Tag: Motley Fool

According to the United Nations, the global population aged 60 years stood at approximately 962 million in 2017.

This was more than twice as large as in 1980 when there were 382 million older persons worldwide.

The intergovernmental organisation is now expecting this figure to more than double again by 2050. At this point, it is projecting that the global population aged 60 years will reach almost 2.1 billion.

This population shift is widely expected to lead to increased demand for healthcare services over the next three decades. Which could be great news for Australian healthcare shares.

One that has been tipped as a big winner from this tailwind is Cochlear Limited (ASX: COH).

Why Cochlear?

Cochlear is a leading global hearing solutions company. It manufactures some of the highest quality and most popular cochlear implant hearing devices in the world.

While 2020 has been a difficult year because of the pandemic’s impact on elective surgeries, a recent update appears to demonstrate that the worst is now over for the company. Furthermore, with potentially effective COVID-19 vaccines not far away, 2021 looks set to be a significantly better year for Cochlear.

Looking further ahead, the expected increase in the over-60 population over the coming decades will be good news for Cochlear. This is because as people age, their hearing will invariably fade and require some form of assistance.

One broker that is positive on the company is Macquarie. It recently put an outperform rating and $241.00 price target on the company’s shares. Its research appears to show that Cochlear has been winning market share.

In addition to this, its survey of US audiologists shows that its products are the most highly rated in the industry. The broker feels this bodes well as activity levels recover from the COVID disruption.

More reading

• What can you do when the ASX is down?
• Top brokers name 3 ASX shares to buy today
• Reasons to be confident and cautious as ASX shares are bouncing back
• 2 ASX healthcare shares to buy today
• 4 outstanding ASX 200 shares to buy with $4,000

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Is the Cochlear (ASX:COH) share price a long term market beater? appeared first on Motley Fool Australia.

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The Nanosonics Ltd (ASX: NAN) share price has been a strong performer on Tuesday.

In afternoon trade the infection prevention company’s shares are up 3.5% to $6.71.

Why is the Nanosonics share price charging higher?

Investors have been buying the company’s shares today following the release of its annual general meeting update.

At the event, the company’s chairman and chief executive officer both spoke positively about the future.

Nanosonics Chairman, Maurie Stang, commented: “As we progress into FY21, notwithstanding our customers facing challenges in various markets, we are now seeing some very encouraging indicators that underscore our belief in the fundamentals of this business.”

This sentiment was echoed by CEO, Michael Kavanagh. While he notes that the company’s performance was impacted greatly by the pandemic in the fourth quarter of FY 2020, it has rebounded strongly from the crisis.

He explained: “We certainly do not believe that COVID-19 has negatively impacted the underlying fundamentals for the business and indeed the COVID-19 impacts experienced in the fourth quarter of FY20 have significantly reversed in the first 4 months of FY21.”

FY 2021 trading update.

During the first wave of COVID-19 in North America, Nanosonics struggled to gain access to hospitals.

Pleasingly, things have been very different during the second wave. Management notes that hospitals in the region appear better equipped to manage the impact of the pandemic now. As such, ultrasound procedure volumes requiring High Level Disinfection have not been impacted to the same degree as experienced in the first wave.

Though, management has warned that this does not guarantee that future waves will follow the same pattern in North America or other regions.

Nevertheless, as things stand, purchases of Consumables (Sonex/NanoNebulant) by end customers continued to recover in the first four months of FY 2021 as hospital departments reopened and ultrasound procedure volumes increased towards pre-fourth quarter levels.

Unit purchases of Consumables by end customers in the first four months of FY 2021 were up 4% compared with prior corresponding period and 25% compared with the last four months of FY 2020.

In addition to this, the company has continued to grow the footprint of its trophon product. It advised that the number of new trophon units installed globally was up 16% in the first four months of FY 2021 compared with the last four months of FY 2020.

It notes that this recovery was experienced in both North America, which was up 14%, and EMEA, which was up 64%.

Another positive is that the recovery in its new installed base growth means that GE Healthcare in North America will resume its purchasing of capital equipment by end of the first half.

Overall, management remains positive on the future, concluding: “Despite ongoing periods of uncertainty we remain optimistic about the future and investments in our growth agenda continue across the business.”

More reading

• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 next week
• Why the Nanosonics (ASX:NAN) share price is edging higher today
• The ASX shares to shine during AND after the COVID-19 recovery
• 2 top ASX healthcare shares that could be market beaters

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 Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the Nanosonics (ASX:NAN) share price is charging higher appeared first on Motley Fool Australia.

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The Oil Search Ltd (ASX: OSH) share price is on a tear this month, up 48% so far in November. And it’s gaining again today, up 3% in afternoon trading.

November’s price action will come as a relief to longer-term shareholders, who watched Oil Search’s share price tumble 75% from 2 January through to the 23 March COVID-19 lows.

Despite November’s strong performance, the Oil Search share price remains down 46% year-to-date. 

By comparison, the S&P/ASX 200 (INDEXASX: XJO) is down 1% so far in 2020.

We’ll look at what’s driving November’s gains below. But first…

What does Oil Search do?

Oil Search operates all of Papua New Guinea’s oil fields. It owns 29% of the ExxonMobil-operated PNG LNG Project, a major exporter to Asian markets. The company also holds interests in the Elk-Antelope and P’nyang gas fields. And in 2018, Oil Search acquired and now operates a portfolio of oil leases in Alaska, United States.

Oil search counts some of the most successful oil and gas operators in the world as its joint venture partners. The company was established in Papua New Guinea in 1929, and shares first began trading in Australia in 1974.

Why is the Oil Search share price surging this month?

Several factors could be driving the Oil Search share price up this month. The company’s 19 November announcement of a 33% increase in its contingent resources in its Alaskan Pikka oil field. The rising price of crude oil. And increasing expectations that crude prices could hold onto recent gains, or continue to climb higher.

As Ryan Fitzmaurice, commodities strategist at Rabobank, explains (quoted by Bloomberg):

The overall ‘risk-on’ sentiment is being driven by more positive vaccine news this weekend, and oil prices in particular are being propelled higher by aggressive ‘short’ covering, especially in the ICE Brent contract… The oil market will [also] be focused on the OPEC+ meeting which is set for next week and which will likely begin to garner a great deal of attention as the week goes on.

Brent crude prices kicked off November at US$37.46 per barrel. Today Brent is trading for US$46.55 per barrel, a price increase of 24%.

Oil Search’s profits (and hence share price) are leveraged to the price of oil. Meaning when the price of oil goes up or down, the Oil Search share price is likely to rise and fall by a greater margin. That’s because the company’s fixed costs largely remain the same, regardless of the price of oil. So, any big increase, like the 24% price rise in November, lands almost entirely on the bottom line.

As Fitzmaurice points out, the next big determiner for the Oil Search share price will be the outlook for the global crude supply. We should know more about that following the upcoming OPEC+ meeting next week.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Top brokers name 3 ASX shares to sell next week
• Why the Oil Search (ASX:OSH) share price is the worst performer today
• Why Kogan, Oil Search, Orica, & Soul Pattinson shares are dropping lower
• ASX 200 up 0.1%: CBA’s APRA update, Mesoblast rockets, Oil Search sinks

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the Oil Search (ASX:OSH) share price is up 48% in November…and gaining again today appeared first on Motley Fool Australia.

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The Skyfii Ltd (ASX: SKF) share price is soaring higher today after the company held its annual general meeting (AGM). At the time of writing, shares in the tech minnow have risen 6.52% to a price of 24 cents.

This comes after a strong 6 months for the company, which has seen its share price rise 56%, taking its market cap to a total of $88 million.

What Skyfii does

Skyfii is a global software and data services company that aims to transform the way that organisations collect and use data. The tech provider currently operates across 35 countries and 5 continents and has delivered its solutions to a total of over 10,000 venues to date. Its clients range in size from small hospitality and retail stores to large stadiums and airports.

The company’s software has applications with monitoring social distancing and contact tracing, making it applicable during the pandemic. In order to do this the company processes billions of data points every month. These data points are captured both physically and virtually in order to assist businesses in improving customer and employee experience.

Skyfii annual general meeting

This morning Skyfii chair Andrew Johnson and CEO Wayne Arthur addressed shareholders at the company’s AGM.

The pair highlighted Skyfii’s strong financial growth in FY20, with operating revenue growing an impressive 44% and recurring revenue also increasing by 72% over the year. Despite its small market capitalisation, the software provider also posted positive operating earnings before interest, tax, depreciation and amortisation (EBITDA) of $2.1 million and also expects another positive result in FY21.

It was also noted that Skyfii has successfully completed two accretive acquisitions this year: Beonic Technologies, which will add over 300 blue-chip clients, and the retail optimisation solution, Blix.

Notably, Skyfii has poured money into improving its product suite throughout the year, which currently includes artificial intelligence (AI) video analytics, managed services and drone AI.

The results of the meeting clearly impressed shareholders as the Skyfii share price is surging upwards.

Outlook

While a revenue goal was not mentioned in the AGM, the speakers highlighted some areas of focus for the remainder of Skyfii’s year.

They outlined that there would be increased investment into marketing activities to continue to drive quality leads across all markets. This comes with a particular focus on integrating corporate offices, universities and grocery stores into its customer base.

Furthermore, the company announced that it would remain focused on cash management in light of the uncertainty surrounding COVID-19. However, if acquisition opportunities present themselves then the company indicated it is likely to act.

More reading

• ASX stock of the day: Skyfii (ASX:SKF) shares shoot the moon

Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Monday 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 that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX shares:

Ampol Ltd (ASX: ALD)

According to a note out of Goldman Sachs, its analysts have retained their sell rating and $23.30 price target on this fuel retailer’s shares. Goldman was pleasantly surprised by Ampol’s announcement of a $300 million off-market share buyback. It thought the company may delay capital returns due to the difficult trading conditions and Lynton refinery closure. However, this isn’t enough for a change of rating by the broker. It continues to see value elsewhere and sees downside risk to consensus estimates. The Ampol share price is trading at $30.04 this afternoon.

Commonwealth Bank of Australia (ASX: CBA)

A note out of Morgan Stanley reveals that its analysts have retained their underweight rating and $68.50 price target on this banking giant’s shares. This follows news that APRA will reduce the banking giant’s operational risk overlay. While this is a positive and will lift its CET1 capital ratio well above APRA’s unquestionably strong benchmark, the broker continues to believe that the bank’s shares are overvalued at the current level. The Commonwealth Bank share price is fetching $80.95 on Tuesday.

Zip Co Ltd (ASX: Z1P)

Analysts at Citi have retained their sell rating and $6.55 price target on this buy now pay later provider’s shares. According to the note, the broker believes Zip is well-placed to deliver strong growth in the near term. This is expected to be driven by its increased investment in the US and UK markets, as well as the growing adoption of the payment method by merchants. However, the broker has concerns about increasing competition and the impact this could have on margins. In light of this, it feels there is downside risk to medium term estimates. The Zip share price is now trading below this price target at $6.29.

More reading

• ASX 200 rises again on Monday
• Will the Liberty IPO damage the Commonwealth Bank (ASX:CBA) share price?
• Why Ampol, Cann, Fortescue, & Mesoblast shares are surging higher
• ASX 200 up 0.7%; Zip trading update, Ampol buyback, IAG sinks
• Zip Co (ASX:Z1P) share price pushes higher on trading update

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 ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Challenger Ltd (ASX: CGF) share price is on the move today. Challenger shares are up 5.94% at the time of writing to $5.71 a share.

Today’s moves come on top of what has been a great month at the tail end of a wild year for Challenger.

Challenger shares are up 18% over the past month. However, they also remain down more than 30% year to date, and more than 44% off the highs we saw in February. Even worse for shareholders, Challenger’s all-time high of $14.17 that we saw back in December 2017 is a distant memory. The shares are still down 60% from that level on today’s prices.

What does Challenger do?

Challenger is an asset manager at its core. It has four divisions: Challenger Life, CIP Asset Management, Fidante Partners and Accurium.

CIP is an institutional funds management business that works in fixed income, real estate and derivative strategies. According to the company, its Fidante division “invests in and forms long-term alliances with talented professionals to create, grow and support specialist, boutique funds management businesses”. Accurium provides self-managed super funds (SMSFs) with assistance and services for clients in, or transitioning to, retirement phase.

However, it’s the Challenger Life division that is the company’s crown jewel. For one, it contributes the lion’s share of income to Challenger. Net income from the Life division was $639 million in FY2020, out of a total of $797 million for the Challenger Group. That’s just over 80%.

Challenger Life is an annuity provider. An annuity is a secure, guaranteed income that is paid for your lifetime, or for a fixed term. You basically pay a lump sum of cash to Challenger, and in return receive a fixed income stream for the terms agreed upon. Challenger takes this capital, invests it and then keeps any gains above what is required to pay out in annuity payments as profit.

Annuities – a double-edged sword

The appeal of Challenger’s annuities has increased in recent years (sales were up 13% in FY20). However, the same factors at play here are making it harder for Challenger to generate profits. Let me explain.

The appeal of an annuity, as opposed to owning dividend-paying ASX shares, for example, is the certainty. Although an ASX dividend share might offer, say, a trailing 5% dividend yield, there is no guarantee that the company will continue to pay the same yield, year in, year out. That inherent uncertainty does not suit some investors, who might prefer a lower, but safer yield. That’s where companies like Challenger come in.

But it’s not much easier for annuity-style businesses to generate the necessary yield to fund these payments. In the days of yore, investors looking for guaranteed income would turn to cash or fixed-interest investments. but in a world of near-zero interest rates, these kinds of investments don’t have the chops to put real, meaningful returns on the table. As an example, the current running yield for a 10-year Australian government bond is currently just 0.88% per annum.

So whilst Challenger’s annuities are increasing in popularity, the company’s ability to generate returns above the level it costs to provide the annuities is shrinking. 

Why are Challenger shares on the rise today?

Because of the nature of its business model, Challenger is a very cyclical stock. Thus, it tends to outperform the broader share market in good times, and underperform in bad times. That’s because the market knows Challenger has a lot of money invested in assets itself, so a rising market is likely to translate into rising profits for the company, and vice-versa.

But Challenger also released some good news to the markets today as well. In a release this morning, Challenger told investors that S&P Global Ratings has completed their annual ratings review and reaffirmed Challenger’s Life business with an ‘A’ rating, and a ‘stable outlook’. It has also reaffirmed the Challenger Group’s rating at ‘BBB+’, also with a ‘stable outlook’. This has positive ramifications for the interest rates which Challenger can borrow money and issue bonds at.

This positive news is likely to be contributing to the Challenger share price appreciation we are seeing today.

More reading

• Top fundie, Wilson, names ASX shares to buy
• 3 ASX shares rated as buys by brokers
• These were the best performing shares on the ASX 200 in October
• ASX 200 Weekly Wrap: ASX snaps winning streak… just

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Cardinal Resources Ltd (ASX: CDV) share price is surging higher today on news the company has received an unsolicited takeover bid. The conditional, off‐market takeover offer at $1.05 per share is from a Ghana incorporated company, and is the third takeover bid Cardinal has received this year. 

At the time of writing, the Cardinal share price has lifted higher than the actual offer price, up 5.94% to $1.07. 

What happened today

Mineral explorer Cardinal says it received a bid of $1.05 per share in the form of cash from Engineers & Planners Company Limited, a company incorporated in Ghana.

The bidder’s statement advised the offer was conditional upon 50.1% minimum acceptance by Cardinal shareholders, as well as regulatory approvals. These approvals include the Foreign Investment Review Board in Australia, as well as approvals in Ghana by the relevant authorities.

Cardinal has advised its shareholders to take no action at this time while the board considers the proposal. 

Other recent takeover bids for Cardinal

Earlier in the year, Cardinal was embroiled in a takeover battle for the company by two overseas-based miners – Shandong Gold (SHA: 600547) from China, and Russian company Nord Gold. 

In June, Cardinal received a takeover bid from Hong Kong-based Shandong Gold at an offer price of 60 cents per share, valuing the company at around $300 million. The Chinese company, which is the second-largest gold producer in China, then increased its offer price for Cardinal to $1 a share in September. This was meant to outbid another interested party Nordgold, a Russian gold miner which had previously increased its own offer from 60 cents to 90 cents a share.

Today’s price of $1.05 represents a 5% premium to the last offer price from Shandong Gold of $1, which the board at the time unanimously recommended shareholders to accept. 

About Cardinal Resources

Cardinal is a West African gold‐focused exploration and mining company that holds interests in tenements within Ghana, West Africa. The company is focused on the development of the Namdini Gold Project, and released its feasibility study on 28 October 2019 which concluded that it had an ore reserve of approximately 5.1 million ounces.

The Cardinal share price has more than doubled in 2020. It began the year at 31 cents before rising to today’s price of $1.07. The company currently commands a market cap of $575 million. 

More reading

• Why fund manager optimism is at almost 3-year highs
• Why ASX, Kogan, Myer, & Northern Star shares are dropping lower
• Could Citi’s forecast spell good news for the Lendlease (ASX:LLC) share price?
• PayGroup (ASX:PYG) share price rocky following half year results
• Why ASX gold shares are the worst performers so far today

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It’s hard to get away from COVID-19.

Even if you eschew the news, you’re reminded of it every time you go to the shops or really anywhere in public as social distancing remains the norm.

If you’re working from home, you’re reminded of it simply by the fact that you’re not at the office; no longer communicating face to face.

And if you’ve been planning any international travel, you’ll be reminded of it by your empty suitcase, still waiting patiently for borders to reopen.

Like I said, it’s hard to get away from this insidious virus. And the few items I listed above are tame compared to the far harsher reminders millions of people are faced with across the world. That of serious illness and the deaths of loved ones.

COVID’s ‘push-and-pull’

Unfortunately, with global cases soaring by some half-million per day, we’ll be stuck in this viral rut until one or more vaccines are widely distributed.

Fortunately, that timeline is looking ever nearer.

With two highly promising vaccines already announced in November, AstraZeneca plc (NASDAQ: AZN) became the third company to announce its vaccine is more than 90% effective in the latest trials.

Nowhere is this almost daily mix of really bad and really good news more clearly visible than in the share markets

As David Carter, chief investment officer at Lenox Wealth Advisors in New York, is quoted as saying by the Australian Finance Review (AFR):

Markets are still stuck in a push-and-pull between the dramatic rise of new COVID cases versus apparent progress on vaccines. This is likely to continue until we have an approved and distributed vaccine.

Why fund manager optimism is soaring

In the ongoing push-and-pull between the virus and humanity’s all-out race for a cure, hopes for a rapid vaccine rollout are trumping fears of an extended pandemic.

According to AMP Capital portfolio manager Dermot Ryan (quoted by the AFR):

We’re coming home strong in 2020. I think from a bottom-up perspective, we’ve seen some strong AGM [annual general meeting] guidance upgrades coming through in the last few weeks…

Those reopening trades are all benefiting as we get back to normal and demand can increase. The vaccine trade has just put a rocket under that… We [Australia] basically get a head start on the recovery and it allows domestic companies to build momentum faster than offshore companies…

We’re quite bullish on the employment numbers. We think the recovery is well and truly in play. The RBA called the start of it in September but this is a globally synchronised recovery and now we’re coming out of it.

As Bloomberg reports, Ryan is far from the only fund manager with a bullish outlook. In fact, Bank of America Corp‘s (NYSE: BAC) latest fund manager survey revealed the highest level of optimism since January 2018.

According to Chris Gaffney, president of world markets at TIAA Bank, “It’s been almost impossible being bearish. The Fed sets us up to be very anti-bearish going forward, even with bad Covid news, even with economic shutdowns.”

Matt Forester, chief investment officer of BNY Mellon’s Lockwood Advisors notes that it’s the central banks and governments working together that have really encouraged share markets:

Markets always feel it’s difficult to be bearish when there is such a large degree of federal coordination, fiscal and monetary policy helping to support the markets. Markets have become accustomed to these short-term volatility events that recover very quickly, and I think that does condition them to come in and buy the dip whenever there’s any challenges.

Jonathan Boyar, managing director at Boyar Value Group, shares their optimism, but sounds a note of caution (from Bloomberg):

In the short-term, anything is possible and from a humanitarian perspective it is awful that the people who currently need the most help are not getting it. But with multiple viable vaccines on the horizon, I think the market will largely look through the horrible headlines. There certainly, however, will be some fits and starts along the way.

Morgan Stanley’s Mike Wilson also cautions this many bulls create the potential for a share market correction (from the AFR):

Most noticeable to us last week is the almost universally bullish view from investors, including retail. In fact, it’s very hard to find a bear on 2021 — a dramatic shift from even three months ago. The high efficacy of the vaccines combined with a market friendly election outcome (divided Congress) are good reasons. However, price action appears exhaustive and the market seems ripe for another correction.

Any correction should offer new buying opportunities

Chris O’Keefe, managing director at Logan Capital Management, isn’t overly concerned about the next correction, saying (from Bloomberg), “Every time the market has pulled in, it’s been a good buying opportunity. There’s that desire to chase that momentum.”

And, as the AFR reports, David Cassidy, Wilsons head of investment strategy, believes the forecast earnings recovery for shares in the energy, financials and travel sectors – projected for 2024–2025 – could be too pessimistic.

Cassidy says, “A fast-tracked global vaccine rollout during 2021–22 has the potential to bring forward activity levels and earnings expectations, and we are closely watching evidence on this front.”

If activity levels and earnings expectations do come forward from recent expectations, it could spell good news for some of the leading S&P/ASX 200 Index (ASX: XJO) travel shares.

The Qantas Airways Limited (ASX: QAN) share price, for example, is up 3.9% at the time of writing, but Qantas shares are still down 22.2% since 2 January.

Then there’s travel agency Flight Centre Travel Group Ltd (ASX: FLT). Flight Centre’s share price was ravaged by COVID-19, falling more than 77%. The Flight Centre share price is up 0.3% in intraday trading, but still down 59% year-to-date.

More reading

• Why Brickworks, Mesoblast, Qantas, & Telix shares are storming higher
• Qantas (ASX:QAN) to make COVID vaccine mandatory for passengers
• JobKeeper saved 700,000 jobs, reveals RBA
• Why ASX shares are in awesome shape vs overseas markets
• Qantas (ASX: QAN) share price on the rise as more flights resume

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to record a very strong gain. At the time of writing, the benchmark index is up 1.1% to 6,634.7 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

ASX Ltd (ASX: ASX)

The ASX share price is down almost 2% to $77.84. Investors have been selling the stock exchange operator’s shares this week after it confirmed that ASIC is conducting an investigation into the ASX Trade outage on Monday 16 November 2020. ASX responded by saying that it acknowledges that this is appropriate given ASIC’s regulatory oversight.

Kogan.com Ltd (ASX: KGN)

The Kogan share price is down 4.5% to $16.54. This ecommerce company’s shares continue to slide as investors rotate out of COVID-winners and into other areas of the market which have struggled in 2020. This latest gain means the Kogan share price is now down 20% since the start of the month.

Myer Holdings Ltd (ASX: MYR)

The Myer share price is down is down 5% to 35.2 cents. This appears to have been driven by profit taking after a sizeable gain in November. Speculation that the department store operator could be a takeover target has led to its shares surging over 50% higher since the start of the month.

Northern Star Resources Ltd (ASX: NST)

The Northern Star share price has sunk almost 7% lower to $13.00. Investors have been selling the gold miners today after AstraZeneca provided an update on its COVID-19 vaccine candidate. One dosing regimen was found to be 90% effective at preventing the virus. Given its low cost and easy storage, this has sparked hopes that the pandemic will be brought to an end next year. It isn’t just Northern Star tumbling lower. The S&P/ASX All Ordinaries Gold index is down 5.6% at the time of writing.

More reading

• ASX 200 jumps 1.2%: Technology One results, Brickworks update, gold miners sink
• Why the Myer (ASX:MYR) share price is at an 8-month high
• 5 things to watch on the ASX 200 on Tuesday
• Why BlueScope, Home Consortium, IAG, & Kogan shares are dropping lower
• ASX 200 Weekly Wrap: ASX continues to climb, despite outage

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 Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Like many ASX property shares, the Lendlease Group (ASX: LLC) share price was hammered during the initial COVID-19-driven market rout. The property developer’s shares plummeted 51% from 21 February through to 27 March.

Following those lows, the Lendlease share price has regained 51% since 27 March. At first blush you might think that a 51% recovery following a 51% loss means shares have regained their 21 February highs. But remember, if a share loses 50% of its price it needs to go up 100% to recoup the losses.

Hence the Lendlease share price remains down 26% since 21 February. By comparison, the S&P/ASX 200 Index (ASX: XJO) is down 7% since that same date.

However, if Citi’s outlook for residential property prices in today’s ultra-cheap money environment proves correct, could Lendlease shareholders be major beneficiaries?

We’ll get to that in a tick. But first…

What does Lendlease do?

Lendlease Group develops and owns international property and infrastructure projects. Its operations span across Australia, Asia, the Americas and Europe. The company’s integrated business model comprises development, construction, investment management and ownership of property and infrastructure assets.

The company is active in the residential, retail and commercial office market spaces.

Why is Citi’s outlook for credit growth important?

According to the Australian Financial Review, Citi believes the forecast for credit growth and bank earnings don’t fully take into account the potential for a big surge in residential real estate prices in today’s easy money environment.

Citi’s Brendan Sproules and Thomas Strong said:

The RBA’s almost singular focus on the currency will lead to the inevitability of what always happens when rates fall – asset prices go up. Particularly housing. Certainly, the AFR’s Banking Summit gave credence to this view, with a broad acknowledgement that housing would accelerate.

Residential real estate makes up a significant share of the Lendlease portfolio. As the company notes, it “shapes cities, creating strong and connected communities”.

In the early months of the pandemic, house prices in Australia were widely forecast to fall into 2021. Atop the impact on the retail sector, this put a lot of pressure on the Lendlease share price.

But if house prices now look to spike higher, as Citi highlights, the pressure on the Lendlease share price could potentially lift.

More reading

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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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Could Citi’s forecast spell good news for the Lendlease (ASX:LLC) share price? appeared first on Motley Fool Australia.

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