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The Western Areas Ltd (ASX:WSA) share price closed over 16% lower today at $2.46, making the company one of the biggest losers on the ASX for the day. The S&P/ASX 200 Index (ASX: XJO) finished off 2.7% lower.

Western Areas is one of Australia’s top nickel producers with a current market capitalisation of approximately $811 million. Its shares came under pressure today after the company released its most recent quarterly report. Here’s a closer look at its performance for the quarter ending 31 December 2020.

Mining activity updates

Within Western Areas’ Forrestania operation there are four separate mine sites — Flying Fox, Spotted Quoll, Cosmos and Odysseus. The Flying Fox site is Western Areas first producing underground mine. According to Western Areas, it’s one of the highest grade nickel mines in the world. The mine has been operating since 2006.

At the end of the December 2020 quarter, Western Areas advised that its Flying Fox operation produced 38,255 tonnes of ore at an average grade of 2.5% nickel for 939 nickel tonnes.

The Spotted Quoll mine was discovered by Western Areas in 2007. The company estimates it currently has a mine life exceeding six years, based on reserves. Spotted Quoll produced 86,204 tonnes of ore at an average grade of 3.0% nickel for 2,579 nickel tonnes during the period.

The other two sites, Cosmos and Odysseus, both received capital injections during the period as the company continues to expand and develop its programmes. In total, $35.6 million was invested in the Forrestania operation during the December quarter.

Financial position

Western Areas finished off the December quarter with a cash total plus nickel sales receivables and liquid assets totalling $168.6 million. This is around $12 million less than the preceding quarter.

‘Cash at bank’ was $98 million at the December quarter end. This compares to $120.3 million in the quarter prior.

The company attributed the spending increase to a few different events across the quarter, including the $18 million spend on the Odysseus Mine development and shaft haulage infrastructure construction.

Additionally, the company paid $13.4 million toward mine development and capital expenditure at its Forrestania site. It spent $4.3 million on exploration and feasibility expenditures, and $2.1 million went to FY20 final dividends.

Today’s steep plummet puts the Western Areas share price at $2.46, down more than 7% on this time last year.

More reading

• These ASX stocks just got a big upgrade on the back of Tesla (NASDAQ:TSLA)
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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 Fortescue Metals Group Limited (ASX: FMG) share price was out of form on Thursday and tumbled lower despite the release of a solid quarterly update.

The iron ore producer’s shares were caught up in the market selloff and dropped 4% to $22.73.

How did Fortescue perform in the second quarter?

For the three months ended 31 December, Fortscue achieved iron ore shipments of 46.4 million tonnes (mt), bringing its half year shipments to a record of 90.7mt.

The former was achieved with C1 costs of US$12.81 per wet metric tonne (wmt), which were largely in line with the previous quarter.

Thanks to the appreciation in the iron ore price during the quarter, Fortescue recorded average revenue of US$122 per dry metric tonne (dmt). This was 91% of the average Platts 62% CFR Index for the quarter.

The strong free cash flow that this generated led to Fortescue finishing the period with net debt of just US$0.1 billion. This includes the payment of the FY 2020 final dividend and the FY 2020 final tax instalment.

Fortescue’s Chief Executive Officer, Elizabeth Gaines, commented: “Record shipments of 90.7mt surpassed any half year since Fortescue’s inception, and we are very well placed to meet the sustained strength in demand from our customers.”

“Fortescue is continuing to deliver strong results for FY21 across all key measures of safety, production and cost; and during the quarter the team achieved a key milestone of first ore at our Eliwana mine,” she added.

Outlook

Fortescue has held firm with its guidance for FY 2021.

It continues to forecast iron ore shipments of 175mt to 180mt with C1 costs of US$13.00 to US$13.50 per wmt.

Capital expenditure is expected in the range of US$3 billion to US$3.4 billion. This is all based on an assumed exchange rate of AUD:USD 0.70.

The company is scheduled to release its half year results on 18 February. Its preliminary net profit after tax for the six months on an unaudited basis is expected in the range of US$4 billion to US$4.1 billion.

More reading

• Why the IGO (ASX:IGO) share price is tanking today
• Why Beach, Fortescue, Iluka, & Temple & Webster shares are dropping lower
• ASX 200 down 0.7%: BHP & Fortescue tumble, Reliance rockets, CSL downgraded
• ASX property stocks are likely to beat property investments in 2021
• ASX 200 rises 0.4%

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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There are some ASX shares that a number of brokers like and have rated as ‘buys’

It can be quite hard to find good businesses that are trading at a good price. One investor might say that BHP Group Ltd (ASX: BHP) is a good buy, whilst another might say that Woolworths Group Ltd (ASX: WOW) is the share to buy.

Brokers are constantly looking at businesses and share prices, thinking about what would be a good investment. There are various brokers out there like Bell Potter, Macquarie Group Ltd (ASX: MQG) and UBS that provide different recommendations about shares.  

With that in mind, these ASX shares are liked by more than one broker. Of course, this still isn’t a guarantee of success – they could all be herding together.

Baby Bunting Group Ltd (ASX: BBN)

Baby Bunting is the largest baby and toddler product retailer in Australia.

The ASX share is liked by at least three brokers right now.

The company sells things like prams, baby clothes, cots and toys. There was growth in sales during FY20 despite COVID-19 impacts – total sales went up 11.8% to $405.2 million thanks to comparable store sales growth of 4.9% and online sales growth of 39.1%. In that same result, the gross profit margin increased by 120 basis points to 36.2%. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 24.1% to $33.7 million and underlying net profit after tax (NPAT) rose 34.1% to $19.3 million.

At the company’s annual general meeting (AGM), it said in the year to date to 2 October 2020, comparable store sales had grown by 17%. Excluding Melbourne metro stores, comparable store sales had gone up by 28.5%.

In the first quarter of FY21, the ASX share’s online sales (including click and collect) went up 126% – excluding Victoria, online sales went up 92%. Click and collect sales jumped 233%. The gross margin improved by 90 basis points to 37.5%.

The company is anticipating to open between four to six stores in FY21, with three new stores opened in the first half of the year.

Australia and New Zealand Banking Group Ltd (ASX: ANZ)

The big four ASX bank is rated as a buy by at least five brokers.

During the 2020 calendar year, the big banks like ANZ significantly increased credit provisions because of the economic impacts of the COVID-19 pandemic.

However, brokers such as Credit Suisse believe that as time goes on, investors will recognise the dividend and earnings recovery. ANZ is Credit Suisse’s favourite big four ASX bank.

The Australian Prudential Regulation Authority (APRA) recently lifted the restrictions regarding how much of a dividend payout ratio that the banks can pay. Under previous guidance, banks were limited to a 50% dividend payout ratio of statutory earnings.

However, APRA does still expect banks to take a prudent approach.

APRA Chair Wayne Byres said: “A decade-long process of increasing capital levels and bolstering resilience in the banking system has put Australian banks in their current position of strength, allowing the sector to support customers and the broader economy at a time of crisis.

Brokers are also positive on big banks like ANZ because of the improving prospects for the housing market as well as reductions in impairment charges for the big four banks.

More reading

• Jailing of NAB exec a scary déjà vu for NAB (ASX:NAB) share price
• ASX 200 down 2.3%: Bank shares tumble, InvoCare jumps, IOOF disappoints
• 2 fantastic ASX dividend shares with attractive yields
• ASX 200 Weekly Wrap: Change in America spurs ASX 200 higher
• 2 blue chip ASX dividend shares to buy next week

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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 S&P/ASX 200 Index (ASX: XJO) fell sharply today, down 2.0% in late afternoon trading.

The ASX and Asian share markets are following the lead of the United States and European markets, where all the major indexes lost ground yesterday (overnight Aussie time).

In the US, the S&P 500 Index (INDEXSP: .INX) fell 2.6%. Technology shares weren’t spared either, with the tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) also dropping 2.6%.

In Europe, Germany’s DAX PERFORMANCE-INDEX (DB: DAX) led the charge lower, closing down 1.8%.

Today’s retrace among leading Australian shares puts the ASX 200 back in the red for the calendar year, down 0.8% since the opening bell on 4 January.

With all the talk of frothy markets and bubbles circulating in the financial news, you’d be forgiven for feeling a touch of anxiety.

But according to a wide range of market veterans, the mid-term outlook for share prices remains quite positive.

A tradeable low

Addressing the overnight selloff in equities, Fundstrat Global’s Tom Lee wrote in a note (quoted by the Australian Financial Review [AFR]):

Equities are selling off sharply today and [it] is broad-based… I think there is a good chance today is a tradeable low. Yes. Not the start of a correction, but the resolution of this trading range.

As the AFR reports, David Older, head of equities at Carmignac sounds a more cautious note, though he’s not expecting any kind of major market falls:

Timing the end of this frothiness is hard. It can go on longer than you think. I don’t see a huge move lower… But we have become more cautious.

One of the big changes we saw in 2020 was the rapid rise of retail investors. Many mum and dad investors signed up to new low cost (or even free) online trading platforms during the coronavirus pandemic lockdowns. These so-called Robinhood investors are often quick to chase the latest hot tips. And some analysts believe they could be a destabilising market force.

But Salman Baig, multi-asset investment manager at Unigestion in Geneva, isn’t losing sleep over the increased presence of retail investors. He points to the fact that most previous bubbles, like China’s 2015 market meltdown, saw retail investors heavily dependent on margin finance (aka debt). But today’s environment is different:

It’s important to remember how retail investors are financing these purchases… Now, household savings are high. People have built up cash balances… It does not feel to us like a bubble. Rather, there are some expensive stocks where there could be a meaningful correction.

Andrew Sheets, chief cross-asset strategist at Morgan Stanley, adds, “The fact that people are still nervous enough about future volatility suggests people are not all in.”

Michael Kelly, head of multi-asset investment at PineBridge Investments also isn’t ready to jump on the bubble bandwagon:

I don’t think the bubble bugles are acknowledging why stocks are so expensive. In 2021, markets are going up because earnings are going up and excess liquidity is still surging. We are in a structural growth in capital because of the rising savings rate and, on top of that, quantitative easing. We’ve never ever had that before.

Speaking of ASX earnings…

In case you’re just tuning in from your summer holidays, earnings reporting season kicks off next week. And though few would have expected this at the height of Australia’s pandemic lockdowns last autumn, company earnings are expected to come in quite strong.

As reported by the AFR, Citi forecasts market earnings per share growth of 20% in 2020-21. Citi expects the resources sector to outperform, with earnings growth of 32%. As for dividends, Citi forecasts 22.3% market-wide growth.

According to Citi Australia’s head of research, Craig Woolford:

It’s likely reporting season next month will show many companies have delivered earnings growth over the six months to December, which back in March or April 2020, people would have thought was mad…

The mining companies are benefiting from much higher prices, particularly for iron ore, copper and nickel… We think the strength of the domestic economy will mean there’s less credit risk for the banks and potential for some of the provisions to unwind that they made over 2020.

Quoted in the same article, T. Rowe Price’s head of Australian equities, Randal Jenneke says:

To the extent that we get a higher number, that is going to support markets. We know that we have had an enormous amount of monetary and fiscal support that has really been helping demand for the better part of nine months…

I think that where the market has got this wrong is that this earnings strength is not just going to peter out in the next two to three months. It’s going to be ongoing for most of this year.

The other part of the market that I think is going to do well is the global cyclicals, the miners in particular, as we are going to have a global cyclical recovery… Provided we have a good solid recovery in earnings, it’s not unusual for multiples to be elevated right now given there’s an expectation earnings will improve.

Jenneke indicated 5 ASX 200 shares investors should keep an eye on during the upcoming earnings season.

Domain Holdings Australia Ltd (ASX: DHG), whose share price is up 1.1% in 2021 and up 22.0% since this time last year.

SEEK Limited (ASX: SEK), whose share price is down 4.2% in 2021, but up 17.1% over the past year.

Harvey Norman Holdings Limited (ASX: HVN), whose share price is up 11.2% in 2021 and up 23.9% over the last full year.

James Hardie Industries plc (ASX: JHX), whose share price is down 5.0% in 2021, but up 15.2% since 29 January 2020.

And OZ Minerals Limited (ASX: OZL), whose share price is down 4.4% this calendar year, but shares are up an impressive 83.9% over the last full year.

More reading

• Why the IGO (ASX:IGO) share price is tanking today
• Investment specialist: ASX to buckle in for the commodity bull market of a lifetime
• Top brokers name 3 ASX shares to buy today
• This ASX company will double its earnings this year: fundie
• These ASX shares are targeting enormous growth over the 2020s

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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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One of the most dominant themes running through the ASX last year was Australia’s deteriorating relationship with China. The issues started as a diplomatic spat between the Australian government and the Communist Party of China (CCP) regarding the origins of the coronavirus pandemic.  Tensions have since spilled over into the share market in a dramatic fashion.

Just ask shareholders of Treasury Wine Estates Ltd (ASX: TWE). Treasury shares had one of their worst years ever last year, as the CCP imposed import restrictions on Australian wine entering China. Treasury shares were at $17.70 in January last year. They closed the year at $9.40.

Australia’s “China problem”

Part of the problem is that China views Australia as a lockstep ally of the United States. The United States certainly did not pursue an amicable trade relationship with China under the recently departed Trump Administration. The relationship between these two countries over the past 4 years has been defined by tariffs and trade wars.

The Trump Administration is now history. Many ASX investors might be hoping for a relationship reset between the world’s 2 largest economies. In turn, restoring our own fractured relations. Unfortunately for those investors, this doesn’t look likely.

Biden Administration signals no major change to Sino-US relations

According to reporting in the Australian Financial Review (AFR) today, the Sino-US relationship doesn’t look set for a significant thaw anytime soon.

According to the report, the recently confirmed US Secretary of State, Anthony Blinken told his confirmation hearing that the Trump administration “was right in taking a tougher approach to China”. Blinken is the equivalent to our Foreign Minister. He then “judged” the CCP as “engaging in genocide against Xinjiang’s Uighur population, trampling democracy in Hong Kong, and threatening Taiwan”.

Not exactly the best way to go about a ‘reset’.

Blinken has also apparently described strategic competition with China as “a defining feature of the 21st century”. He reportedly added that “Chinese conduct hurts American workers, blunts the country’s technological edge, and threatens US alliances”.

The report notes that these attitudes break the Biden administration away from the ‘consensus’ that has existed among both previous Republican and Democratic administrations. That consensus basically revolves around the notion that engagement with China will lead a “fostering of domestic liberalisation”.

Secretary Blinken’s remarks, as the report states, seem to mark and end of this consensus in the Democratic Party. Much as the former Trump Administration did for the Republican Party.

It does not look like a favourable resolution for the ASX shares caught in the Sino-Australia crossfire is in sight anytime soon. As a major ally of the United States, it’s unlikely that the Australian government will depart from the ‘new US consensus’ regarding China.

It remains to be seen how Treasury and others will adapt to this new paradigm in international relations between the two countries.

More reading

• Why Bigtincan, Bubs, LiveTiles, & Treasury Wine shares are storming higher
• Will Joe Biden’s election help an Australia-China reset?
• Goldman Sachs sees more pain for the Treasury Wine (ASX:TWE) share price
• 5 things to watch on the ASX 200 on Wednesday
• Why the Treasury Wine (ASX:TWE) share price crashed 43% lower in 2020

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. 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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The Next Science Ltd (ASX: NXS) share price is racing higher today. This comes after the company announced its fourth-quarter trading update for 2020.

The Next Science share price is rising despite the ASX All Ordinaries Index (ASX: XAO) heavily dropping 2.06% today. At the time of writing, the medical technology company’s shares are up 8% at $1.22.

What’s moving the Next Science share price?

The Next Science share price is on the move after reporting strong growth across its business.

For the period ending 31 December, the company delivered total group revenue of $2.3 million. This represented a 75% increase over the prior corresponding period, and accounts for 66% of FY20’s annual revenue. Next Science attributed the positive result to a recovery on surgery volumes compared to the previous 2 quarters.

In addition, the company highlighted that despite the impacts of COVID-19, it continues to see significant improvement in sales from its largest market, the United States.

Next Science noted that its XPerience no rinse antimicrobial solution has been resubmitted to the United States Food and Drug Administration (FDA) as a 510(k) medical device. This follows the company’s animal studies that was requested by the FDA to further validate the product’s effectiveness. Next Science anticipates that its first commercial sales of XPerience to begin sometime in the first-half of 2021.

The company revealed it had a healthy cash balance of US$15.3 million in the bank, with no debt.

Management commentary

Next Science managing director Judith Mitchell welcomed the results, saying:

We made good progress this quarter in advancing key regulatory approvals, and enhancing our distribution model to drive accelerated sales growth. It is pleasing to see revenue growth returning to a positive trajectory as elective surgery case volumes recover in some regions in the US.

Coupled with the expected launch of XPerience in 1H 2021 and our strengthened balance sheet, we are well placed to deliver a strong performance in 2021.

Outlook

Looking ahead, Next Science believes that its fourth-quarter performance will run through the first-half of 2021. It stated that its sales team will focus on driving market adoption of the SurgX product in the United States. SurgX is a sterile wound gel that reduces surgical site infections.

Furthermore, the company will seek to expand market awareness of its Xbio technology and upcoming XPerience antimicrobial solution.

About the Next Science share price

Over the last 12 months, the Next Science share price has snowballed almost 50% lower reflecting weak investor sentiment.

The company’s shares hit a low of $1.00 in the March coronavirus meltdown last year, and have barely recovered since. Its 52-week high was recorded last February, reaching $2.76 on the ASX boards.

Based on the current share price, Next Science has a market capitalisation of roughly $232 million.

More reading

• Here’s why the Volpara (ASX:VHT) share price is edging higher
• Why the 4DMedical (ASX:4DS) share price is soaring higher
• Here’s why the Coventry Group (ASX:CYG) share price is soaring 9% today
• Here’s why the Rhythm (ASX:RHY) share price hit an all-time high today
• Why the Bod (ASX:BDA) share price is tracking 5% higher today

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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If you’re currently in retirement or approaching it, you’ll probably be looking for ways to boost your income in this low interest rate environment.

But which ASX shares should you turn to? Two top options for retirees to look at are listed below. Here’s what you need to know about them:

BWP Trust (ASX: BWP)

The first ASX share to look at is BWP. It is a commercial real estate investment trust with a focus on warehouses.

The vast majority of the company’s properties are leased to home improvement giant Bunnings Warehouse. Given how Bunnings has been performing very strongly during the pandemic, it will not be surprising to learn that BWP has continued its positive form over the last 12 months and collected rent largely as normal.

Another positive was that the company’s portfolio actually appreciated in value last year. This came at a time when most other retail landlords were writing down the value of their properties.

Pleasingly, Bunnings has continued to perform well in FY 2021 and appears to have put BWP in a position to deliver a robust result later this year.

Analysts at Ord Minnett are estimating an 18 cents per share distribution in FY 2021. Based on the current BWP share price, this represents a 4.2% distribution yield.

Ramsay Health Care Limited (ASX: RHC)

Another ASX share to look at is Ramsay Health Care. It is a leading private healthcare company with operations across several countries.

While its growth over the short term is likely to be challenging in some markets because of headwinds caused by the pandemic, things are improving and its long term outlook remains very positive due to its world class network of private hospitals and their exposure to the growing demand for healthcare services.

Analysts at Goldman Sachs are very positive on the company. They note that the ANZ market is recovering strongly and expect Ramsay to benefit greatly from a backlog in surgeries. And given how the local market contributes approximately two-thirds of its earnings, this bodes well for the company’s recovery from the pandemic.

Overall, its analysts believe Ramsay is now well-placed for solid earnings and dividend growth over the coming years. In light of this, they recently put a conviction buy rating and $70.00 price target on its shares.

More reading

• 2 reliable ASX dividend shares for income investors to buy
• 3 reasons why Soul Patts (ASX:SOL) is a great ASX dividend share
• 2 outstanding blue chip ASX shares to buy right now
• Why Data#3, JB Hi-Fi, Ramsay, & Zip shares are charging higher
• ASX 200 down 0.5%: JB Hi-Fi guidance impresses, Super Retail update, Ramsay surges

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

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Given the quality on offer in the tech sector, it isn’t surprising that tech shares are among the most popular shares on the ASX.

But given the abundance of choice that investors have, it can be difficult to decide which ones to buy over others.

To help narrow things down for you, I have picked out two ASX tech shares which are very highly rated right now:

Nitro Software Ltd (ASX: NTO)

Nitro Software is a software company which is aiming to drive digital transformation in organisations around the world across multiple industries.

Its core solution is the Nitro Productivity Suite, which provides integrated PDF productivity, eSignature, and business intelligence (BI) tools to customers. Management notes that its software solution is highly scalable, serving large multinational enterprises and government agencies, as well as small businesses and individual users.

This week Nitro released its fourth quarter update and revealed that its annualised recurring revenue (ARR) reached US$27.7 million. This was up 64% on the prior corresponding period and was ahead of its upgraded guidance.

It also revealed that it now serves 11,700 business customers, including 68% of the Fortune 500, and saw over 1 million Nitro Sign eSignature requests sent during the year.

Analysts at Morgan Stanley are positive on Nitro and have an overweight rating and $3.50 price target on its shares.

Xero Limited (ASX: XRO)

Another ASX tech share to look at is Xero. It is a leading cloud-based business and accounting software provider.

Thanks to its highly successful evolution from an accounting platform to a full service small business solution, Xero has been growing at a rapid rate in recent years.

Pleasingly, this has continued in FY 2021, even during the pandemic. In the first half of FY 2021, Xero reported a 21% increase in operating revenue to NZ$409.8 million and a 15% lift in annualised monthly recurring revenue (AMRR) to NZ$877.6 million. It also grew its subscribers to 2.45 million.

Analysts at Goldman Sachs believe Xero’s growth is only just starting. Thanks to the quality of its offering, the shift to the cloud, its global market opportunity, and burgeoning app ecosystem, it believes Xero is capable of delivering multi-decade strong revenue growth.

In the meantime, Goldman Sachs believes Xero can achieve a subscriber footprint of 7.4 million and generate NZ$3.4 billion in annual revenue by 2030.

In light of this, the broker has a buy rating and $157.00 price target on its shares.

More reading

• Why Booktopia, Nitro, Reliance, & Vulcan shares are charging higher
• Here’s why the Nitro Software (ASX:NTO) share price is surging 7% higher today
• 3 of the best ASX shares you can buy today
• 5 things to watch on the ASX 200 on Monday
• 3 exciting small cap ASX shares to watch very closely

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 Xero. The Motley Fool Australia has recommended Nitro Software 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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Splitit Ltd (ASX: SPT) shares have been performing well of late, having gained nearly 17% over the last month. Today, however, the Splitit share price is falling. This comes after the buy now, pay later (BNPL) company released its FY20 fourth quarter report.

By the market’s close, Splitit shares had fallen 2.7% lower to $1.46.

Record quarter

The Splitit share price is sliding lower today despite the company reporting record quarterly results. Gross revenue surged to US$2.9 million, up 359% year on year (YOY), surpassing the total revenue achieved in FY19.

Notably, the company grew its merchant sales volume (MSV) 218% YoY to US$86.3 million. The increase equates to US$345 million when annualised. This was driven largely by the accelerated adoption by shoppers and large merchants.

MSV growth was again especially strong in Splitit’s largest markets of North America and Europe. This was supported by the company’s first targeted consumer marketing campaign in North America. The campaign helped accelerate consumer adoption, leading to a 70,000 increase in shoppers in the quarter alone.

Splitit also added multiple large merchants to the platform during the quarter. This helped it achieve a total of 1,800 merchants, an increase of 144% YoY. The growth in new merchants was accelerated by the ability to cross sell through the company’s partnership with Stripe Connect. Stripe Connect is an online marketplace available in more than 100 countries.

In reducing onboarding time by enabling any merchant that accepts credit cards to offer instalments within minutes, Splitit expects the accelerated growth in merchant adoption to continue in FY21 and beyond. 

Global expansion

Splitit’s vertical expansion, such as through partnership with QuickFee, has continued to drive growth and present opportunities for the company to expand globally. For example, more than 210 accounting and law firms now use Splitit, highlighting strong initial uptake in the professional services vertical. Based on this, Splitit is aiming to accelerate growth in the professional services vertical through more dedicated sales and marketing efforts.

In the fourth quarter, the company’s global and scalable platform was used by shoppers in 100 countries and by merchants in over 30 countries. According to Splitit, as the company grows, it will be seeking further expansion opportunities with particular focus on Asia and Europe.

About the Splitit share price

It has not only been a strong month for the Splitit share price, but also for other BNPL players. In particular Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) shares have also performed well, rising by 12% and 35% respectively. The more junior BNPL company is not being left behind by its larger counterparts, however, returning 16.8%.

Based on the current Splitit share price, the company boasts a market capitalisation of $500 million.

More reading

• Zip and Vulcan were among the most traded ASX shares last week
• 2 ASX growth shares to buy in February
• ASX property stocks are likely to beat property investments in 2021
• Leading brokers name 3 ASX shares to sell today
• These ASX 200 shares are on fire in 2021

Daniel Ewing has no position in any of the stocks mentioned. 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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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:

Commonwealth Bank of Australia (ASX: CBA)

According to a note out of Macquarie, its analysts have retained their underperform rating but lifted the price target on this banking giant’s shares to $78.00. Macquarie notes that Commonwealth Bank is still operating in a challenging environment and facing margin and fee pressures. It doesn’t feel that this is being factored into its share price, which it believes is looking stretched. The Commonwealth Bank share price is trading at $84.82 today.

Iluka Resources Limited (ASX: ILU)

Analysts at Credit Suisse have downgraded this mineral sands producer’s shares to an underperform rating but lifted the price target on them to $5.60. According to the note, the broker made the move following the release of a reasonably mixed quarterly update earlier this week. In light of this update, it feels it is unlikely that Iluka will be paying a dividend with its full year results. The Iluka share price is fetching $6.64 this afternoon.

Orocobre Limited (ASX: ORE)

A note out of Credit Suisse reveals that its analysts have downgraded this lithium miner’s shares to an underperform rating with an improved price target of $5.00. While Orocobre was on form during the second quarter, the broker appears concerned by its valuation. It notes that its shares have rallied hard over the last three months amid the strengthening the outlook for lithium demand and prices. The Orocobre share price is trading at $5.66 on Thursday afternoon.

More reading

• Jailing of NAB exec a scary déjà vu for NAB (ASX:NAB) share price
• Here are the US shares ASX investors are buying
• Why Beach, Fortescue, Iluka, & Temple & Webster shares are dropping lower
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 up 0.35%: Afterpay & Appen push higher, big four banks rising

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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