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The Worley Ltd (ASX: WOR) share price took a dive this morning after issuing a disappointing profit update.

It looks like the oil price recovery from COVID-19 may be slipperier to grasp than investors had originally thought!

The WOR share price crashed 13.2% to a three month low of $9.91 at the time of writing. This makes the engineering contractor the worst performer on the S&P/ASX 200 Index (Index:^AXJO) by a country mile.

The next worse ASX stock is the Lynas Rare Earths Ltd (ASX: LYC) share price with a 5.7% plunge followed by the Janus Henderson Group CDI (ASX: JHG) share price with its 4.7% drop.

WOR share price hit by profit downgrade

The Worley share price is worse for wear as its first half profit is expected to be way down from the same time last year.

Management is predicting that group revenue will range between $4.4 billion and $4.5 billion in 1HFY21.

Interim underlying earnings before interest, tax and amortisation (EBITA) will fall to $200 million to $210 million.

This compares to 1HFY20’s revenue of $6 billion and EBITA of $366 million. The impact of COVID is laid bare for all to see!

Big drop from pre-COVID

Management is blaming the pandemic for the poor result. It noted that several projects have been deferred but tried to put a positive spin on things.

While project commencements have been pushed back, Worley is seeing few cancellations. Management is convinced these deferred projects will restart when the global economy improves.

Worley taking a spin on the poor update

It also was quick to point out that the group “continued to generate strong operating cash flow” and cut net debt by $1.2 billion to its lowest since its ECR acquisition in 2018.

Further, the earnings weakness is partially offset by cost savings from a headcount reduction of around 47,600 and synergies from the ECR transaction.

If that wasn’t a “rosy” enough picture, management believes the new US Biden presidency is great for its business.

Worley’s energy transition

Worley is in the process of pivoting towards renewable energy projects and away from carbon.

“The clear shift in the political environment in the USA as well as ongoing policy rollout and anticipated increases in investment in the UK, Europe and Canada provide near-term opportunities in hydrogen, electrification, carbon capture, offshore wind and nuclear, while North America remains buoyant in renewable fuels and circular economy projects,” said Worley.

Foolish takeaway

While the medium- to longer-term outlook is positive for Worley, the trouble is the near term uncertainty.

The pivot takes time and the global economic recovery from COVID remains highly uncertain.

What’s more, while the positive operating cash flow is reassuring, it’s still down from the $277 million it generated in 1HFY20.

Investing in Worley requires a lot of patience, in my view. And after three years of disappointments, that’s a lot of ask of shareholders.

More reading

• Why Afterpay, ResMed, Temple & Webster, & Worley shares are dropping lower
• Why the Crown (ASX:CWN) share price could be hit harder than others today
• These were the worst performing ASX 200 shares in January
• These were the best performing ASX 200 shares in January
• ASX 200 Weekly Wrap: Reality (and GameStop) finally hits ASX

Motley Fool contributor Brendon Lau owns shares of Lynas Limited and WorleyParsons Limited. Connect with me on Twitter @brenlau.

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 Link Administration Holdings Ltd (ASX: LNK) share price is edging higher today following two positive updates.

While the broader ASX market has fallen heavily in the past few days, the administration services company’s shares are pushing 1.67% higher to $4.86.

What’s new?

The Link share price is on the move today after the company provided investors with updates on its previously announced Pepper European Servicing (PES) takeover, and demerger of its investment in Property Exchange Australia Limited (PEXA).

PES

In today’s release, Link advised that it will exercise its right to terminate the binding agreement to acquire PES. This comes after the transaction, pending regulatory approvals and commercial conditions, lapsed the expiry date.

Previously, Link entered into a binding agreement on 30 January, 2020, to takeover PES from the Pepper Group for £165 million.

Based in London, PES provides end-to-end loan servicing and asset management in residential and commercial sectors throughout Europe.

PEXA

In additional news, Link also revealed that the trade sale process of PEXA is tracking along well.

The company stated that it will put forward the trade sale process to maximise value for shareholders. Link will demerge its investment in PEXA through the sale of its shares and shareholder loans. Furthermore, the company said that the refinancing of its external debt will no longer go ahead.

Words from the head of Link

Commenting on the updates, Link Group CEO & managing director Vivek Bhatia said:

The Link Group business is resilient with strong foundations. We have a clear strategic focus to simplify the business, deliver the global transformation program and maintain a strong balance sheet. As a result of the termination of the PES transaction, we will preserve the capital for future growth opportunities.

The board is committed to maximising the value of its interest in PEXA for Link Group’s shareholders. PEXA’s cash balance continues to strengthen month-on-month highlighting the strong cash-flow conversion of this investment.

About the Link share price

The Link share price has underperformed over the past 12 months, with its shares down 25%.

Having reached a 52-week high of $6.65 last January, the company’s shares took a steep dive in the following months. During the coronavirus-led market meltdown in March, its shares hit an all-time low of $2.64 before gradually climbing over time.

Based on the current share price, Link commands a market capitalisation of roughly $2.5 billion.

More reading

• These were the worst performing ASX 200 shares in January
• These ASX 200 shares have been smashed in 2021
• Why the Link (ASX:LNK) share price is one to watch this morning
• These were the worst performing ASX 200 shares last week
• ASX 200 rises 1.5%

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration Holdings 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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It has been a busy week for WallStreetBets as the GameStop Corp (NYSE: GME) short squeeze took the world by storm. This event has been the talk of the town as the literal manifestation of the collective little guy versus the big guy hedge fund managers.

However, it appears that the party doesn’t stop at GameStop and other heavily shorted names – now the attention has turned to a silver squeeze. Yet, this time the community isn’t as one-minded about this particular squeeze.

The path to this moment

Last week’s GameStop mania led to Melvin Capital Management and Citron Research removing their short positions as the losses stacked up. Brokers have also found themselves under the public’s microscope due to the trading restrictions imposed on a basket of stocks experiencing high volatility.

Brokers cited liquidity being the major cause for restrictions, as the high volatility could have left the brokers in a position without funds to cover the interim, increasing the value at risk (VAR).

Once restrictions were put in place, the attention shifted to other non-restricted tradeable listings, such as Dogecoin. The cryptocurrency experienced a surge of 900% in the space of one day – at which point Robinhood proceeded to restrict the trading of Dogecoin as well, as reported by Business Insider.

The result of these stoppages in momentum has pushed some of the community onto its next target, silver.

Silver squeeze in two minds

The original hypothesis on WallStreetBets titled “THE BIGGEST SHORT SQUEEZE IN THE WORLD $SLV Silver $25 to $1,000” outlines a belief that silver is manipulated to cover inflation by shorting with paper contracts.

Users on the subreddit pegged the inflation-adjusted price at $1,000. Some in the community believe this will hit the likes of JP Morgan, which settled a lawsuit not too long ago over ‘spoofing’ of the precious metals market.

Alternatively, there are many others in the community who see the silver squeeze as a distraction from the real agenda, which has been targeting the hedge funds. Furthermore, many believe that JP Morgan and others, such as Citadel, are actually long on silver – which means an increase in the price of the commodity would benefit them.

The price of silver and ASX silver shares is increasing

Today, the silver price is on the increase – trading up roughly 7% to a spot price of A$28.60 (at the time of writing) with silver mining companies benefitting from the push. Some ASX silver shares trading upwards today include Adriatic Metals PLC (ASX: ADT) up 14.7% and Thomson Resources Ltd (ASX: TMZ) up 38.5% at the time of writing.

Many of the popular bullion dealers, including APMEX, are currently reporting unprecedented demand for physical silver as well.

The outcome of the latest short squeeze attempt will likely develop over the coming days. But at the moment it seems that the WallStreetBets community isn’t fully aligned on this one, as they were for GameStop.

More reading

• The worst mistake GameStop investors can make right now
• ASX 200 Weekly Wrap: Reality (and GameStop) finally hits ASX
• How to buy US shares from Australia right now
• GameStop chaos: Real reason Robinhood cut off retail investors
• GameStop frenzy: 3 shorted ASX shares that could shoot up

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

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a decline. At the time of writing, the benchmark index is down 0.4% to 6,578.7 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping lower:

Afterpay Ltd (ASX: APT)

The Afterpay share price is down 2.5% to $131.53. Investors have been selling Afterpay and other tech shares today after their US counterparts dropped lower on Friday night. The technology-focused Nasdaq index tumbled 2% to extend its weekly decline to over 3%. The S&P/ASX All Technology Index (ASX: XTX) is down 2% at the time of writing.

ResMed Inc. (ASX: RMD)

The ResMed share price is down 3.5% to $26.24. This morning analysts at Morgan Stanley retained their neutral rating but trimmed the price target on the medical device company’s shares to $27.40. It believes that COVID-19 related ventilator sales have now peaked and that its shares are fully valued at the current level.

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price has tumbled 8% lower to $10.53. This is despite there being no news out of the online furniture and homewares retailer. However, with its half year results due to be released tomorrow, some investors may be nervous that it may not live up to the market’s lofty expectations.

Worley Ltd (ASX: WOR)

The Worley share price has crashed 15% lower to $9.72. This follows the release of a trading update this morning which revealed that COVID-19 has had a big impact on its first half performance. Combined with foreign exchange headwinds, Worley expects aggregated revenue to be in the range of $4.4 billion to $4.5 billion for the first half. Underlying EBITA is expected to be between $200 million to $210 million. This is down from $5,998 million and $366 million, respectively, a year earlier.

More reading

• Top ASX shares to buy in February 2021
• ASX 200 Weekly Wrap: Reality (and GameStop) finally hits ASX
• 3 reasons to consider Sezzle (ASX:SZL) at this share price
• 2 ASX shares that are growing rapidly
• 3 very impressive ASX quarterly updates from last week

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 Temple & Webster Group Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended ResMed Inc. and Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Vmoto Ltd (ASX: VMT) share price has fallen 7.7% to 47.5 cents this morning after tumbling almost 9% in opening trade today.

This comes despite a relatively positive update from the global electric vehicle company on its fourth quarter 2020 activities (quarter ending 31 December).

It also comes as the wider All Ordinaries Index (ASX: XAO) is following US and European markets sharply lower, currently down 1.2%.

What did Vmoto report in its fourth quarter results?

In an announcement to the ASX this morning, the electric scooter manufacturer revealed strong performance, crediting its business to business (B2B) products for helping drive an increase in demand for its products.

The 6,028 units sold in the fourth quarter were consistent with Vmoto’s expectations. Total units sold in the 2020 financial year reached 23,547 units. That’s an increase of 18% from the previous financial year and up 117% from the 2018 financial year.

International sales also reached new records, with the 21,416 units sold representing a 24% increase from the previous financial year.

Vmoto reported it is currently has 7 ride sharing operators globally as clients, while it is negotiating with 14 other ride sharing operators. It is also supplying products to 12 delivery customers with 13 potential new deliver customers in the pipeline.

The company reported it had no bank debt as at 31 December with a net cash position of $15 million. That’s up from just under $7 million net cash held on 31 December 2019.

Looking ahead, Vmoto reported that it has 11,000 international orders held, which it expects will provide a “runway for a strong year of sales” for the year ahead.

The company is also optimistic about its European market, writing:

With the European governments’ initiatives to encourage consumers to adopt electric vehicles and the impacts from COVID-19 on personal and public transportation, the company believes it is well positioned to benefit over both the short and longer term.

Vmoto share price snapshot

The ASX’s only two-wheeled electric vehicle manufacturer had a strong start to the year. Even with this morning’s 8.7% loss taken on board, the Vmoto share price is still up 9.3% in 2021. That compares to a 2.5% loss for the All Ords.

Over the past 12 months, Vmoto’s share price is up 68%. The company has a market cap of $142 million.

More reading

• ASX 200 Weekly Wrap: Reality (and GameStop) finally hits ASX
• Revenue growth pushes Wisr (ASX:WZR) share price higher
• The Next Science (ASX:NXS) share price is up 8% today. Here’s why
• Here’s why the Volpara (ASX:VHT) share price is edging higher
• Why the 4DMedical (ASX:4DS) share price is soaring higher

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.

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

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

McDonald’s Corp (NYSE: MCD) just closed the books on a forgettable year for the business. COVID-19 continued to sink customer traffic across its global portfolio of stores through the end of 2020, the fast-food giant said in its recent earnings report. 

Yet McDonald’s notched a few wins that point to a better 2021 ahead, assuming the pandemic threat fades over the next few months.

Let’s take a closer look.

McDonald’s steady rebound continued in the three months that ended in late December. Comparable-store sales were down just 1% globally, compared to a 2% drop last quarter and a 25% slump in fiscal Q2. Declining revenue isn’t normally a cause for celebration, but management highlighted several bright spots in a tough year.

These include the fact that sales landed in modestly positive territory in the core US market thanks to a quick shift to a drive-thru and home delivery focus. That result kept the chain ahead of peer Starbucks for the year, but trailing Chipotle Mexican Grill.

“2020 will be remembered as one of McDonald’s most challenging … moments in our long history,” CEO Chris Kempczinski said in a press release.

Earnings are down

The earnings picture is less encouraging and reflects the depth of the chain’s operating slump in 2020. Profits in Q4 fell 9% after excluding currency exchange rate shifts, and were down 20% for the full year. That metric trailed McDonald’s revenue trend thanks to extra costs related to COVID-19 safety and elevated marketing spending aimed at supporting franchisees.

The fast-food industry has become more competitive in recent months as national chains fight over pieces of a flat market.

MCD Cash from Operations (TTM) data by YCharts

McDonald’s finances endured a COVID-19 hit but they’re still strong. Operating cash flow declined by roughly $2 billion in 2020 yet was solidly positive at $6.3 billion.

The chain continued spending cash on its growth initiatives like store remodels, product launches, and delivery.

“By investing for the future and leveraging competitive strengths, we’re confident we can continue to capture market share and drive long-term sustainable growth,” Kempczinski said.

Looking ahead

Management didn’t issue a forecast for the new fiscal year, but McDonald’s is likely to report significant growth this year. The fiscal first quarter, which started a few weeks ago, is up against a prior-year period that included significant early impacts from the pandemic. Comps dove 13% in the US in March last year and fell 35% in the company’s core international segments. Both areas should see significant improvements when compared to those slumps.

The big question is when the chain can get back to setting sales and earnings records again on an absolute basis. Continued modest improvements like the one the chain just announced would mean McDonald’s could reach that revenue mark in 2021. The profit rebound will take longer.

That means shareholders should brace for a volatile period ahead for the business, and for the stock, until the rebound path looks clearer by late 2021.

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

More reading

• Better buy: McDonald’s vs Costco

Demitri Kalogeropoulos owns shares of Chipotle Mexican Grill, McDonalds, and Starbucks. The Motley Fool Australia’s parent company The Motley Fool owns shares of and recommends Chipotle Mexican Grill and Starbucks. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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At the start of each week I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Webjet Limited (ASX: WEB) continues to be the most shorted ASX share with short interest of 14.2%. This was down from 14.9% a week earlier. Short sellers have been targeting the online travel agent’s shares on the belief they are expensive given the challenging near term trading conditions.
• Tassal Group Limited (ASX: TGR) has seen its short interest ease week on week to 11.8%. Concerns that China could slap duties on Australian seafood has been weighing on this salmon producer’s shares.
• Mesoblast limited (ASX: MSB) has seen its short interest remain flat at 10.3%. This biotech company has gained the attention of short sellers after a series of very disappointing trial updates.
• Speedcast International Ltd (ASX: SDA) has short interest of 9.3%. The communications satellite technology provider’s shares remain suspended while it undertakes a recapitalisation.
• Inghams Group Ltd (ASX: ING) has 8.4% of its shares held short, which is flat week on week once again. Short sellers appear to expect an unfavourable sales mix caused by COVID-19 to weigh on this poultry producer’s performance in FY 2021.
• AVITA Medical Inc (ASX: AVH) has seen its short interest rise week on week to 8.3%. This appears to have been driven by concerns that COVID-19 headwinds will stifle the medical device company’s growth again in FY 2021 after a poor performance in FY 2020.
• InvoCare Limited (ASX: IVC) has short interest of 7.9%, which is down week on week again. This funerals company has been tipped to lose market share in FY 2021 due to increasing competition and COVID-19 headwinds.
• A2 Milk Company Ltd (ASX: A2M) has seen its short interest rise slightly to 7.9%. Concerns that weakness in the key daigou channel could persist for even longer than expected appears to be weighing heavily on sentiment.
• Metcash Limited (ASX: MTS) has short interest of 7.4%, which is up slightly week on week. Although the wholesale distributor has delivered strong growth so far in FY 2021, short sellers aren’t giving up on it.
• Service Stream Limited (ASX: SSM) has seen its short interest remain flat at 7.3%. Unfortunately for short sellers, this essential network services company’s shares surged higher last week after announcing a major contract win.

More reading

• Top brokers name 3 ASX shares to buy next week
• 2 beaten-up infant formula ASX shares to buy
• ASX 200 ends 0.6% down, Kogan falls 8.5%, Service Stream soars 10%
• GameStop frenzy: 3 shorted ASX shares that could shoot up
• ASX 200 up 0.6%: ResMed Q2 update, Kogan sinks, NAB acquires 86 400

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 Avita Medical Limited. The Motley Fool Australia owns shares of and has recommended A2 Milk and Webjet Ltd. The Motley Fool Australia has recommended Avita Medical Limited, InvoCare Limited, and Service Stream 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 Zip Co Ltd (ASX: Z1P) share price is on course to start the week with a disappointing decline.

In morning trade, the buy now pay later provider’s shares are down over 3% to $7.04.

Why is the Zip share price dropping lower?

There have been a couple of catalysts for the weakness in the Zip share price on Monday.

The first is general weakness in the tech sector following a poor end to the week on Wall Street’s technology-focused Nasdaq index. The world-famous index fell 2% on Friday, bringing its weekly decline to over 3%.

This is weighing on the local tech sector, leading to the S&P/ASX All Technology Index (ASX: XTX) falling 2.4% this morning.

In addition to this, this morning Zip announced that its Chair, Philip Crutchfield, will step down from the role after more than five years with the company. Mr Crutchfield is exiting the role with immediate effect but will remain on the board until the end of March in order to support an orderly transition.

New Zip Chair

Zip has announced the appointment of Ms Diane Smith-Gander AO as its next Chair.

According to the release, Ms Smith-Gander is a seasoned professional non-executive director with chair experience. The company believes she is ideally placed to lead Zip as it forges ahead as with its global expansion.

It notes that Ms Smith-Gander will bring her extensive governance and international experience to Zip, with the ambition of guiding the business in the coming years, as well as bringing to millions of new customers a fairer and more transparent way of managing their money.

Ms Smith-Gander had a long career in banking, technology, and strategic and management consulting. She spent time with Westpac Banking Corporation (ASX: WBC) as a Group Executive and McKinsey & Company as a US-based partner.

Zip’s Co-Founder and Chief Executive Officer, Larry Diamond, said: “I would like to thank Philip Crutchfield for his incredible service at Zip. When he joined us in December 2015, Zip had less than 30 staff and worked out of a tiny office with a ping pong table. From then to now, he has steered us with a steady hand on our journey to the place we are in today. Personally, he has been a wise mentor and a good friend. On behalf of Zip, I would like to thank Philip and wish him all the best for the future.”

“I would also like to welcome Diane Smith-Gander to Zip. Diane is an experienced leader with a diverse background across finance, technology and banking. She will be an important part of Zip’s future as we strive to become the first payment choice everywhere and every day,” he concluded.

More reading

• These were the best performing ASX 200 shares in January
• The Zip (ASX:Z1P) share price rocketed 37% higher in January
• 3 reasons to consider Sezzle (ASX:SZL) at this share price
• Zip and Vulcan were among the most traded ASX shares last week
• 2 ASX growth shares to buy in February

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 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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Despite the stock market rally following the 2020 market crash, it is still possible to find top shares to buy right now. Over time, they could deliver higher returns than the stock market, which could boost an investor’s portfolio performance.

Through analysing company valuations on a relative basis, considering the capacity for a recovery within struggling sectors, and assessing the financial strength of businesses, it is possible to unearth the most appealing shares to buy right now.

Low valuations among top shares to buy today

Following the stock market recovery, a number of companies now trade on high valuations. While they could move higher if investor sentiment continues to improve, the top shares to buy today may be those companies with more modest valuations. After all, lower valuations may mean there is more scope for capital growth as the economic recovery takes hold.

As such, it may be prudent to search for companies that have low valuations. They may be lower than their sector peers, or below their historic averages. In either of these situations, there may be scope for them to enjoy upward reratings over the coming months and years, as improving investor sentiment and reduced disruption from lockdown measures allow businesses to return to improved operating conditions.

Focusing on recovery opportunities

Some companies have been hit harder than others in the present economic crises. In many cases, this is through no fault of their own. For example, they may have experienced weak operating conditions because of a challenging economic outlook.

History suggests that buying such companies could be a shrewd move. The performance of the economy, and most sectors, is very likely to improve significantly over the coming years. This may mean that the financial performance of businesses that experienced falling sales and profitability in 2020 improves. This process may or may not take place in 2021, but is likely to come into force in the long run.

Therefore, searching for top shares to buy now in sectors with recovery potential could be a shrewd move. It may enable an investor to buy turnaround opportunities that deliver market-beating returns.

Financial statement analysis

Even cheap shares with recovery potential are of little use if they cannot survive short-term economic challenges. After all, to benefit from an economic recovery through an upward rerating, a company must first overcome short-term difficulties that may remain present for much of the current year.

Therefore, analysing a stock’s financial statements could be a sound idea. It will enable an investor to judge whether the company in question has the financial means to survive the short run to benefit from an improving long-term outlook. Top shares to buy today are likely to have low debt, access to liquidity and the means to cut costs now to become leaner entities prior to an economic recovery.

More reading

• The Pro Medicus (ASX:PME) share price zoomed 25% higher in January
• Why the Vection (ASX:VR1) share price is lifting today
• Why the Coca-Cola Amatil (ASX:CCL) share price is pushing higher
• Here’s why the Creso Pharma (ASX:CPH) share price is rocketing 18% higher
• Woolworths (ASX:WOW) settles shareholders’ lawsuit for $44.5 million

Motley Fool contributor Peter Stephens 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 Pro Medicus Limited (ASX: PME) share price was an impressive performer in January.

It was among the best performers on the S&P/ASX 200 Index (ASX: XJO) with a 25.4% monthly gain.

This means the Pro Medicus share price is now up a massive 71% over the last 12 months.

Why did the Pro Medicus share price rocket higher in January?

The catalyst for the strong performance by the Pro Medicus share price in January was the announcement of another major contract win.

This was the sixth such an announcement in the space of eight months and follows previously announced deals with Ludwig-Maximilians University, MedStar Health, Northwestern Memorial Healthcare, and NYU Langone Health. It was also the fifth win in just six months.

The latest contract is with Salt Lake City-based Intermountain Healthcare and is the biggest of them all. Management revealed that it is worth a sizeable $40 million over a seven-year period.

According to the release, Intermountain Healthcare is the largest health system in the State of Utah. It also provides medical services in the states of Idaho and Nevada.

The contract, which is based on a transactional licensing model, will see the company’s Visage 7 Viewer and Visage 7 Open Archive products implemented across all of Intermountain’s radiology and subspecialty imaging departments.

The implementation will be fully deployed on Google Cloud Platform (GCP), leveraging Visage’s native, cloud-engineered enterprise imaging technology.

Pro Medicus’ CEO, Dr Sam Hupert, commented: “This is a very important deal for us, not only because of its size and scope, it will provide us with a material footprint in Intermountain West, previously an untapped region for us.”

“Prestigious deals”

In a separate Q&A release, Dr Hupert spoke in more detail about its recent contract wins.

Commenting on what the deal says about its technology, Dr Hupert said: “Firstly, these were arguably five of the largest, most prestigious deals in the market not to mention that these sorts of deals don’t come around often, so they were incredibly competitive. The fact that we won five out of five we feel validates our belief that we have a unique, highly differentiated offering.”

“Secondly, I think people are hearing about the ROI we deliver, both financially and clinically. This combined with our ability to rapidly and seamlessly implement is creating a strong network effect that has been instrumental in our spate of recent wins,” he added.

Looking ahead, the Chief Executive remains positive on its outlook thanks to its strong pipeline of opportunities.

He explained: “In terms of the pipeline, there have been a number of new opportunities, particularly over the past 6-8 months that supplement those already in the pipeline that are progressing through the cycle. So, whilst we have been very successful in converting end-stage opportunities such as Intermountain and the other deals we have announced over the past 6 months, our pipeline remains strong with a range of opportunities across various stages of the cycle and across multiple segments of the market.”

This may bode well for the Pro Medicus share price over the next 12 months.

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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. 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.

The post The Pro Medicus (ASX:PME) share price zoomed 25% higher in January appeared first on The Motley Fool Australia.

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