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The S&P/ASX 200 Index (ASX: XJO) fell by around 1.2% today to 6,676 points.

Here are some of the highlights from the ASX today:

A2 Milk Company Ltd (ASX: A2M)

The A2 Milk share price fell by 23% today after the company adjusted its guidance for the FY21 first half and full year results.

A2 Milk first reminded investors that it has been saying for months it was suffering from lower sales in Australia because of daigou sales reductions with reduced tourism from China and international student numbers.

The company was previously guiding that there would be a significant increase of revenue in the second half.

However, today the company said that the disruption in the daigou channel, which represents a significant proportion of infant nutrition sales in the ANZ business, has proved to be more significant and protracted than previously anticipated. Whilst this was predominately affecting infant nutrition sales, sales in other nutritional segments have now also been impacted.

Whilst A2 Milk had expected some disruption in the FY21 second quarter, the recovery hasn’t been as much as expected. It’s also seeing a higher level of disruption to the cross border e-commerce channel (CBEC). The daigou channel is reportedly important for stimulating demand across multiple channels, including CBEC.

It said that the performance in the 11/11 online sales event showed year on year growth, but sales in the CBEC channel in the period after that event was below expectations.

A2 Milk is now expecting the sales for both daigou and CBEC channels for the rest of FY21 to be materially lower. The company intends to focus further on reactivating the daigou channel in the second half.

On the positive side of things, the company said its performance in Chinese ‘mother and baby’ stores remains very strong and it’s expecting revenue growth of 40% in the first half compared to the prior corresponding period. It also said that the liquid milk businesses in Australia and the USA are performing well with growth compared to the FY20 first half.

In the first half of FY21 A2 Milk is expecting revenue of NZ$670 million, with second quarter revenue stronger than the first quarter. The earnings before interest, tax, depreciation and amortisation (EBITDA) margin for the first half is now expected to be in the order of 27%.

For the full year, the revenue is now expected to be between NZ$1.4 billion to NZ$1.55 billion. The EBITDA margin for FY21 is expected to be between 26% to 29%.  

Mesoblast Limited (ASX: MSB)

The Mesoblast share price was another to fall heavily today. It dropped by around 35% after giving an update about its trial of remestemcel-L in ventilator-dependent patients with moderate to severe acute respiratory distress syndrome (ARDS) due to COVID-19 infection after the Data Safety Monitoring Board (DSMB) performed a third interim analysis on the trial’s first 180 patients.

The company said that the trial was powered to achieve a primary endpoint of 43% reduction in mortality at 30 days for treatment with remestemcel-L on top of leading care in a trial of 300 patients.

The projected mortality reduction was based on pilot data observed during the initial stages of the pandemic when control mortality rates were exceedingly high and prior to new evolving treatment regiments that have reduced disease mortality in ventilated patients.

The DSMB reported that there were no safety concerns and noted that the trial is not likely to meet the 30-day mortality reduction endpoint at the planned 300 patient enrolment. The DSMB recommended that the trial complete with the currently enrolled 223 patients, and that all be followed-up as planned.

Australian Ethical Investment Limited (ASX: AEF)

The Australian Ethical share price fell 1.2% after it gave a profit update today. It said that it’s expecting underlying net profit to be between $4.6 billion and $5.1 billion, which would be a mid-point increase of 11% for the six months ending 31 December 2019.

It said that funds under management (FUM) increased to $4.92 billion at 30 November 2020, up 14% from 30 September 2020 and up 21.6% since 30 June 2020.

More reading

• Boral (ASX:BLD) share price falls on sale of its US bricks business
• UBS unveils its latest ASX “buy” idea for 2021
• US fundie predicts 25% share market gain in 2021
• The Costa (ASX:CGC) share price is slipping lower today. Here’s why
• Why the a2 Milk Company (ASX:A2M) share price crashed 26% lower today

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended Australian Ethical Investment 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 Boral Limited (ASX: BLD) share price lost ground on Friday after it announced the sale of its US joint venture bricks business.

The Boral share price tumbled 2% to $4.82 compared to the 1.2% decline in the the S&P/ASX 200 Index (Index:^AXJO) today.

The building products supplier announced in the closing moments of trade that it struck an agreement with its JV partner to sell the Meridian Brick business to Wienerberger for US$250 million.

Boral’s divestment yields small profit

Boral will receive half of the proceeds, which should translate to around a $10 million pre-tax profit for the group.

The divestment is subject to the usual conditions and regulatory approvals, but I don’t see any real impediments to the deal. The transaction should be finalised in FY21.

The sale won’t come as any real surprise. Boral’s current chief executive, Zlatko Todorcevski, is tasked with undoing his predecessor’s disastrous US expansion.

More transactions expected?

“The agreed sale represents a fair value for the business and reflects its improved performance,” said Todorcevski.

“The divestment of Meridian is a further step in Boral’s portfolio review works. It helps to streamline our US business and allows us to further focus on the improvement initiatives underway in the remaining businesses in Boral North America.”

Takeover rumours continue to run hot

The Boral share price performed well recently as bargain hunters bought into the stock on turnaround hopes.

Speculation that it’s a takeover target didn’t hurt either as Seven Group Holdings Ltd (ASX: SVW) appeared on its share register.

However, the Boral share price is still lagging the sector. While the BLD share price gained 8% in 2020, which is ahead of the ASX 200’s flat performance, its peers have outperformed.

Boral share price still lagging despite divestments

The James Hardie Industries plc (ASX: JHX) share price surged 35%, while BlueScope Steel Limited (ASX: BSL) share price and CSR Limited (ASX: CSR) share price gained 18% each since January.

However, Boral’s share price rally is likely to extend into 2021. The large pipeline of construction projects over the few years bodes well for the industry.

Besides, with eager bidders lurking in the shadows, the stock is unlikely to tumble by too much even as the post-COVID‐19 recovery is unlikely to be smooth.

More reading

• ASX 200 falls 1.2% on Friday
• Not even this could stop the Boral (ASX:BLD) share price tumbling lower
• UBS unveils its latest ASX “buy” idea for 2021
• US fundie predicts 25% share market gain in 2021
• The Costa (ASX:CGC) share price is slipping lower today. Here’s why

Motley Fool contributor Brendon Lau owns shares of BlueScope Steel Limited, James Hardie Industries plc, and Seven Group Holdings 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 Boral Limited (ASX: BLD) share price was out of form on Friday and dropped lower with the rest of the share market.

Not even a late announcement could stop the building materials company’s shares from falling 2% to $4.82.

What did Boral announce?

This afternoon Boral announced that together with its joint venture partner, an affiliate of Lone Star Funds, it has agreed to sell the North American based Meridian Brick business to Wienerberger.

According to the release, the parties have agreed a consideration of US$250 million, which remains subject to customary adjustments. This equates to US$125 million for Boral’s 50% share, prior to any adjustments.

Subject to exchange rates and final adjustments, the company is expecting to report a small pre-tax accounting profit on sale of approximately A$10 million at closing.

Though, it has warned that the transaction is subject to various closing conditions and regulatory approvals. If all goes to plan, the parties are targeting completion in FY 2021.

Goodbye bricks.

The sale of the Meridian Brick business is the final step in Boral’s exit from brick operations globally.

Boral’s CEO and Managing Director, Zlatko Todorcevski, commented: “In recent years Boral has divested its interest in bricks in Australia and since forming the bricks joint venture in the US with Lone Star in 2016, the plan was to ultimately prepare the business for sale.”

“As part of this process, Meridian’s leadership was refreshed with the appointment of a new CEO in December 2018, and a stronger focus on improving performance,” he added.

Mr Todorcevski believes that Boral has received is a good price for the business and that it “reflects its improved performance.”

What now?

The CEO expects the divestment to allow the company to focus on improving the performance of other areas of the business.

“The divestment of Meridian is a further step in Boral’s portfolio review works. It helps to streamline our US business and allows us to further focus on the improvement initiatives underway in the remaining businesses in Boral North America,” he concluded.

More reading

• Are ASX stocks in for an M&A frenzy in 2021?

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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With Australia’s interest rates effectively zero – or even negative – ASX dividend shares are in the spotlight for 2021.

We’ll get to 2 ASX income shares you may want to investigate further for your own portfolio shortly.

But first, let’s look at why the real returns you’re likely to get on your cash savings are actually negative.

On 3 November, the Reserve Bank of Australia (RBA) took the unprecedented step of cutting the official cash rate to a rock bottom 0.10%.

Governor Philip Lowe indicated the bank has no intention to reduce rates into the negative range. But the RBA’s $100 billion quantitative easing (QE) program is intended to keep a tight cap on borrowing costs. And hence on what you’ll receive in your role as lender from your term deposit account.

As it stands, you’ll be hard-pressed to get more than 0.5% in interest on a 1-year term deposit. Or $500 per year on a $100,000 deposit.

If that doesn’t sound like much, that’s because it isn’t.

Unfortunately, that figure is your nominal return. Meaning it doesn’t take inflation into account.

Even if inflation is only 1% in 2021 (well below the RBA’s target of 2–3%), your real (inflation adjusted) return from that term deposit would be –0.5%. In other words, by the end of 2021 the purchasing power of the by then $100,500 in your term deposit will be around $500 less than it was on the first of the year.

And if you’ve been holding your breath waiting for cash savings rates to go higher, you can let that breath out.

The odds of that happening are slim to none.

Low rates to the horizon

Australia may be isolated geographically. But when it comes to the RBA’s cash rate, the bank’s decisions are intricately entangled with the world’s other leading central banks.

And none appear to have any intention to raise interest rates in the foreseeable future.

On Wednesday, the US Federal Reserve, the world’s most watched central bank, doubled down on its own QE policies to keep borrowing rates low and money flowing through the system.

Fed Chair Jerome Powell said the bank will continue its US$120 billion (AU$159 billion) of monthly bond purchases until inflation and employment demonstrate “substantial further progress”.

The European Central Bank (ECB), the Bank of Japan (BoJ) and most every other major central bank across the world is firmly on the same low interest rate track.

Not only is this likely to remain the case throughout 2021, but the RBA has previously stated it’s likely to keep the cash rate at historic lows for as long as 3 years.

And on 1 December Lowe said:

In Australia, the economic recovery is underway, and recent data has generally been better than expected. This is good news, but the recovery is still expected to be uneven and drawn out, and it remains dependent on significant policy support.

This ongoing “significant policy support” won’t be music to the ears of Australian savers. But it’s certainly good news for borrowers. The bigger your debts, the better that news.

And no one in Australia is more indebted than our own federal government. Yet another reason to expect lower interest rates for longer.

From the Australian Financial Review:

The federal government estimates it will save an extra $457 million in interest payments over the next four financial years following the Reserve Bank’s massive government bond buying program that has been driving borrowing costs down…

In this financial year the government will save $56 million in interest payments on its $852 billion in debt compared to what it was projecting just two months ago.

The outlook for ASX dividend shares

Before moving on to ASX income paying shares, a reminder on some widely held general financial advice.

Cash in the bank is undoubtedly safer than money invested in shares. Particularly if your bank is covered by the Federal Government’s Deposit Guarantee. This covers up to $250,000 per authorised deposit-taking institution should the bank run into solvency issues.

You should also keep enough cash on hand to cover several months of living expenses should your other income sources dry up, plus enough to meet any emergency spending issues.

With that said, the outlook for ASX dividend shares in general for 2021 is looking up.

According to Shane Oliver, Head of Investment Strategy & Economics and Chief Economist at AMP Capital, 2021 is likely to see ASX companies returning more money to their shareholders via dividends.

Speaking at AMP’s webinar earlier this month, Oliver noted:

As we go through 2021, I reckon the dividends will start to go back up again… We’re looking at dividend payments on the Aussie market over the next 4 months of somewhere between 4–4.5% [up from the recent 2.9%]… Our indicators for Australia are now looking healthier than they are in Europe and the US.

2 ASX dividend shares for 2021’s zero to negative rate world

There are a number of quality shares on the ASX paying regular dividends.

Here are 2 that may be worth investigating further.

First up is Australia’s largest rail-based transport business, Aurizon Holdings Ltd (ASX: AZJ).

Aurizon’s share price still hasn’t recovered from the pummeling it took during the initial COVID-driven market selloff, which saw shares fall 35%. Year-to-date Aurizon’s share price remains down 22%.

Now I hold no opinion as to where Aurizon’s share price is heading in 2021. But if you’re after extra income from your ASX shares, Aurizon pays a dividend yield of 6.7%, 70% franked.

The second ASX dividend share you might want to look into further is Rural Funds Group (ASX: RFF). Rural Funds is a real estate investment trust (REIT) that focuses on agricultural assets across Australia.

The Rural Funds’ share price also took a steep hit from the February and March market selloff. But shares have rebounded strongly, and Rural Funds’ share price is now up 34% year-to-date.

Again, whether or not it continues that strong performance in 2021 is beyond the focus of this article. But if it’s real, inflation beating income you’re after, Rural Funds pays a dividend yield of 4.3%, unfranked.

More reading

• 3 top ASX dividend shares to buy
• 2 ASX dividend shares with attractive yields
• These ASX dividend shares will help you overcome low interest rates
• 5 ASX dividend shares to buy for income in 2021
• Forget term deposits and buy these ASX dividend shares

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia has recommended Aurizon Holdings 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 Alliance Aviation Services Ltd (ASX: AQZ) share price is breaking new ground today  after the company announced it is expanding its current fleet.

During mid afternoon trade, the company’s shares reached an all-time high of $4.05 but have since slightly retreated. At the time of writing, the Alliance share price is up 5.24% to $4.02.

What’s moving the Alliance share price

In today’s release, Alliance advised it has entered a contract with United States-based company Jetran LLC. The agreement will see Alliance acquire 16 Embraer E190 aircraft and one spare General Electric CF34 engine.

The aircraft, previously operated by American Airlines, are of a 99 seat, two-class cabin configuration.

The total purchase price of the assets is valued at $85 million. Alliance will fund the expansion through a mix of existing cash reserves, operating cash flows, and debt facilities.

Transfer of the aircraft will take place over an 11-month period, commencing with 5 Embraer E190s to be delivered this month. Thereafter, one airline jet will be handed over each month until November 2021.

The company said it will use the planes to capture several growth opportunities across Australia. This includes contract flying as well as wet and dry lease operations.

In addition to the news, Alliance stated that the E190 simulator that was bought as part of its Azzora E190 transaction is currently in transit. Expected to arrive in Brisbane in the near future, the aircraft simulator will be employed for pilot training.

The company anticipates that its E190 aircraft will be accredited to its CASA Air Operator’s Certificate in March next year.

Alliance believes the acquisition will not see a full positive material impact until sometime in FY23. In the meantime, the company is due to release its FY21 half-year results on 10 February 2021.

What did the managing director say?

Mr Scott McMillan, managing director of Alliance Aviation, commented on the procurement:

Alliance has again taken advantage of its strong financial position and current market conditions to acquire these quality aircraft at compelling value. The 100 seat jet aircraft market globally will rebound quickly as carriers look to focus on total trip costs rather than traditional metrics.

The acquisition of these 16 aircraft is in addition to the previously disclosed acquisition of 14 E190 aircraft from Azzora Aviation. This transaction completes Alliance’s short-term fleet expansion strategy and while the Azzora transaction included options for five additional aircraft, these options will now not be exercised.

Alliance share price summary

The Alliance share price has strongly rebounded since COVID-19 hit the airline industry earlier this year.

Breaking new ground today, the airline’s shares have outperformed while its peers are still well below their 52-week highs.

Alliance has a market capitalisation of $645 million and a price-to-earnings (P/E) ratio of 23.66.

More reading

• Regional Express (ASX:REX) share price soars to 13-year high

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

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The Mineral Resources Limited (ASX: MIN) share price is surging higher even as the ASX share market took a tumble.

Shares in the ASX miner jumped 2.1% to $33.40 in the last hour of trade when the S&P/ASX 200 Index (Index:^AXJO) tanked 1%.

Mind you, the MIN share price isn’t the only one making gains today. The Rio Tinto Limited (ASX: RIO) share price added 1.1% to $117.70 while the BHP Group Ltd (ASX: BHP) share price advanced 0.3% to a more than nine-year high of $43.41.

ASX miner is the latest “buy” rated stock

But it’s the Mineral Resources share price that’s in the spotlight on Friday after UBS initiated coverage on the stock with a “buy” recommendation.

It would appear that the stock is firing on all cylinders!

“MIN offers exposure to a growing mining services business and attractive commodities exposure to iron ore and lithium,” said UBS.

“We see MIN at an inflection point in terms of its pipeline of growth opportunities for the commodities business with benefit to its mining services contract tonnes.”

Stronger than expected iron ore price

The company’s expansion of its iron ore projects is perfectly timed with the unexpectedly strong iron ore price.

The commodity is hovering near record highs of around US$150 a tonne and the near-term outlook for the steel-making mineral is bright.

But iron ore isn’t the only reason to feel bullish about the stock, according to UBS.

Mineral Resources share price powering up

“MIN’s 40% interest in Wodgina (750ktpa spodumene mine) and Kemerton (50ktpa hydroxide facility) offers long term exposure to the Electric Vehicle (EV) thematic that offsets the historical dominance of iron ore in the commodities portfolio,” explained the broker.

“UBS forecasts sales of new EVs to reach 40% of total new car sales by 2030 with insufficient existing lithium supply to meet demand.”

One also shouldn’t forget that Mineral Resources partnered with a top-tier lithium player, Albemarle. This puts the ASX stock in a great position to benefit from the global vehicle electrification revolution.

More room for the MIN share price to rally

Meanwhile, Mineral Resources mining services division should be able to sustain its growth momentum. The business services the booming Western Australia resources market with mining clients ramping up production to meet the expected iron ore supply deficit.

UBS’ 12-month price target on the Mineral Resources share price is $41.90 a share. This means there’s still a close to 30% upside for the stock if you included dividends.

More reading

• US fundie predicts 25% share market gain in 2021
• The Costa (ASX:CGC) share price is slipping lower today. Here’s why
• ASX 200 down 0.6%: Mesoblast crashes lower, Qantas & Flight Centre tumble, NAB AGM
• The QBE (ASX:QBE) share price has plummeted 9% today. Here’s why
• Are ASX stocks in for an M&A frenzy in 2021?

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited and Rio Tinto Ltd. 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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Since we are well and truly now in the fabled ‘twelve days of Christmas’, many investors are starting to turn their attention to the year in front of us, and what tidings it might bring. After such a year in 2020, it’s hard to know what 2021 has in store for investors.

Could it bring a market crash? Another flat-ish year? Or a year that sees the S&P/ASX 200 Index (ASX: XJO) break above its most recent highs we saw back in February. Perhaps it could even test 8,000 points for the first time ever?

The answer will of course be obvious in hindsight. But since we don’t yet have the benefit of that, let’s look at what an expert thinks.

According to reporting in the Australian Financial Review (AFR) today, an American fund manager is predicting a bumper year for US shares (which could arguably translate into a bumper year for our own ASX 200).

A 25% upside in 2021 for US shares?

The AFR reports that New York-based Fundstrat Global’s research chief Tom Lee is expecting a 25% surge for the American S&P 500 Index (SP: .INX), saying it could end the year as high as 4,300 points (it closed this morning at 3,722 points).

Mr Lee said the US is on the cusp of a “new economic expansion” which “should lead to profit margin explosion after major cost-cutting efforts this year, a drop in equity risk premia and lower volatility“. The reason to be optimistic on the share market is reportedly “pent-up demand”, as well as “massive relief and celebration with an end to the pandemic“. He says this could lead to “a substantially stronger than expected GDP recovery. This is what the resilience of equities in 2020 seem to suggest”.

Speaking of volatility, Mr Lee notes that the VIX (an index that measures US share market volatility) has “averaged 29.5 this year, the third-highest level in 30 years”. Lee sees the VIX averaging just 12 in 2021, suggesting that we should see far less volatility.

However, this happy prediction comes with a caveat. Mr Lee said investors “need to be prepared for some give and take as history says the S&P 500 will [be] likely to correct by 10 per cent to 3,500 between February and April”. He puts this down to the fact that shares “need to work off overbought conditions before mid-year… I am stating the obvious – but markets cannot rise in a straight line”.

However, Mr Lee also notes that risks still abound, and investors need to be careful of the unexpected. He lists some possible things to watch out for:

COVID-19 could mutate; vaccines do not work; the US dollar crashes; interest rates surge; investors are too bullish; Congress goes after big tech; and, President-elect Joe Biden has health issues.

But if all goes well, Mr Lee sees 2021 as the start of a new bull market, one that he sees possibly running all the way to 2030, with an S&P 500 at 10,000 points. That would certainly make the next decade one not to miss out on.

More reading

• UBS unveils its latest ASX “buy” idea for 2021
• The Costa (ASX:CGC) share price is slipping lower today. Here’s why
• ASX 200 down 0.6%: Mesoblast crashes lower, Qantas & Flight Centre tumble, NAB AGM
• The QBE (ASX:QBE) share price has plummeted 9% today. Here’s why
• Are ASX stocks in for an M&A frenzy in 2021?

Motley Fool contributor Sebastian Bowen 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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Tyro Payments Ltd (ASX: TYR) has accepted a 2-year court-enforceable undertaking to remedy breaches of the Spam Act.

An Australian Communications and Media Authority (ACMA) discovered the fintech illegally sent more than 150,000 spam email and text messages in the last 2 years.

The communications breached the law because they didn’t include an unsubscribe function.

ACMA deputy chair Creina Chapman said the entire finance sector is on notice after Tyro’s breach.

“Australians should not receive marketing messages they haven’t consented to, and they must be able to easily withdraw their consent when they choose,” she said.

“The Spam Act has been in place for 17 years and provides important protections to consumers.”

The law covers SMS, email and phone marketing, and is a current priority for ACMA because of “the serious harms that can be involved”. 

The Motley Fool has contacted Tyro for comment.

The saga started after a customer complained about the payment company’s spamming to ACMA earlier this year. A subsequent internal investigation confirmed the breaches, which Tyro admitted to the authority.

What has Tyro agreed to do?

The court-enforceable undertaking directs Tyro to hire an independent consultant to review its customer communications, implement the review recommendations, perform auditing and train staff on the Spam Act.

If this undertaking is breached, the Federal Court can force the company into action and order it to pay a fine equivalent to the financial benefit it derived.

“Although it’s clear that [Tyro’s] practices and systems were not adequate to comply with the spam laws, its actions since receiving our alert are appropriate to address the issues,” said Chapman.

“However, the ACMA will not hesitate to pursue more serious enforcement action, including financial penalties, in appropriate cases.”

The last 12 months has seen companies pay more than $1.7 million in penalties for ACMA-enforced breaches of the spam and telemarketing laws.

The Tyro share price was down 0.95%, trading at $3.14 at the time of writing. It has lost almost 18% this month.

More reading

• The Tyro (ASX:TYR) share price is down 20% in one month. Time to buy?
• Why Emerge Gaming, Flight Centre, Medical Dev International, & Tyro shares are dropping lower
• Why Adairs, Link, Nuix, & Tyro shares are charging higher
• Why Bapcor, Event, Money3, & Tyro shares are dropping lower
• Why the Afterpay (ASX:APT) share price and these ASX stocks could get a boost next week

Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments. 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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Integrated Research Limited (ASX: IRI) shares are falling lower today after the company provided the ASX with a market update. At the time of writing the Integrated Research share price is trading 5.66% lower at $3.00.

It has been a somewhat volatile year for the S&P/ASX All Technology Index (ASX: XTX) member. Shares in the company were hard hit by the pandemic but rebounded strongly to a price of $4.92 in August. That is were the good news ended however, with Integrated Research shares falling 39% since then. This means, at its current level, the Integrated Research share price is in the red for the year, down by 9.6%.

What Integrated Research does

Integrated Research is a global business that supports some of the largest companies in the world. It is specifically involved in the design and implementation of technology that optimises business operations, predicts disruptions, and automates business processes.

Thus, in essence, the company assists organisations to reduce the complexity and improve the transparency of their operations. 

Based in Sydney, the Aussie growth company now boasts more than 1,000 customers in over 60 countries.

What happened?

This morning the software provider confirmed that, as a result of deteriorating trading conditions, its revenue for the first quarter of FY21 is below that of the prior corresponding period (pcp). As such, Integrated Research essentially updated the market confirming what was hinted at during its 2020 annual general meeting (AGM).

The company stated that, based on unfavourable exchange rate movements and year-to-date trading, anticipated revenue for the first half of FY21 has been reduced to $41 to $47 million. Revenue for the pcp was $53.2 million. As a result of the decrease in revenue, lower profits of between $5 to $8 million are also predicted, compared with profit in the pcp of $11.8 million. 

Foolish takeaway

In addition to today’s news, Integrated Research has also suffered other setbacks in 2020. As noted at the company’s AGM, ongoing global disruption and uncertainty surrounding COVID-19, including widespread business closures, has seen sales cycles lengthen and some customers defer purchasing decisions.

The Australian Dollar has also performed strongly this year, gaining 12% in just six months. And, according reporting in The Australian Financial Review, there may be more hurt ahead for Integrated Research in this regard, with the AFR saying the Australian dollar could surge as high as 85 US cents.

More reading

• Why the Integrated Research (ASX:IRI) share price is dropping lower

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 Integrated Research Limited. 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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Much to the disappointment of some shareholders, there will be no Sydney Airport Holdings Pty Ltd (ASX: SYD) dividend in FY 2020.

This is the first time in its listed history that the airport operator hasn’t rewarded its shareholders with an annual paycheck.

But one leading broker believes the investors that stick with the company will be rewarded handsomely in the future.

Who is bullish on Sydney Airport shares?

According to a note out of Goldman Sachs, its analysts have retained their buy rating and $7.02 price target on its shares.

Based on the current Sydney Airport share price, this price target implies potential upside of just under 9% over the next 12 months excluding dividends.

This stretches to almost 11% if you include the ~13.3 cents per share dividend it expects the company to pay in FY 2021.

Looking further ahead, Goldman expects this dividend to more than double to ~29.2 cents per share in FY 2022 when trading conditions return to normal

What did Goldman say?

Goldman Sachs has been pleased with Sydney Airport’s recovery from the pandemic and notes that its recent update is in line with its forecasts.

It explained: “SYD’s November pax volumes align with our expectations of an improvement in domestic pax with the softening of state boarders in NSW. We expect to see a continued increase in December data with holiday travel and the reopening of the NSW and Victoria border on 23 November.”

It also notes that Qantas Airways Limited (ASX: QAN) is planning to increase its flights into the airport, which should help its recovery.

“QAN has indicated that it has scheduled 15 flights/day (well below the 45 pre-Covid-19), but that there is significant pent-up demand for the route and that on the day of the reopening of ticket sales it sold over 100k SYD-MEL tickets,” the broker said.

All in all, the broker feels it is worth sticking with the company, especially with its shares still trading materially lower than their pre-COVID highs.

More reading

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

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

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