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The gold spot price has pushed higher to almost US$1,900 after dipping as low as US$1756 in November.

Despite gold holding never before seen levels, and US Federal Reserve continuing to expand its balance sheet, Citi believes that gold prices will peak in 2021 and weaken through 2022.

Here are the ASX gold shares that have had share price targets adjusted to reflect lower gold prices. 

Newcrest Mining Ltd (ASX: NCM) 

The Newcrest Mining share price target was lowered  from $35.50 to $32.00 with a buy rating. Its shares are currently trading at $26.74, so the price target still represents an upside of 19%. 

Newcrest is Australia’s largest gold producer with one of the lowest all-in sustaining costs (AISC) in the world of just US$980 per ounce.

The company continues to explore a number of organic growth opportunities to leverage its low costs and current gold prices. This includes a secondary listing on the Toronto Stock exchange to support its growth strategy in the Americas and broaden its access to the large North American capital pool. 

Saracen Mineral Holdings Limited (ASX: SAR) and Northern Star Resources Ltd (ASX: NST) 

Saracen and Northern Star are currently working through a proposed merger under which Northern Star will acquire all shares of Saracen. This merger is forecast to be completed by 15 February 2021. 

Saracen was upgraded from neutral to buy, but its share price target was lowered from $6.20 to $5.30 to reflect lower gold prices. The lower price target still represents a 13% upside to its price of $4.68 at the time of writing.

Northern Star was also upgraded from neutral to buy, with its price target lowered from $15.90 to $13.90. At its current price of $12.40, this represents an 12% upside. 

Evolution Mining Ltd (ASX: EVN) 

The Evolution Mining share price target was lowered from $5.50 to $4.90 with a neutral rating. This represents a downside of 2.4% to its current price of $5.02. 

Evolution is often regarded as one of the lowest cost gold producers in the world with its September quarter AISC of A$1,198 per ounce (US$857/oz). 

While the company’s growth might not be as explosive as Northern Star or Saracen, it has flagged that its Cowal and Red Lake projects will drive significant organic growth over the next three years.

Evolution delivered total gold production of 746,463 ounces in FY20 and looking ahead, expects to deliver: 

3-year outlook	FY21	FY22	FY23
Production (oz)	670,000–730,000	700,000–770,000	790,000–850,000
AISC ($/oz)2	1,240–1,300	1,220–1,280	1,125–1,185
Sustaining Capex ($/M)	112.5–137.5	110.0–135.0	95.0–120.0
Major Capital ($M)	260.0–290.0	250.0–280.0	220.0–260.0
Discovery ($M)	75.0–100.0	70.0–100.0	70.0–100.0

More reading

• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 Weekly Wrap: ASX hits new post-March high
• 5 things to watch on the ASX 200 on Monday
• Brokers name 3 ASX shares to buy right now
• Why Bapcor, Fortescue, Nufarm, & Saracen shares are pushing higher

Motley Fool contributor Lina Lim 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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Asaleo Care Ltd (ASX: AHY) shares jumped 0.4% higher on open, before falling 1.1% only to rebound and retrace again. At time of writing, the Asaleo share price is down 0.3%.

The moves in the Asaleo share price come after the personal hygiene company announced a new acquisition agreement along with updated advice to shareholders on Essity‘s takeover offer. That offer was delivered earlier this month.

What was announced?

In this morning’s ASX announcement, Asaleo reported it has entered into an agreement to acquire TOM Organic for $12.75 million in cash. TOM Organic produces a range of organic feminine hygiene projects.

Asaleo expects the business to align well with its own Libra brand of feminine care products. The company stated it is well placed to grow the presence of TOM Organic products in markets where it already has a strong presence.

Asaleo forecasts that the transaction will be immediately accretive. It expects first year net revenue of at least $11 million and underlying earnings before interest and tax (EBIT) of $1.7 million. Once scale and supply chain benefits fully materialise in the second year, it forecasts EBIT of $3.5 to $4 million.

Commenting on the acquisition, Asaleo Care’s CEO Sid Takla said:

TOM’s much-loved brand, sustainable product range, innovation pipeline, and digital and e-commerce capabilities align strongly with the company’s strategy to operate in higher growth, higher margin personal care categories. TOM Organic delivers profitable product diversification and significant additional financial benefits by leveraging our existing scale and supply capabilities.

In updated advice on the takeover offer received from major shareholder Essity on 10 December to acquire all of Asaleo Care’s ordinary shares, the company reported that a board committee of independent directors, excluding Essity nominated directors, is considering the proposal.

Asaleo Care Chair Harry Boon said:

Our Board Committee is carefully reviewing the Essity proposal and expects to be in a position to comment further early in the new year. Prior to then, shareholders are advised to take no action. Meanwhile, today’s announcement of the acquisition of TOM Organic reflects our commitment to creating long-term value for our shareholders through our strategic growth plans, including sensible acquisitions that take advantage of our scale and core capabilities.

Asaleo Care share price snapshot

After a turbulent year, which saw the Asaleo share price fall 22% over two weeks in March during the wider COVID selloff, the company’s shares really blasted off on 10 December following on Essity’s takeover offer.

As of this morning, the Asaleo Care share price is up 33% since the closing bell on 9 December and it’s now up 27% year to date. For comparison the wider All Ordinaries Index (ASX: XAO) is up 1% in 2020.

More reading

• Why the Asaleo (ASX:AHY) share price is up 26% in two days
• Asaleo Care (ASX:AHY) share price shoots 22% higher following takeover bid
• Why Asaleo Care, Fortescue, Perpetual, & Starpharma shares are storming 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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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) looks set to record a disappointing decline. At the time of writing, the benchmark index is down 0.65% to 6,626.6 points.

Four shares that have not let that hold them back are listed below. Here’s why they are pushing higher:

A2 Milk Company Ltd (ASX: A2M)

The a2 Milk share price is up 1.5% to $10.40. This appears to be down to bargain hunters swooping in today to take advantage of a significant pullback in the infant formula company’s share price. Its shares were sold off last week after it was forced to downgrade its guidance due to weakness in the daigou channel.

Doctor Care Anywhere Ltd (ASX: DOC)

The Doctor Care Anywhere share price has jumped 7% higher to $1.29. This has been driven by an announcement that revealed that the UK-based telehealth company has signed a new channel agreement with Allianz Partners. It is one of the world’s largest insurance and assistance companies. This agreement will give Allianz Partners international private medical insurance policyholders and their dependents based in Europe access to Doctor Care Anywhere’s digital health services.

McPherson’s Ltd (ASX: MCP)

The McPherson’s share price is up 5% to $1.39. Investors have been buying the beauty products company’s shares following the release of an update after the market close on Monday. That update revealed that McPherson’s is on track to achieve its previous first half underlying profit before tax guidance which was recently withdrawn. It is expecting underlying profit before tax in the range of $6.5 million to $7.5 million. This represents an 11.8% to 23.5% decline on the prior corresponding period.

Volpara Health Technologies Ltd (ASX: VHT)

The Volpara share price has risen 3.5% to $1.37. This solid gain has been driven by news that it has signed a five-year software-as-a-service (SaaS) contract with BreastScreen Queensland following a successful pilot trial. BreastScreen Queensland is the third largest public breast screening program in Australia. The contract is initially for Volpara’s quality assurance platform, VolparaEnterprise. But allows for the expansion of services to include VolparaDensity and VolparaLive.

More reading

• ASX 200 down 0.85%: ANZ CFO resigns, tech shares tumble, iron ore jumps
• Volpara (ASX:VHT) share price jumps 5% in morning trading. Here’s why
• Why brokers slashed their A2 Milk (ASX:A2M) share price target
• Why the Doctor Care Anywhere (ASX:DOC) share price is surging 11% higher
• Why the McPherson’s (ASX:MCP) share price could charge higher on Tuesday

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 VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended VOLPARA FPO NZ. 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 Archer Materials Ltd (ASX: AXE) share price leapt higher on open this morning on news the company has sold 2 mineral exploration licenses. 

At the time of writing, the Archer share price is trading 1.9% higher at 53.5 cents. Here’s what you need to know.

What did Archer Materials report?

Today, Archer Materials advised it has entered into a legally binding agreement to sell 2 of its mineral exploration licenses on South Australia’s Eyre Peninsula. The sale does not need Archer shareholder approval.

Baudin Minerals, a private company, will pay $2.0 million for the licenses, along with a bonus share payment after it lists on a stock exchange, as planned. In addition, Archer will receive a 2% net smelter return royalty if Baudin discovers and begins mining for minerals.

Archer also revealed it will retain the right to explore for, and mine, graphite on both tenements.

The company said the sale matched its business strategy to sell off non-core mineral exploration assets, using the funds for its materials technology development. Its core focus is developing its CQ room temperature quantum computing chip and graphene-based A1 Biochip.

Commenting on the sale, Archer chairman Greg English said:

We believe this is a good deal for our shareholders. The proceeds from the sale of the tenements will assist in the funding of our tech-related activities.

In addition to the upfront payment at completion, Archer will also receive royalty payments should the buyer discover minerals and commence mining on the tenements. The royalty would allow the company to financially benefit from any future development of these projects.

Archer share price and company snapshot

Archer is a materials technology company. It focuses on developing cutting edge technology in quantum computing, reliable energy and biotechnology. Archer’s Australian-based mineral exploration projects span critical minerals like graphite, copper, tungsten, cobalt, and more. Archer Materials’ shares listed on the ASX in August 2007.

Despite plummeting 48% in the first weeks of February during the COVID-19 market panic, Archer shareholders are well into the green in 2020. Year-to-date, the Archer share price is up a whopping 234%. By comparison the All Ordinaries Index (ASX: XAO) is up just over 1%.

More reading

• Why the Think Childcare (ASX:TNK) share price is up 2% today
• The Pensana (ASX:PM8) share price shot up 14% higher today. Here’s why
• ASX 200 Weekly Wrap: ASX hits new post-March high
• Why the CleanSpace (ASX:CSX) share price is climbing today
• Recent development sends the Antisense (ASX:ANP) share price soaring 45%

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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Respected fund manager Wilson Asset Management (WAM) has recently identified two ASX shares that it owns in its portfolio.

WAM operates several listed investment companies (LICs). Two of those LICs are WAM Capital Limited (ASX: WAM) and WAM Leaders Ltd (ASX: WLE).

There’s also one called WAM Active Limited (ASX: WAA) which looks at businesses it thinks are the most undervalued.  

WAM says WAM Active invests in market mispricing opportunities in the Australian market.  

The WAM Active portfolio has delivered gross returns (that’s before fees, expenses and taxes) of 12% per annum since inception in January 2008, which is superior to the Bloomberg AusBond Bank Bill Index return per annum of 3.1%.  

These are the two ASX shares that WAM outlined in its most recent monthly update:

Graincorp Ltd (ASX: GNC)

According to the ASX, Graincorp has a market capitalisation of $980 million.

The fund manager describes GrainCorp as a business that handles, receives and stores agricultural commodities including grain and assists with the transporting, testing, storing and marketing of agricultural products.

Graincorp recently released its FY20 results for the year to September 2020 that showed a “significant lift” in financial performance despite the impact of the drought with underlying earnings before interest, tax, depreciation and amortisation (EBITDA) from continued operations of $108 million and a fully franked dividend of 7 cents per share.

The company also reported that its underlying net profit after tax (NPAT) for continuing operations was a $16 million loss, although this was improved from the $158 million loss in FY19. The statutory net profit was $343 million.

WAM Active said that the FY21 outlook for the company is strong with a record east coast crop tracking ahead of expectations. Graincorp is leveraged to an increase in crop volumes and the fund manager believes that the efficiency gains and cost savings implemented by management over the past years will materialise in financial performance.

Management said that the 2020/2021 winter crop will be similar size to the FY17 harvest (subject to ongoing weather conditions and other variables).

At the current Graincorp share price, it’s valued at 15x FY21’s estimated earnings according to projections on Commsec.

Adore Beauty Group Ltd (ASX: ABY)

According to the ASX, Adore Beauty has a market capitalisation of $480 million.

Adore Beauty recently listed on the ASX at the end of October 2020. It’s Australia’s only exclusively-online beauty retailer. WAM said the company was launched in 2000 in the founder’s backyard.

The company has grown to now stock more than 230 leading beauty brands, offering customers access to more than 11,000 products. The company had more than 18.5 million website users across its Australian and New Zealand websites in FY20. At 30 June 2020 it had serviced more than 590,000 active customers.

WAM pointed out that in November, promotional sales during the Black Friday and cyber weekend proved stronger than Adore Beauty’s initial forecasts. That’s why Adore Beauty increased its forecast revenue guidance for the FY21 first half to approximately $95.2 million, which was more than the prospectus forecast by 7%.

At the time of the update, Adore Beauty CEO Tennealle O’Shannessy said: “We are pleased to report strong sales ahead of our prospectus forecasts. The business has continued to scale, deliver content and meet the needs of our customers at a time when they need it most.”

The expected uplift in revenue is also anticipated by the company to have a positive impact on the EBITDA forecast for the first half of the 2021 financial year.

More reading

• 2 exciting mid cap ASX shares to buy for the long term
• Here’s how Nuix (ASX:NXL) and these recent IPOs are performing since listing
• 2 highly rated mid cap ASX shares to buy for 2021
• Wilson Asset Management (WAM) thinks these 2 ASX shares are a buy
• Westpac (ASX:WBC) tips Australian dollar to hit 80 US cents in 2021

Motley Fool contributor Tristan Harrison 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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At lunch on Tuesday the S&P/ASX 200 Index (ASX: XJO) is on course to record a sizeable decline. The benchmark index is down 0.85% to 6,613 points.

Here’s what has been happening on the market today:

ANZ CFO resigns.

The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price has come under pressure on Tuesday after announcing the exit of its chief financial officer (CFO). According to the release, the bank’s CFO, Michelle Jablko, has decided to leave the company and take up a senior role at toll road operator Transurban Group (ASX: TCL). Ms Jablko will transition her duties over the coming months to current Group General Manager Internal Audit Shane Buggle, who will be appointed Acting Chief Financial Officer.

Tech shares tumble.

Many of Australia’s leading tech shares are trading lower on Tuesday. The likes of Nearmap Ltd (ASX: NEA) and Zip Co Ltd (ASX: Z1P) are trading notably lower and weighing heavily on the the S&P ASX All Technology Index (ASX: XTX). The tech index is down a sizeable 1.2% lower at the time of writing. This follows a soft night of trade on Wall Street’s tech-focused Nasdaq index.

Iron ore price hits a nine-year high.

Mining giants BHP Group Ltd (ASX: BHP), Fortescue Metals Group Limited (ASX: FMG), and Rio Tinto Limited (ASX: RIO) are all dropping lower today despite the iron ore price jumping higher overnight. According to CommSec, the spot iron ore price jumped a massive 7.8% higher to a nine-year high of US$176.90 a tonne. This has been driven by concerns over a supply outage at one of Vale’s mines in Brazil.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Tuesday has been the A2 Milk Company Ltd (ASX: A2M) share price with a 1.5% gain. Bargain hunters appear to be snapping up shares after a heavy decline last week. The worst performer has been the Ramelius Resources Limited (ASX: RMS) share price with a 7% decline. A number of gold miners are dropping lower today, but Ramelius is leading the pack.

More reading

• Transurban (ASX:TCL) share price wobbles on new CFO announcement
• Why brokers slashed their A2 Milk (ASX:A2M) share price target
• The Unibail Rodamco Westfield (ASX:URW) share price has dipped 3% today
• Iron ore hits 9-year high: What this means for BHP, Fortescue, & Rio Tinto
• Is the Zip (ASX:Z1P) share price a buy yet?

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended Nearmap Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to record another decline. At the time of writing, the benchmark index is down 0.4% to 6,642.2 points.

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

AGL Energy Limited (ASX: AGL)

The AGL share price is down 3% to $12.17. Investors have been selling the energy company’s shares after it downgraded its guidance on Monday afternoon. AGL now expects its net profit after tax to be in the range of $560 million-$660 million, down from $500 million-$580 million previously. This represents an 11% reduction at the midpoint. This led to analysts at Morgans cutting their price target on the company’s shares to $11.18 this morning.

Mesoblast limited (ASX: MSB)

The Mesoblast share price has continued to sink lower and is down a further 4% to $2.21. Investors have been selling the biotech company’s shares after the release of a couple of disappointing updates last week. Both its advanced chronic heart failure and COVID-19 Acute Respiratory Distress Syndrome trials failed to achieve their primary endpoints.

WiseTech Global Ltd (ASX: WTC)

The WiseTech share price has fallen 2% to $30.13. Investors have been selling the logistics solutions company’s shares after it was the subject of a short seller attack by Viceroy Research. Its analysts claim many of the 37 acquisitions made by WiseTech over the past four years are from distressed sales or bankrupt companies with revenues falling post-acquisition.

Woodside Petroleum Limited (ASX: WPL)

The Woodside share price is down almost 2.5% to $22.53. Investors have been selling Woodside and other energy producers after oil prices tumbled lower overnight. Fears over a new strain of COVID-19 in Europe has led to concerns over demand for energy. Both WTI and Brent crude oil prices fell 2% during overnight trade.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Why the AGL (ASX:AGL) share price has fallen 6% today
• Under attack! Why the WiseTech Global (ASX:WTC) share price is down 9%
• Why Elixinol Global, Flight Centre, Mesoblast, & WiseTech shares are dropping lower
• ASX 200 down 0.4%: NIB jumps, a2 Milk rebounds, WiseTech sinks lower

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of WiseTech Global. 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 Volpara Health Technologies Ltd (ASX: VHT) share price has jumped by almost 5% this morning, after the company announced a new contract with BreastScreen Queensland.

At the time of writing, the Volpara share price is trading at $1.38, up by 6 cents.

What’s driving the Volpara share price? 

The Volpara share price is on the rise today after the medical technology company reported it has signed a five-year software-as-a-service (SaaS) contract with BreastScreen Queensland following a successful pilot trial.

BreastScreen Queensland is the third largest public breast screening program in Australia, and is head-quartered on the Gold Coast.

The contract, initially for Volpara’s quality assurance platform, VolparaEnterprise, will allow for the expansion of services to include VolparaDensity and VolparaLive.

The initial stage will involve the roll-out of VolparaEnterprise to 11 BreastScreen Queensland services operating in Brisbane and elsewhere in the state.

The BreastScreen Queensland services comprise 69 gantries and 43 sites that include 10 mobile units, covering 171 radiologists and technologists.

The roll-out of VolparaEnterprise to BreastScreen Queensland has already begun, and Volpara expects it to go live in early 2021.

Although the terms and conditions of the contract will remain confidential, Volpara CEO Dr Ralph Highnam believes the deal will put Volpara’s name on the world map, saying:

We are delighted to now have BreastScreen Queensland signing up to use our software, making it the second major public breast cancer screening programme in Australia signed up to Volpara products.

This is news that will resonate around the world, and we are extremely pleased that our software will be helping women in the fight against breast cancer, including women in the lives of many of our long-term investors.

What is Volpara?

Volpara is a New Zealand-based provider of breast imaging analytical products that improve clinical decision-making and the early detection of breast cancer.

It suite of software helps clinicians understand their patients, and administrators better understand their practices.

Today’s announcement is the second major contract the company has been able to secure in the space of just one week.

Last Friday, Volpara also announced it has signed a five-year contract with a major United States-based customer, US Radiology.

That contract was for the delivery and ongoing use of the Volpara Breast Health Platform.

About the Volpara share price in 2020

In its latest update to the market in November, the company reported net revenue of NZ$9.5 million for the first half of FY21, up 38% on the prior corresponding period.

However, that top line revenue resulted in a net loss after tax of NZ$8 million, compared to a NZ$8.9 million loss in 2019.

This performance has been reflected in the Volpara share price, which is down 25% this year.

Based on the current share price, the company commands a market capitalisation of $329 million.

More reading

• The Volpara (ASX:VHT) share price is flat today despite announcement
• 3 quality SaaS ASX shares to buy
• 3 exciting small cap ASX shares to buy
• Volpara (ASX:VHT) share price falls on half-year results

Eddy Sunarto 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 VOLPARA FPO NZ. The Motley Fool Australia has recommended VOLPARA FPO NZ. 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 Transurban Group (ASX: TCL) share price has been wobbly in morning trade despite the company announcing a change in the management team. At the time of writing, the toll road operator’s shares are inching up 0.43% to $14.06.

What did Transurban announce?

Transurban advised it has appointed Ms Michelle Jablko as the new chief financial officer.

Ms Jablko will leave her role as chief financial officer with Australia and New Zealand Banking Group Ltd (ASX: ANZ). Having held that position since 2016, Ms Jablko was also a member of the bank’s executive committee.

Ms Jablko has developed her skills across large and multinational organisations and brings a wealth of experience to Transurban. Her core competencies involve capital efficiency and allocation, as well as taking lead on merger and acquisition deals.

Prior to her role at ANZ, Ms Jablko spent most of her career in investment banking, most notably working for UBS and Greenhill Australia. In the latter, she held the role of managing director.

In her early career, Ms Jablko was employed by Allens Linklaters, which focuses on mergers and acquisitions, banking, tax and finance law.

Ms Jablko will join the Transurban team in the new year and be based in its offices in Melbourne, Victoria.

CEO commentary

Transurban CEO, Mr Scott Charlton, spoke highly about Ms Michelle Jablko and the new appointment:

We are delighted that Michelle will be joining Transurban Group and I believe that with her leadership, capabilities and experience she will make a significant contribution to the Transurban business.

About the Transurban share price

The Transurban share price has almost recovered to pre-COVID-19 levels. Its shares are currently down just under 10% from their 52-week high of $16.44 in January. However, since the beginning of June, the Transurban share price has mostly stagnated.

The company has a current market capitalisation of $38.2 billion.

More reading

• ANZ (ASX:ANZ) share price under pressure after CFO resigns
• ASX 200 Weekly Wrap: ASX hits new post-March high
• Top brokers name 3 ASX shares to sell next week
• 2 blue chip ASX dividend shares to buy next week
• Brokers name 3 ASX shares to buy right now

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban 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 Ramsay Health Care Limited (ASX: RHC) share price has lifted this morning after the company announced a new contract in the United Kingdom.

At the time of writing, the Ramsay share price is up 0.98% at $63.11.

What did Ramsay announce?

In today’s release, Ramsay advised it has signed a new volume-based agreement with NHS England (NHS). Ramsay will make its services available to the NHS to help meet the ongoing COVID-19 demands.

The NHS, or National Health Service, is the United Kingdom’s publicly-funded healthcare system.

The new agreement will run from 1 January to 31 March next year, unless terminated earlier on 6 weeks’ notice. It replaces an existing cost recovery agreement with NHS, which completes on 31 December 2020.

The company says NHS may trigger a peak surge period on 7 days’ notice, should Ramsay’s capacity be required to enable the NHS to respond to COVID-19 cases.

In these circumstances, the affected hospitals will be paid on a cost recovery basis.

Quick take on Ramsay Health Care

Ramsay Health Care is a global private hospital provider. Its facilities cater for a broad range of health care needs from primary care to highly complex surgery, as well mental health care and rehabilitation.

Ramsay Australia has around 36% market share of the private hospital market in Australia, with demographic positioning skewed to urban and mid- to high-income areas.

The Australian business has been a good cash generator for the company, as more Australians are on private health insurance (PHI) compared to our European counterparts.

According to recent data from APRA (Australian Prudential Regulatory Authority), 45% of Australians have PHI. In addition, more than 80% of private hospital revenue in Australia comes from private insurance.

This compares with 20% private insurance revenue in the United Kingdom and France, and 10% in the Nordic countries.

The cash revenue generated from Ramsay’s Australian business has enabled the company to expand overseas. Its most recent acquisition is the Swedish-based private hospital company Capio.

How has the Ramsay share price performed in 2020

The Ramsay share price is down 9.5% in 2020. The company delivered net profit after tax (NPAT) of $337 million for FY20, compared to $591 million for FY19.

However in its latest first-quarter update to the market, Ramsay Australia reported a 1.5% increase in total revenue during the first quarter of FY21. This reflects a 1.7% increase in surgical admissions.

Overseas, Ramsay UK business has also experienced a recovery in private care in recent months.

Given near-term uncertainties however, Ramsay declined to give any guidance for fiscal 2021. The company commands a market cap of $14.3 billion.

More reading

• These are 8 of the best performing ASX healthcare shares of 2020 so far
• 3 reasons why Soul Patts (ASX:SOL) is a great ASX dividend share
• 2 top ASX blue chip shares to buy
• ASX 200 events this week that could move the market

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

The post Ramsay Health Care (ASX:RHC) share price climbs after this announcement appeared first on The Motley Fool Australia.

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