able to stop the SEEK share price from tumbling lower today.

The company advised that it now expects its revenue to be in the order of $1,700 million in FY 2021. It is also forecasting EBITDA of $460 million, up notably from its previous guidance of $404 million.

In fact, Goldman Sachs was tipping SEEK to increase its EBITDA guidance, but only expected an upgrade to $420 million. Had Andrew Bassat not announced his exit today, the SEEK share price would arguably be trading higher today on this upgrade.

Commenting on the remainder of the financial year, Mr Bassat said: “Overall, our H1 21 result and FY21 outlook is better than we expected. This reflects the strength of our key businesses and improving macro conditions in many of our markets. The combination of the momentum in these results, underlying economic recovery and today’s announcements bode well for SEEK’s long-term outlook.”

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Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended SEEK 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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G8 Education Ltd (ASX: GEM) shares are on the slide during the opening minutes of trade after the company released its 2020 full-year results. At the time of writing, the G8 Education share price has slumped 4.27% to $1.12.

In its report, G8 advised it is still managing the effects of coronavirus with regard to occupancy rates at its early learning and childcare centres.

Let’s review how this impacted the company’s results and what the CEO had to say. 

G8 Education reports annual losses

Investors are driving down the G8 Education share price today after the company reported its annual revenue dropped to $788.1 million for the year ended 31 December 2020. This was down 14.4% from the $920.6 million revenue recorded for the year prior. 

Underlying earnings before interest and taxes (EBIT) fell 11.9% compared to the prior corresponding period (pcp) and totalled $105.2 million.

G8 also reported a net profit after taxes (NPAT) loss of 11.3%. NPAT was $60 million for 2020 compared to $67.7 million in the pcp.

Earnings per share (EPS) took a 38.1% hit, falling from 13 cents for the 2019 period to 8.1 cents at the end of 2020.

The company reported a statutory loss after taxes of $187 million.

CEO comments 

Commenting on the company’s annual performance, G8 Education CEO and Managing Director Gary Carroll said: 

This year the Group’s absolute priority has been to ensure the health, safety and wellbeing of our team members, children and families as we navigate the ongoing impact of COVID‐19. In addition, we have been firmly focused on safeguarding the business through prudent financial management and cash preservation and by drawing on the Commonwealth Government’s welcome support for the sector during the pandemic.

These efforts have been reflected in the Group’s 2020 full‐year results, which show a strong recovery in occupancy and attendance in a challenging COVID‐19 related environment. Throughout this period, the Group has not lost sight of its strategic priorities, with the optimisation of its portfolio continuing through the divestment of underperforming centres, the ongoing improvement program and the opening of greenfield sites. Our strong balance sheet, with net cash of $21.8 million, gives us the capacity to continue this momentum and to explore other sensible growth opportunities.

G8 education share price snapshot

Including today’s falls, the G8 Education share price has shed nearly 30% of its value over the past year. However, G8 Education shares have gained around 20% over the last six months.

Based on the current share price, G8 Education has a market capitalisation of around $990 million with 847.4 million shares outstanding.

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Motley Fool contributor Gretchen Kennedy 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 Jumbo Interactive Ltd (ASX: JIN) share price is on the move on Tuesday following the release of its half year results.

In early trade, the online lottery ticket seller’s shares are up 1.5% to $14.70.

How did Jumbo perform in the first half?

For the six months ended 31 December, Jumbo reported a 26% increase in total transaction value (TTV) to $233 million. This was despite an unkind Australian lottery jackpot cycle, with only 15 large jackpots during the period. This compares to 23 in the previous corresponding period, representing a decline of 35%.

However, due to softer revenue margins, Jumbo’s revenue grew at the slower rate of 9% to $41 million.

Also softening was Jumbo’s EBITDA/Revenue margin, which reduced 300 basis points to 59%. This led to underlying EBITDA growing just 3.7% to $24.1 million.

And on the bottom line, the company posted a 0.5% lift in net profit after tax (before amortisation) to $16.3 million. 

In light of its soft profit growth, the Jumbo board elected to cut its interim dividend slightly to 18 cents per share fully franked.

Management commentary

Jumbo’s Executive Director and CEO, Mike Veverka, was very pleased with the result.

He said: “We are delighted with the Group results which show our new business segments helping to lift results in periods when the Jackpot cycles are low.”

“For the first time we are reporting our results in three segments, reflecting the evolving strength and diversity of Jumbo, as we continue to leverage our superior lottery management capabilities and technology to reshape our business, making lotteries easier for our partners and customers, and underpinning our continued growth, both domestically and offshore.”

Those three segments are its Lottery Retailing, SaaS, and Managed Services segments.

• The core Lottery Retailing business delivered TTV of $185.7 million, revenue of $37.8 million, and EBITDA of $15.4 million.
• Whereas the SaaS business contributed TTV of $39.9 million, revenue of $15.5 million, and EBITDA of $10.4 million.
• Finally, the Managed Services business was responsible for TTV of $7.2 million, revenue of $1.5 million, and EBITDA of $0.5 million.

Outlook

No guidance has been given for the full year. However, management notes that its Lottery Retailing business has had a promising start to the second half.

Management said: “Although we have made a promising start to the current half year, especially in our Lotteries Retailing segment, the macro environment we face is more uncertain than ever, which makes it difficult to make any financial forecasts for the financial year with any conviction.”

“However, I am confident that with the suite of businesses that we own, coupled with the likely growth of the markets within which they operate domestically and overseas, that we are well positioned to deliver superior returns to all our stakeholders over the medium to long term.”

One slight negative, though, is that the company revealed that its 85% payout ratio is under review.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive 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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In morning trade the MNF Group Ltd (ASX: MNF) share price has been a strong performer following its half year results release.

At the time of writing, the leading voice communications software provider’s shares are up 7% to $4.48.

How did MNF perform in the first half?

MNF continued its positive form during the first half of FY 2021 and delivered strong recurring revenue and profit growth.

For the six months ended 31 December, the company reported revenue of $112.1 million. While this was only up marginally on the prior corresponding period due to declines in global roaming and audio conferencing usage, recurring revenues continued to grow.

MNF delivered a 15% increase in recurring revenue to $55.7 million for the half. This was driven by its Wholesale business, which reported strong growth across both its Global and Domestic segments. This was supported by firm recurring revenues from the Direct business.

This means that recurring revenues now account for 50% of its overall revenue, which is up from 43% a year earlier.

Also growing at a solid rate during the half was its earnings before interest, tax, depreciation and amortisation (EBITDA). MNF reported a 16% lift in EBITDA to $19.6 million. This means it is on track to achieve its guidance for FY 2021.

On the bottom line, the company posted a 30% increase in underlying net profit after tax (before amortisation) to $8.4 million.

This solid profit growth allowed the MNF board to declare a fully franked interim dividend of 3.3 cents per share. This is up 32% on last year’s interim dividend.

Key metrics improving

Investors may want to take note of a few other key metrics which have also been improving during the half (and appear to be helping drive the MNF share price higher today.

This includes the number of phone numbers growing 24% to 5.1 million thanks to strong organic growth. The addition of over 1 million new numbers is a big positive, as traditionally it is a leading indicator of future recurring revenue.

Another metric that caught the eye was its Net Revenue Retention (NRR). The company revealed that its NRR rate across its top 10 customers was 115%. This means that the company is not only retaining these customers, they are also spending more.

MNF’s CEO, René Sugo, commented: “I am delighted to report a strong result across all key metrics, including record profitability, a 24% increase in phone numbers and 15% growth in recurring revenue. Underpinning our growth strategy is a laser focus on growing recurring revenue. We were particularly pleased with the performance of our global wholesale business, where recurring revenue increased 55%. Our top 10 clients are spending more with us as seen in our net revenue retention rate of 115%.”

Outlook

The company revealed that its expansion into Singapore is progressing well and technical trials are underway with three major global customers. MNF is aiming to go live in the market later this financial year.

But management may not stop there. It revealed that it has been completing due diligence to assess the next Asia-Pacific market to expand into. A number of milestones in this process have been completed with six possible target countries shortlisted.

Management also notes that the COVID headwinds it is facing from lower roaming revenues should be temporary. It expects revenue growth from this side of the business to recover once international travel resumes.

For now, Mr Sugo believes the company is on track to achieve its FY 2021 EBITDA guidance of $40 million to $43 million.

Commenting on its outlook, he said: “We are on track to deliver EBITDA for the 2021 financial year of $40.0 million to $43.0 million.”

“Our strategic priorities are to grow market share, expand into the Asia Pacific region, be a trusted partner and provide a high standard of customer experience. We are very pleased with the progress we have made in Singapore which further cements our relationships with our global customers and give us confidence to expand further into the Asia Pacific region.”

“This milestone highlights the need for MNF’s services across the region and supports the steps we are taking to assess new markets in the region to grow and expand our footprint. We are well positioned to execute on these strategic initiatives and drive operational excellence at home, in Australia and New Zealand,” Mr Sugo concluded.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended MNF 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 Adore Beauty Group Ltd (ASX: ABY) share price is rocketing higher following the release of its half year results.

At the time of writing, the online beauty products retailer’s shares are up 11% to $6.33.

How did Adore Beauty perform in the first half?

As you might have guessed from the Adore Beauty share price reaction today, the company performed very positively during the half.

For the six months ended 31 December, the company delivered revenue of $96.2 million. This was an increase of 85% on the prior corresponding period and 8% ahead of its prospectus forecast of $89 million.

Management advised that this was driven by strong customer growth and continued high customer retention. At the end of the period, Adore Beauty had 777,000 active customers on its platform, up 82% since this time last year.

Also heading in the right direction was its gross profit margin. It came in at 32.5% for the half, which was up 1.4 percentage points on the prior corresponding period. This was underpinned by product margin expansion.

Positively, this margin expansion led to Adore Beauty reporting a 188% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) to $5.2 million. This was also 58% ahead of its prospectus forecast of $3.3 million.

Finally, on the bottom line, the company recorded a half year net profit after tax of $2.54 million. This compares to a loss of $3.18 million during the same period last year.

At the end of the period, Adore Beauty had a cash balance of $25.9 million and no debt.

Management commentary

Adore Beauty’s CEO, Tennealle O’Shannessy, was very pleased with the company’s first half performance.

She said “Adore Beauty is Australia’s market leader in online beauty retail. Our strong performance this half is underpinned by high levels of customer engagement, retention and satisfaction, and includes a record trading day of $1.5m.”

“We have been thrilled to welcome many new customers to our platform over the last six months and are pleased to continue to be the online beauty shopping destination for our loyal customers,” O’Shannessy added.

Outlook

While no guidance was given for the full year, Tennealle O’Shannessy remains very positive on its prospects.

She said: “Looking forward, we are executing a clear strategy to cement our online market leadership position, and we are well positioned to capture market share in a large and growing market benefitting from structural tailwinds.”

And while the company has benefitted greatly from the pandemic pushing shoppers online, positively, it believes it can still thrive even when COVID-19 passes.

Management explained: “As COVID-19 related restrictions ease we expect to deliver full year FY21 revenue growth above pre-COVID levels given the continued structural shift to online and strong retention of new customers acquired over the peak COVID period.”

“We are executing a clear strategy to cement our online market leadership position, and we are well positioned to capture market share in a large and growing market benefitting from structural tailwinds. As the business grows, we expect scale benefits to increase operating leverage and deliver further EBITDA margin expansion,” it concluded.

Despite this strong form, the Adore Beauty share price is still trading lower than its IPO price of $6.75.

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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.

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The Worley Ltd (ASX: WOR) share price will be on watch this morning following the company’s announcement regarding a front-end engineering design (FEED) contract. At the market close yesterday, the Worley share price finished the day 1.2% higher to $10.54.

It will be interesting to watch how the company’s shares perform today as investors digest this morning’s update.

What did Worley announce?

The Worley share price could be on the move today as the company reported its latest contract win.

According to this morning’s release, Worley advised it has been awarded a FEED contract from 1PointFive Inc. This contract is for a direct air capture (DAC) project.

1PointFive Inc. is a partnership created by Oxy Low Carbon Ventures (a subsidiary of Occidental Petroleum Corporation) and Rusheen Capital. The group is focused on implementing low-carbon technologies that offer sustainable business solutions. This is made by utilising Occidental’s leadership in carbon management and carbon dioxide storage with Rusheen’s knowledge of carbon-to-value projects.

Under the deal, Worley will commence work on 1PointFive’s first DAC unit for its DAC facility. This will be constructed in the United States Permian Basin, which is located across western Texas and southeastern New Mexico. Worley stated that it will use its Houston office to lead the project.  Additionally, the project will utilise the support of its Global Integrated Delivery team in India.

The company noted that this will be the first commercial-scale development using Carbon Engineering Ltd’s DAC technology. When fully operational, the DAC unit will remove around 1 million tonnes of carbon dioxide (CO2) from the air each year.

Once the FEED contract has been fulfilled, it is expected that Worley and 1PointFive will form an alliance. Consequently, this will flow onto additional projects in which Worley will provide engineering, procurement and construction work for further DAC’s. Currently, there are three additional DAC projects in the pipeline.

CEO commentary

Worley CEO Chris Ashton welcomed the new deal, saying:

We are delighted to have been awarded the FEED contract and we are looking forward to forming the alliance with 1PointFive. This direct air capture project is a starting point for the deployment of commercial-scale DAC to help companies meet CO2 emission reduction targets and aligns with Worley’s strategic focus of delivering a more sustainable world.

About the Worley share price

The Worley share price has fallen more than 24% over the past 12 months. The company’s shares hit a low of $4.63 cents in March last year, before moving on an upwards trajectory later that month.

Based on the current share price, Worley commands a market capitalisation of around $5.5 billion.

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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.

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Energy infrastructure business APA Group (ASX: APA) has reported its FY21 half-year result.

APA FY21 half-year highlights

APA announced that its half-year revenue fell by 0.6% to $1.07 billion. It reported that there was strong volume growth in Western Australia, the Northern Territory and sectors of the east coast grid offset by softer contract renewals and lower energy consumption in Victoria.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 2.3% to $823 million. 

The business said that it made a loss after tax of $11.7 million including significant items. This includes a non-cash impairment recognised against the Orbost Gas Processing Plant of $174.5 million.

Net profit after tax (NPAT) excluding significant items was down 7% to $163 million. Operating cash flow was up 1.4% to $519 million due to favourable working capital movements.

APA boasted that it provided reliable operations during the period. It said that regarding its essential services delivery reliability, it achieved 99.92% against customer gas nominations. There was a successful major overhaul of the Diamantina Power Station despite COVID-19 constraints. The production from the Orbost Gas Processing Plant is improving from phase 2 works.

Distribution

APA had already announced an interim distribution of 24 cents per security, amounting to a 4.3% increase compared to the prior corresponding period. It confirmed that distribution today. 

The energy infrastructure business announced that it was upgrading its FY21 distribution guidance to 51 cents per security, up 2% compared to FY20.

APA’s continued growth and refreshed strategy

The business said that organic growth capital expenditure is now expected to exceed $1 billion between FY21 and FY23. This builds on recent investments in the Northern Goldfields Interconnect and the Gruyere Hybrid Energy Microgrid.

APA also said that it will play a central role in supporting the federal government’s plans for a gas-led economic recovery, with a staged expansion of the east coast grid the fastest and most efficient way to address forecast 2024 shortfalls. Early engineering work is already underway.

The business said that it’s well positioned where it has or is rapidly developing capability, including renewables, firming, storage and electrification. It’s also pursuing opportunities in adjacent energy markets such as hydrogen, off-grid renewables and storage. This will be a key part of its efforts to support a lower carbon future.

It has an ambition to achieve net zero operations emissions (scope 1 and scope 2) by 2050.

APA continues to assess attractive energy infrastructure opportunities in North America. Factors such as COVID-19 and the US federal election resulted in a number of opportunities being put on hold during 2020. More activity is expected in 2021 as conditions normalise.

FY21 guidance and outlook

APA reaffirmed its guidance that FY21 underlying EBITDA is expected to be in a range of between $1.625 billion and $1.665 billion. The net interest expense is expected to be in a range of $490 million to $500 million.

The CEO and managing director of APA, Rob Wheals, said:

We have a significant pipeline of energy infrastructure growth opportunities that align with our purpose, vision and strategy. Our organic growth pipeline is healthy and we now expect to exceed $1 billion of growth capex over the FY21-FY23 period. Further development of new technology projects under APA’s Pathfinder Program will ensure APA can play a leading role in the energy transition.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of APA Group. 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 Cochlear Limited (ASX: COH) share price has been a strong performer so far in 2021.

Since the start of the year, the hearing solutions company’s shares are up a sizeable 16%.

Why is the Cochlear share price charging higher?

The Cochlear share price was given a major boost earlier this month from the release of a better than expected half year result.

For the six months ended 31 December, the company reported a 4% decline in sales to $742.8 million. This followed a big improvement in the second quarter which saw constant currency sales increase 7% over the prior corresponding period.

On the bottom line, the company posted a 6% decline in underlying net profit to $125.3 million. Management advised that this reflected a recovery in its sales and lower operating expenses due to material COVID-19 related savings.

Impressively, in constant currency, this was just a 4% decline from last year’s record half year profit. That period was of course prior to COVID-19 emerging and disrupting the global economy.

Is it too late to buy shares?

One broker than believes the Cochlear share price is overvalued now is Goldman Sachs.

This week the broker reiterated its sell rating but lifted its price target on the company’s shares to $189.00.

Based on the latest Cochlear share price of $220.38, this price target implies potential downside of over 14%.

Why is Goldman Sachs tipping the Cochlear share price to decline?

Goldman explained why it is bearish on Cochlear.

It said: “Whilst near-term growth rates are strong off a depressed FY20 base, we struggle to see COH retracing pre-Covid expectations for many years. We currently model an installed base in FY23 that is -3% below our pre-Covid forecast, and yet, adjusting for the 15% equity dilution in Mar-20, COH is now trading +5% above its pre-Covid peak.”

“There are still many reasons to like this stock, but we expect the majority of ‘recovery’ upgrades will be posted after Friday’s 1H21 results update and, looking slightly further ahead, we believe COH’s normalised EBITDA CAGR of 8% (FY22-25E) does not support its peak multiple (31.0x NTM EBITDA, +1 SD above 5yr avg.; +46% vs. sector),” it concluded.

However, one broker that doesn’t agree with this view is Macquarie. Last week the broker reaffirmed its outperform rating and lifted its price target to $245.00.

Time will tell which broker is right.

More reading

• Why broker downgraded these 2 ASX 200 shares last week
• ASX 200 sinks 1.3%, Cochlear soars, TWE sours
• ASX 200 down 0.6%: Cochlear jumps, Goodman upgrades guidance
• Why Cochlear, Goodman, Lovisa, & Whispir shares are surging higher
• Cochlear (ASX:COH) share price in focus after delivering a solid half year result

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

The post Is the Cochlear (ASX:COH) share price in the buy zone? appeared first on The Motley Fool Australia.

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For some ASX 200 shares, it has been the toughest year in living memory. Especially for companies most negatively affected by lockdowns and global mobility. For others like retailers and healthcare, the demand for their goods and services is at all-time highs. The following ASX 200 shares were upgraded by Goldman Sachs last week following outstanding results that topped expectations. 

Wesfarmers Ltd (ASX: WES) 

Wesfarmers delivered a robust HY21 result driven by stronger in-house consumption that lifted its Bunnings, Officeworks and Kmart Group revenues. Management noted their improving confidence in the economic recovery, which is a notable improvement on prior cautious commentary from the company. 

The conglomerate delivered stronger than expected 1H21 EBIT growth of 27.4% to $2.057 billion compared to Goldman’s forecasted 12.3%. As a result, Goldman revised its FY21/22 NPAT forecasts for this ASX 200 share to 16.3% and 21.9% respectively, with a 12-month price target of $59.70. This offers a potential return of 13.43% based on the current Wesfarmers share price. 

Wesfarmers was upgraded from neutral to buy based on Goldman’s renewed positive outlook for the company. This included factors such as favourable housing cycles that could continue earnings momentum in Bunnings due to its exposure to DIY and trade home improvement categories, a turnaround for its Target business and potential for M&A opportunities. 

CSL Limited (ASX: CSL) 

Market darlings come and go, but it appears that CSL is forever. The company delivered a 15% increase in revenue while net profit after tax soared 44% in HY21. While the results appear outstanding at face value, the company did note that COVID-19 has tempered the performance of CSL Behring while boosting the performance of Seqirus. The biotech giant also brought attention to its risks, including challenging plasma collection conditions. 

Despite these potential challenges, the company believes it is well placed to emerge strongly when the pandemic recedes and reaffirmed its FY21 guidance of $2.17 billion to $2.265 billion in NPAT. 

Goldman remains positive on the outlook for this ASX 200 share, with a buy rating and 12-month price target of $329, representing an upside of around 23% to the current CSL share price. 

Super Retail Group Ltd (ASX: SUL) 

How the tables have turned. Retail shares have reported tech-like growth figures this reporting season, driven by an increase in online sales, in-house consumption and broad consumer spending recovery. Super Retail reported a 23.1% increase in group sales to $1.776 billion, while underlying NPAT soared 139% to $177.1 million. 

Goldman believes Super Retail will continue to see elevated sales as it benefits from exposure to domestic travel. The company was upgraded to a buy rating with a 12-month price target of $14.80, nearly 22% above the current Super Retail share price. 

More reading

• 2 of the best ASX 200 blue chip shares to buy
• 3 ASX blue chip shares that just raised their dividends
• 3 reasons why the Wesfarmers (ASX:WES) share price could be a buy
• ASX 200 Weekly Wrap: ASX lower despite bumper dividends
• Top brokers name 3 ASX shares to sell next week

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

The post Goldman Sachs upgraded these ASX 200 shares after outstanding results  appeared first on The Motley Fool Australia.

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