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Buying crashing shares today at cheap prices may not necessarily produce high returns in the short run. A number of risks continue to face investors, such as a challenging economic outlook and the ongoing coronavirus pandemic. They, and other threats, could lead to a further market crash over the coming months.

However, over the long run, the stock market’s growth potential could make now the right time to purchase a diverse range of shares. They could benefit from a likely return to a sustained economic boom and improving investor sentiment that lifts valuations across a wide range of sectors.

Risks facing crashing shares in the short run

Crashing shares may already be cheap after their recent falls. They may trade at prices that are substantially below their historic averages. However, if investor sentiment weakens in response to challenging economic data or political uncertainty, it could cause many companies to record falls in their share prices.

Therefore, it is important to accept the potential for paper losses on investments made today over the coming months. The stock market crash from earlier this year showed that predicting market downturns is almost impossible. Therefore, there is always the prospect of experiencing falling share prices over a short time period should a deteriorating economic outlook cause investor sentiment to decline.

Long-term potential

Buying crashing shares could produce high returns over the long run. Value investors such as Warren Buffett have a long track record of purchasing high-quality companies when they trade at low prices. Over time, they have often soared in value as investor sentiment has improved and company valuations have more accurately reflected their financial prospects. With many companies appearing to fall into this category at the present time, there seem to be opportunities to capitalise on low valuations in a wide range of sectors.

The stock market’s past performance shows that a recovery and sustained bull market is likely to take place following short-term volatility. Of course, this can take a matter of months, or even years. Therefore, it is important for investors to manage their expectations when purchasing shares that have fallen in value. Although a recovery may be likely should the company in question have a solid financial position and a wide economic moat, it can take some time for it to be achieved.

Managing risks

It is also important to manage risks when purchasing crashing shares. For example, owning a diverse range of companies within a portfolio can reduce an investor’s reliance on a small number of companies or sectors. It can also mean smoother returns should one industry be less affected by a specific risk or threat compared to others.

Furthermore, identifying high-quality businesses that have fallen heavily in price could be a logical strategy. It may enable an investor to purchase those companies that are not only cheap, but that also offer the best value for money on a long-term basis. Over time, they could be among the least risky opportunities. They may also deliver the highest returns within an index over the coming years.

More reading

• 5 fantastic ASX shares to buy today
• Are these the new paths for growth of the Afterpay (ASX:APT) share price?
• 2 ASX blue chip dividend shares to buy this month
• These were the worst performing ASX 200 shares last week
• These were the best performing ASX 200 shares last week

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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Much has been made of the Afterpay Ltd (ASX: APT) share price of late. That’s generally what happens when a high-flying WAAAX growth share makes yet another brand new all-time high. This is precisely what occurred with the Afterpay share price this week, when it hit a new top of $105.80 on Monday.

Earlier this week, we discussed how the competition was heating up for the company, with the entrance of a few new competitors in the buy now, pay later (BNPL) space that Afterpay has made so famous.

However, reminiscent of Mark Zuckerberg’s famous unofficial motto for Facebook Inc (NASDAQ: FB) in the company’s early years – ‘move fast and break things’ – Afterpay is not a company that finds its laurels too comfortable to rest on.

Reporting in the Australian Financial Review (AFR) this week shed some light on Afterpay’s growth plans. According to the AFR, Afterpay co-founder and co-CEO, Anthony Eisen, has told investors that the company wants to “capitalise on its enormous 11-million strong customer base by better targeting young customers and supporting cross-border purchases”.

Afterpay eyes the horizon

Appearing at the AFR’s Banking and Wealth Summit this week, Mr. Eisen is reportedly exploring new ways to monetise the company’s 11 million (and growing) base of customers. One of these ‘ways’ is a plan to allow merchants in one country to sell products in another country, and “providing foreign exchange services to facilitate cross border transactions.”

The AFR quotes Mr. Eisen as stating that these plans, as well as the company’s small but growing presence in Asia, were “early irons in the fire”. However, he also notes that global retailers are “encouraging [Afterpay] to expand into new regions”. These retailers include Chinese e-commerce giant Tencent Holdings Ltd (HKG: 0700), which Afterpay has an arrangement with dating back to May this year. It was also at this time that Tencent, an e-commerce powerhouse in its own right, acquired a large tranche of Afterpay shares. Some of the apps Tencent owns, such as WeChat, have billions of monthly users. However, Mr. Eisen still says that although the two companies have “some fabulous conversations”, the relationship remains at “arms-length”.

Turning to the prospect of future regulation, a bugbear seemingly always on the minds of Afterpay investors, Mr. Eisen was indifferent: “It’s never been a point about avoiding regulation” he told the AFR, noting that ASIC (the Australian Securities and Investment Commission) has a “fit for purpose” approach to the BNPL space. He also praised ASIC for “recognising that Afterpay was differentiated from the broader sector”.

It’s worth noting, however, that not everyone shares this view. The AFR also quotes Commonwealth Bank of Australia (ASX: CBA) CEO, Matt Comyn, who reckons that “regulation is inevitable but not imminent”.

More reading

• I have too many tech shares: Do I sell, buy or hold?
• Is the Afterpay (ASX:APT) share price a buy today?
• Top brokers name 3 ASX shares to buy today
• Afterpay (ASX:APT) share price under pressure by US BNPL giant
• ASX 200 rises again on Tuesday

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Facebook. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Facebook. 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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If you’re looking to add some blue chip dividend shares to your portfolio, then the two listed below might be ones to consider.

Here’s what you need to know about them:

Westpac Banking Corp (ASX: WBC)

Westpac is one of Australia’s largest banks with a market capitalisation of $72 billion. Times have certainly been hard for the bank in recent years, but its outlook is improving significantly. This is thanks to an improving housing market, the relaxing of responsible lending rules, and the prospect of an effective COVID-19 being developed in the very near future.

And although its shares have staged a strong recovery in recent weeks, one broker that believes they can still go higher from here is Morgans. Earlier this month its analysts put an add rating and $21.00 price target on the company’s shares. The broker is also forecasting dividends of 88 cents per share and 144 cents per share for FY 2021 and FY 2022, respectively. The latter represents a fully franked 7.2% dividend yield.

Wesfarmers Ltd (ASX: WES)

Wesfarmers is the owner of a number of Australia’s most popular retailer such as Kmart, Target, Catch, Officeworks, and Bunnings. It also owns a number of chemicals and industrials businesses. The key business by far is the Bunnings business. In FY 2020 the hardware giant contributed 64.1% of Wesfarmers’ earnings before tax.  

The good news for shareholders is that Bunnings has been on fire so for in FY 2021. For the first four months of the financial year, it delivered sales growth of 25.2% over the prior corresponding period.

According to a note out of Credit Suisse, its analysts believe Wesfarmers is well-placed for growth this year. As such, they have an outperform rating and $51.59 price target on the company’s shares. The broker is also forecasting a dividend of 181 cents per share in FY 2021. Based on the latest Wesfarmers share price, this represents a fully franked 3.7% dividend yield.

More reading

• What would it take for the ASX 200 to hit 7,000 again?
• Why ASX bank share dividends might be surging soon
• Morgan Stanley updates its share price targets for the big 4 banks
• Why Aristocrat Leisure, Chalice Gold, Westpac, & Whitehaven Coal shares are charging higher
• Here’s the ASX bank share rated as a conviction buy

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of Wesfarmers 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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Positive COVID-19 vaccine news gave investor sentiment a lift last week and sent the S&P/ASX 200 Index (ASX: XJO) charging higher again. The benchmark index rose 2.1% to finish at 6539.2 points.

Unfortunately, not all shares climbed higher with the market last week. Here’s why these were the worst performers on the ASX 200 over the period:

Evolution Mining Ltd (ASX: EVN)

The Evolution share price was the worst performer on the ASX 200 last week with an 8.9% decline. Improving risk appetite thanks to positive COVID-19 vaccine developments weighed on the gold price last week. Combined with a broker downgrade from Macquarie, this put a lot of pressure on the Evolution share price. A number of other gold miners including Gold Road Resources Ltd (ASX: GOR), Silver Lake Resources Limited (ASX: SLR), and Northern Star Resources Ltd (ASX: NST) also fell heavily last week for similar reasons.

Elders Ltd (ASX: ELD)

The Elders share price was the next worst performer (excluding gold miners) with a 7.1% decline. Last week the agribusiness company released its full year results. Elders reported a 29% increase in sales revenue to $2,092.6 million and a 71% jump in underlying profit after tax to $109 million. This was driven partly by the acquisition of AIRR and strong demand for products from the recent winter cropping season. While this result was stronger than expected, analysts at Morgans believe its shares are fair value now and put a hold rating and $11.68 price target on them.

Charter Hall Group (ASX: CHC)

The Charter Hall share price was out of form and dropped 6.9% lower last week. This was despite the property company announcing that its wholesale partnership, LWHP, has made an acquisition. The partnership has acquired a $353 million portfolio of six Bunnings Warehouse assets located in prime metropolitan markets. This portfolio of modern Bunnings Warehouse retail stores was acquired on a yield of 4.63%.

NEXTDC Ltd (ASX: NXT)

The NEXTDC share price was out of form and fell 6.7% over the five days. With no news out of the data centre operator, this decline may have been driven by profit taking from investors. After all, even after this decline, the NEXTDC share price is up 84% since the start of the year. This has been driven by increased demand for its data centres due to the accelerating shift to the cloud following the pandemic.

More reading

• These were the best performing ASX 200 shares last week
• ASX 200 ends flat on Friday
• Why the Oil Search (ASX:OSH) share price is the worst performer today
• What would it take for the ASX 200 to hit 7,000 again?
• Takeover battle for Regis (ASX:REG) share price triggers sector-wide upgrade

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia has recommended Elders 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 S&P/ASX 200 Index (ASX: XJO) was on form again last week and charged higher again. The benchmark index rose 2.1% to 6,539.2 points thanks to further positive vaccine news.

While a good number of shares climbed higher with the market, a few recorded particularly strong gains.

Here’s why these were the best performing ASX 200 shares last week:

Unibail-Rodamco-Westfield CDI (ASX: URW)

The Unibail-Rodamco-Westfield share price was the best performer on the ASX 200 last week with a 25.7% gain. Investors have been buying the shopping centre operator’s shares amid hopes that the COVID-19 vaccine will give its struggling business a big lift in 2021. Despite its strong gains in recent weeks, the company’s shares are still down 60% from their 52-week high.

Bendigo and Adelaide Bank Ltd (ASX: BEN)

The Bendigo and Adelaide Bank share price was on form and charged 14.5% higher over the five days. This was despite there being no news out of the regional bank. However, a number of bank shares recorded strong gains last week after investor sentiment improved greatly in the sector. This may have been driven by the vaccine news and hopes that APRA would soon remove its limits on bank dividends.

Alumina Limited (ASX: AWC)

The Alumina share price wasn’t far behind with a 12.8% gain last week. Once again, this was despite there being no news out of the alumina and bauxite company. However, with aluminium prices on an upward trend, investors may be feeling confident about the company’s prospects in FY 2021.

Mesoblast limited (ASX: MSB)

The Mesoblast share price was a strong performer last week and stormed 12% higher. Almost all of this gain came on Friday following the announcement of an agreement with pharma giant Novartis. The two parties have agreed an exclusive worldwide license and collaboration agreement for the development, manufacture, and commercialisation of Mesoblast’s mesenchymal stromal cell product remestemcel-L. Novartis will make a US$50 million upfront payment and could pay upwards of US$1.25 billion milestone payments.

More reading

• ASX 200 ends flat on Friday
• Why the Oil Search (ASX:OSH) share price is the worst performer today
• What would it take for the ASX 200 to hit 7,000 again?
• Why Accent, Mesoblast, Redbubble, & Regis Healthcare shares are charging higher
• Takeover battle for Regis (ASX:REG) share price triggers sector-wide upgrade

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. 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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Is the Kogan.com Ltd (ASX: KGN) share price a buy after holding its annual general meeting (AGM) and revealing that its profit was up 270% in the year to date of FY21?

What is Kogan.com?

Kogan.com is an e-commerce business that sells a variety of products or services. It has an online marketplace where it sells a wide array of products like TVs, appliances, devices, furniture, food, toys, garden items, shoes, clothes and so on.

The company also sells a variety of other services like insurance, money products (like credit cards and superannuation), travel, cars, internet and mobile. 

Kogan.com also has a membership program called Kogan First which provides members with free shopping and some other benefits.

What was said at the AGM?

First, the company reminded investors about its performance in FY20 where net profit grew 55.9% and gross sales increased by 39.3%.

Kogan.com said that in the year to date for FY21 to October 2020, gross sales went up 99.8%, gross profit increased 131.7% and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 268.8%.

The company said that in the year to date, it has seen a strong performance from its product divisions and Kogan Marketplace. The company pointed out that November and December are typically the most important months of the year for the business.

It has been investing in its marketing to grow its customer base and brand, which it expects will have long-term benefits for the company.

The company also pointed that over the past four years it has delivered growth in the gross margin, contribution margin, EBITDA margin and adjusted EBITDA margin. In FY17 the adjusted EBITDA margin was 5.2%, in FY18 it was 6.3%, it FY19 it was 7.2% and in FY20 it was 10%.

Kogan.com also continues to launch new services for customers with partners. For example, in the first half of FY20 it launched Kogan Mobile NZ with Vodafone, Kogan Money Super with Mercer, Kogan Money Credit Card with Citi and Kogan Energy with Powershop (which is part of Meridian Energy Ltd (ASX: MEZ)).

Is the Kogan.com share price a buy?

The CEO and founder of Kogan.com, Ruslan Kogan, said with the FY20 report release: “There is a retail revolution taking place as more and more shoppers learn about the benefits of e-commerce. We’re seeing record numbers of first time customers, who then go on to make repeat purchases at a 40% faster pace than previously. For us this is a very exciting trend that shows that once customers learn about shopping online, they change their ongoing behaviour. Once someone discovers the benefits of online hopping, I struggle to see why they would ever go back to the old way of doing things. After almost 15 years of preparation, the revolution occurring in retail represents a significant opportunity for Kogan.com.”

Mr Kogan also referred to the benefit to the company of its growing number of people using its loyalty scheme: “The Kogan First community of members grew exceptionally during the second half, and importantly these loyal members on average purchase and save much more often than non-members, demonstrating loyalty to the platform, and also demonstrating the significant savings and other benefits available through the loyalty program.”

The Motley Fool Share Advisor service currently rates Kogan.com as a buy. According to estimates on Commsec, it’s trading at 29x FY23’s estimated earnings.

More reading

• ASX 200 ends flat on Friday
• Here’s how the voting went down at the Kogan (ASX:KGN) AGM
• Why Kogan, Oil Search, Orica, & Soul Pattinson shares are dropping lower
• Kogan (ASX:KGN) share price lower on AGM and trading update
• Tussle at Kogan (ASX:KGN) over executive compensations

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 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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Is the Altium Limited (ASX: ALU) share price a buy? The company held its annual general meeting (AGM) this week.

Altium is an electronics PCB software business that counts businesses and organisations like Space X, Tesla, Apple, NASA, Amazon, Google, John Deere, Microsoft, Disney and Honeywell.

What did Altium say at its AGM?

The company outlined its various plans for growth, particularly revolving around Altium 365.

Altium reminded investors that it is going through its ‘Netflix moment’ with a hard pivot to the cloud. Altium is creating a new organisational structure separating its cloud business (Altium 365) from its ‘software’ business.

It’s planning for the rapid development and adoption of Altium 365. It will reinvent Altium’s transactional sales on a digital platform. The company is preparing a “major offensive” into the high-end PCB market through NEXUS and Altium 365 Enterprise, whilst also deeply integrating Octopart and Altium 365.

Another part of the plan is launching preparations for Altium 365 into China and bringing smart manufacturing to Altium 365.

Altium is still planning for market domination with a target of 100,000 Altium Designer subscribers. The company says that its Altium Designer business is the dominance engine, whilst the cloud platform Altium 365 is the transformation engine.

The ASX tech share said that the shift to the cloud is from a position of strength and does not force its customer to change their licensing model or the way they use Altium’s existing software. But Altium 365 does provide future opportunities for direct monetisation from transaction fees on manufacturing or premium services.

Altium revealed that momentum is building with 40% growth of Altium 365 adoption since July. It has 3,739 monthly active accounts and 7,486 monthly active users.

In terms of a market update and outlook, Altium said that the 2021 financial year is a pre-vaccine environment for Altium’s path to 2025, meaning the financial performance will be affected.

Altium said that macro environment remains challenging with a second wave of COVID-19 and uncertainty that has surrounded the US elections.

Management said that the first half is still being affected by COVID-19 but there are some signs of momentum coming back for the second half.

Altium confirmed the company’s guidance range for the full FY21. Revenue is expected to be between US$200 million to US$212 million, which would be growth of 6% to 12%. It’s also expecting earnings before interest, tax, depreciation and amortisation (EBITDA) to be in the range of US$76 million to US$89 million.

Is the Altium share price a buy?

The Motley Fool Pro service still rates Altium shares as a buy. At the current Altium share price of around $36 it’s trading at about 56x FY22’s estimated earnings.

Altium CEO Aram Mirkazemi spoke about the shift to Altium 365: “The implication of all this, is that the adoption of Altium 365 will implicitly change the nature of Altium’s revenue from being old world perpetual and maintenance based to the new world of term-based and software as a service (SaaS). This means, as far as Altium’s existing software revenue is concerned, Altium may very well be able to accomplish a Sun Tzu move in winning a war without fighting a battle.”

Altium is expecting the change to significantly increase renewal rates for maintenance subscription and reduce church, which should have the most dramatic impact on revenue and the climb to 100,000 subscribers.

Mr Mirkazemi said: “Our software business is regarded as world class and is well on the way to achieving worldwide dominance, which will essentially give us a position of absolute market dominance similar to what has been achieved by Adobe or Microsoft software, for the electronics industry.”

More reading

• Is the Altium (ASX:ALU) share price in the buy zone?
• ASX 200 down 0.3%: Altium FY 2021 guidance, Crown drops, insurance shares sink
• Altium (ASX:ALU) share price pushes higher following AGM update
• 2 ASX growth shares predicting big growth this decade
• 5 things to watch on the ASX 200 on Thursday

Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. 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 Reserve Bank of Australia (RBA) has today weighed in on the recent system failures at ASX Ltd (ASX: ASX). The market exchange’s co-regulator says it is “concerned about the recent operational issues affecting CHESS and ASX’s trading systems, and will be working to understand if there are systematic underlying issues.” 

What else did the RBA say?

During the Reserve Bank’s Payments System board meeting today, the panel said it’s worried about this week’s system outage at ASX, and whether there were systemic operational issues that needed to be looked at. The RBA is awaiting ASX’s final investigational report regarding this issue. 

The RBA also outlined its expectations of ASX from both the Australian Securities and Investment Commission (ASIC) and the RBA itself. Both ASIC and the RBA are the regulators of ASX. 

Replacing CHESS

The bank says that the regulators expect ASX to replace CHESS as soon as this can be safely achieved. CHESS is a critical clearing and settlement system for the Australian cash equity market. It contributes to investor confidence, the reduction of systemic risk, and the performance and stability of the Australian financial system.

The RBA says the importance of replacing CHESS in a safe and timely manner was particularly highlighted in recent record trading volumes, and the associated CHESS processing delays observed in March. The bank went on to say that, in implementing the replacement, ASX should take into account CHESS user feedback on a revised implementation timeline. In April 2018, the ASX had sought feedback from its users regarding the scope and implementation of replacing the CHESS system. By September that year, ASX had confirmed the scope and timeline based on the feedback. 

The RBA also says that ASX is expected to demonstrate the readiness of the CHESS replacement system, and will be required to provide supporting independent assurances to the regulators before migrating to the new system.

Earlier this week, ASIC tore into the market operator after it experienced continuing glitches in its Centre Point matching system, just a day after the market was closed down early when the ASX trading systems froze 24 minutes after the morning opening bell.

More reading

• Top brokers name 3 ASX shares to sell today
• ASIC rips into ASX again as more systems go down
• What caused the ASX outage on Monday trading?
• ASIC to investigate if ASX is fit to hold market licence
• ASX trading halt to remain in place for the rest of the day

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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The S&P/ASX 200 Index (ASX: XJO) finished flat today at 6,539 points.

Here are some of the highlights from the ASX:

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) bids for Regis Healthcare Ltd (ASX: REG)

Soul Patts has made a takeover bid for Regis Healthcare, but that was promptly rejected.

The investment conglomerate made a bid, with its partner Ashburn Pty Ltd (controlled by Regis co-founder Mr Bryan Dorman), of $1.85 per share. That bid represented a 25% premium to the closing share price from yesterday.

Ashburn controls 27.2% of Regis’ ordinary shares on issue.

Soul Patts expected that the proposal would be attractive to Regis shareholders.

The Chair of Soul Patts, Rob Millner, said: “WHSP is a patient and long-term investor and is committed to providing access to capital and support to Regis as it navigates through this challenging period and transitions to a new operating environment in the future.

“Given the regulatory uncertainty and funding challenges currently facing the aged care industry, WHSP believes that Regis’ long-term prospects will be best served in a privately owned setting and that WHSP’s long investment horizons and access to capital make it and Ashburn Pty Ltd logical partners to oversee Regis’ growth and development.”

The Regis board rejected the bid from the ASX 200 investment conglomerate because it “materially undervalued the company having regard to its medium to long term prospects.”

Regis is also expecting that the government will commit more funding to the aged care sector in the May 2021 budget. The board also pointed to the easing impacts of COVID-19.

The Regis share price rose over 23% today. The Soul Patts share price fell around 4%, however the company did also go ex-dividend today.

Commonwealth Bank of Australia (ASX: CBA)

Today, CBA acknowledged the outcome of APRA’s review of the progress made against its remedial action plan.

APRA’s validation review found that CBA has made significant progress in implementing the remedial action plan. As a result, the operational risk overlay imposed on CBA is reduced from $1 billion to $500 million with immediate effect. This reduction represents an increase in the CET1 capital ratio of 17 basis points for the ASX 200 bank.

The CBA CEO said that there is still a substantial amount of work to do.

The CBA share price finished up around 1.4%.

Mesoblast Limited (ASX: MSB)

The Mesoblast share price jumped 11% after announcing a partnership with Novartis for the development, manufacture and commercialisation of remestemcel-L. The initial focus will be developing a treatment of acute respiratory distress syndrome (ARDS), including that associated with COVID-19.

Novartis will make a $50 million upfront payment including US$25 million in equity. Mesoblast may receive a total of US$505 million pending the achievement of pre-commercialisation milestones for ARDS indicators. Mesoblast may receive additional payments post-commercialisation of up to US$750 million based on achieving certain sales milestones and tiered double digit royalties on product sales.

The ASX 200 company will retain full rights and economics for remestemcel-L for graft versus host disease, and Novartis has the option to, if exercised, become the commercial distributor outside of Japan.

Mesoblast CEO Dr Silviu Itescu said: “Our collaboration with Novartis will help ensure that remestemcel-L could become available to the many patients suffering from ARDS, the principal cause of mortality in COVID-19 infection. This agreement is in line with our corporate strategy to collaborate and partner with world-leading major pharma companies in order to maximise market access for our innovative cellular medicines.”

Kogan.com Ltd (ASX: KGN)

The Kogan.com share price fell more than 4% today after giving a trading update at its annual general meeting (AGM).

Kogan.com said that in the year to date for FY21 to October 2020, gross sales went up 99.8%, gross profit increased 131.7% and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 268.8%.

The company said that in the year to date, it has seen a strong performance from its product divisions and Kogan Marketplace. The company pointed out that November and December are typically the most important months of the year for the business.

It has been investing in its marketing to grow its customer base and brand, which it expects will have long-term benefits for the company.

More reading

• ASX stock of the day: Japara Healthcare (ASX:JHC) share price soars 23%
• Here’s how the voting went down at the Kogan (ASX:KGN) AGM
• Why the Oil Search (ASX:OSH) share price is the worst performer today
• Why Kogan, Oil Search, Orica, & Soul Pattinson shares are dropping lower
• What would it take for the ASX 200 to hit 7,000 again?

Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. 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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The Openpay Group Ltd (ASX: OPY) share price was out of form on Friday and dropped lower again.

The buy now pay later provider’s shares dropped 0.75% to $2.75.

This means the Openpay share price is now down 43% from its 52-week high of $4.80.

Is this a buying opportunity?

One broker that believes this is a buying opportunity is Shaw & Partners.

In fact, the broker believes Openpay’s shares can go even higher than its 52-week high over the next 12 months.

According to a note out of the broker this week, its analysts have reiterated their buy rating and $5.00 price target on the company’s shares.

Based on the current Openpay share price, this price target implies potential upside of 82%.

What did the broker say?

Shaw & Partners was pleased with Openpay’s recent trading update which revealed strong growth across customers, merchants, plans, and transaction value during October.

It also notes that management spoke positively about trading so far in November thanks partly to the Click Frenzy event.

Another big positive for the broker was its merchant additions. Shaw & Partners was pleased with the significant and numerous merchant wins. These include Kogan.com Ltd (ASX: KGN), NASDAQ-listed BigCommerce Holdings, Surfstitch, Dick Smith, BBQs Galore, Intersport, and Tarocash.

Also catching the eye of its analysts was its cash balance. At the end of the first quarter, Openpay’s cash balance stood at a healthy $65 million. It notes that this equals a solid 16 quarters of funding runway.

What about the future?

Shaw & Partners appears confident Openpay’s strong growth will continue.

It explained: “Key take-away: 2Q21 is shaping up to be potentially massive period given (1) underlying seasonal growth expected to be significant given peak Black Friday/Click Frenzy/Xmas trading to come; (2) recent wins from Kogan, JD Sports Australia and Just Group all contributing; (3) WOW deal now “live”; (4) Pentana / MSL still to be fully implemented; and (5) VIC re-opening,”

“BUY on TSR of 83%. OPY also trades at a significant – and attractive – 40% discount to listed BNPL peers on an FY21 EV/Sales multiple of 7.6x vs. combined 13.2x (consensus) for APT, LBY, SPT, SZL, Z1P,” it concluded.

More reading

• Is buy now, pay later (BNPL) giving Aussies a headache?
• Why the Openpay (ASX:OPY) share price is up and down today
• Afterpay (ASX:APT) share price underperforming after ASIC finds more BNPL customers falling behind
• PayPal’s buy now, pay later service is surging
• Why these 5 fintech ASX shares are surging

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 and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Kogan.com ltd and Sezzle Inc. 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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