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Medical imaging and data management company Mach7 Technologies Ltd (ASX:M7T) has delivered some impressive shareholder returns this year. Despite all the commercial headwinds from COVID-19.

After falling to a 52-week low of just 37 cents in late March, the ASX small cap company’s share price has rallied strongly. In recent months, the Mach7 share price has soared more than 150% higher to 96 cents at the time of writing. This puts its shares up more than 45% so far this calendar year.

What has driven the gains?

Results for FY20 were positive across most financial metrics. Revenues surged 102% higher year-on-year to $18.9 million. The company also reported its first full year of profitability: earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $3.3 million, while net profit after tax was $0.2 million. Most of the uplift in revenues came from licensing fees, either from new customers or existing customers repurchasing licenses.

Annualised recurring revenues also jumped 35% to $9 million. These are subscription and support services revenues received from customers who are “live” on the Mach7 platform. The company will want to continue to grow this category of revenues in particular, as the more revenue the company can “lock in” each year, the less variability there will be in its financial results.

First quarter FY21 results haven’t been quite as strong. Annualised recurring revenues increased by $0.9 million, while the company generated $3.3 million worth of new sales orders. It also completed the acquisition of Client Outlook during the quarter, at a cost of $40.8 million. Client Outlook is a Canadian technology company servicing the healthcare industry, which specialises in medical imaging.

What does Mach7 actually do?

Mach7 develops a centralised software platform for healthcare professionals, with a focus on medical imaging. Patient data can be stored in multiple formats across multiple different systems. Mach7 aims to create a single, integrated source of reliable patient data that can be used by doctors and other healthcare professionals to deliver better results for their patients. The company already has a diverse range of clients, including Singapore General Hospital, Massachusetts General Hospital, and the Hamad Medical Corporation in Qatar.

When releasing Mach7’s first quarter results, company CEO Mike Lapron said: “We have very experienced individuals who are bullish about the product potential and confident in our ability to become a dominant player in the imaging market.”

Our Foolish analysts agreed with Lapron’s bullish outlook, and Mach7 earned itself a place on the Motley Fool’s Hidden Gems scorecard back in June. Our analysts liked the company’s strong business momentum and global market opportunities. 

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Rhys Brock has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MACH7 FPO. The Motley Fool Australia has recommended MACH7 FPO. 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 Resources & Energy Group Ltd (ASX: REZ) share price took a 33% dive on open following its drill results this morning. 

Let’s take a look.

About the company 

Resources & Energy is a gold explorer, developer and producer with projects in Western Australia and Queensland. 

In Western Australia, the company’s flagship site is the East Menzies Gold Project, situated 130km north of Kalgoorlie. The site represents a 112sq km package of contiguous mining, exploration and prospecting licenses. 

In Queensland, the company has a 12sq km mineral development licence over the Mount Mackenzie Mineral Resource. An initial scoping study for the project shows a positive net $63 million of free cash. 

Resources & Energy share price surge in October

The Resources & Energy share price surged more than 200% on 20 October following the discovery of a new high-grade zone of gold mineralisation with a peak result of 76.4 gt/au. This was at the Gigante Grande Prospect situated at its East Menzies Gold Project.

Resources & Energy executive director Richard Poole said the results supported “the overwhelming evidence that the East Menzies Gold Field is one of Australia’s best and most overlooked exploration target areas”. 

Drill results

The gold miner announced its drilling results from its Gigante Grande prospect today. They showed the drill holes, which were targeting a potential continuation of mineralisation, resulted in a peak assay of 3.85 gt/au.

As a result, the Resources & Energy share price opened 33% lower and is currently trading near its intraday lows, down 29.5% at 7.4 cents. The bar may have been set too high after its previous high-grade zone discovery or its share price may have been pumped too high. Nonetheless, investors were clearly far from impressed with today’s drill results. 

Resources & Energy has previously delivered an announcement under similar circumstances where the market was not impressed. On 3 November, the company announced a resource upgrade at its Goodenough Project located within the central west part of the East Menzies Gold Project. In what appears to be a positive announcement, the Resources & Energy share price slipped 5% lower on the day. 

More reading

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• Sky Network (ASX:SKT) share price shoots 6% higher on upgraded guidance
• Why the Straker Translations (ASX:STG) share price is rocketing 37% higher today
• Computershare (ASX:CPU) share price higher after AGM
• CBA (ASX:CBA) share price lifts on first quarter results

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Mesoblast limited (ASX: MSB) share price is bouncing back today from a heavy decline on Tuesday.

In morning trade the biotech company’s shares are up 5.5% to $3.30.

Why is the Mesoblast share price jumping higher?

Investors have been buying the company’s shares after the release of a promising announcement this morning.

That announcement reveals that the company has achieved positive feedback from its randomised controlled Phase 3 trial of remestemcel-L in patients with moderate to severe acute respiratory distress syndrome (ARDS) due to COVID-19 infection.

According to the release, Mesoblast has received a recommendation to continue from the independent Data Safety Monitoring Board (DSMB) following completion of the trial’s second interim analysis.

That analysis was performed on the trial’s first 135 patients, which represents 45% of the total target of up to 300 randomised patients.

The DSMB is recommending the continuation of the trial after reviewing the trial’s primary endpoint, all-cause mortality within 30 days of randomisation and all safety data.

Complementary to a COVID-19 vaccine.

Mesoblast’s Chief Medical Officer, Dr Fred Grossman, was very pleased with the DSMB’s recommendation and sees room in the market for the treatment even if a successful vaccine is developed.

He said: “We are very pleased with the recommendation by the DSMB, as we seek to confirm whether remestemcel-L improves survival in ventilated COVID-19 patients with moderate to severe ARDS. Patients who have co-morbidities or are older are likely to continue to be at high risk of ARDS and death, even if COVID-19 vaccines become available. This is why having a potential treatment that reduces mortality in these patients is so important.”

“ARDS is the principal cause of death in COVID-19 infection and is thought to be due to a dysregulated immune response in the lungs to COVID-19. Deaths continue to increase in ventilator-dependent ARDS patients as COVID-19 cases continue to surge globally. Despite improved treatment and earlier intervention in hospitalized COVID-19 patients overall, the mortality rate in COVID-19 ARDS patients who are over 60 years old remains more than 60%,” he added.

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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. 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 Sky Network Television Ltd (ASX: SKT) share price is shooting higher today following the release of an upgraded guidance announcement.

In early morning trade, shares in the television services company are up 6.8% to 15.5 cents. In comparison, the All Ordinaries Index (ASX: XAO) is up 1.1% to 6,617 points.

Upgraded guidance

According to the release, Sky advised it has upgraded its revenue and profit guidance for the remainder of FY21. The reforecasting exercise was based on the positive momentum experienced in the first four months of trading for the new financial year.

Sky’s direct satellite customer base has grown for six consecutive months, driven by an improvement in FY21 annualised churn to 12.2%. This is a reduction from the 13% and 15% achieved in FY20 and FY19, respectively.

The company attributes it upturn in results to its customer management process and refocused sales efforts. This led to greater-than-anticipated growth in streaming revenue, particularly from the Neon entertainment platform.

As key metrics have outperformed earlier predictions, Sky increased its revenue guidance range for FY21. The company now calculates revenue to be around $680 million to $710 million, compared to the previous estimate of $660 million to $700 million.

In addition, earnings are expected to benefit from one-off cost savings as a result of the renegotiation of certain contract rights. Sky stated that it’s also continuing to exercise careful cost control measures across its operations.

Off the back of the upgraded outlook and tight cost control, earnings before interest, tax, depreciation and amortisation (EBITDA) is also projected to lift. Current estimates put EBITDA for FY21 between $140 million and $155 million, a jump from the $125 million to $140 million declared in September.

Net profit after tax is also forecasted to swell to $20 million to $30 million, almost doubling prior guidance.

What did management say?

Sky chief executive Mr Martin Stewart commented on the strong start to the financial year:

While external economic factors remain challenging and uncertain, our internal performance in managing and serving our satellite customers well has resulted in much lower churn and improved acquisitions, leading to six consecutive months of growth in direct Sky satellite customers. We also continue to see pleasing growth from, and engagement with, our Neon streaming service.

The last few months have reinforced the ‘power of our bundle’ and our ability to offer a one-stop- shop for all of our customers’ entertainment and sport needs. We are looking forward to making life even better for our satellite customers when we add Sky Broadband to the mix in early 2021.

Sky share price summary

Despite today’s positive announcement, Sky shareholders would be disappointed with the company’s share price performance over the last few years. Reaching as high as $6.27 in 2014, Sky shares can be picked up for now 15.5 cents, representing a massive fall of 97%.

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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. 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 Straker Translations Ltd (ASX: STG) share price has been an exceptionally strong performer on Wednesday.

In early trade the translation platform provider’s shares were up a massive 37% to $1.24.

Why is the Straker share price rocketing higher today?

Investors have been fighting to get hold of the company’s shares this morning after it announced a major deal with global tech giant International Business Machines Corporation (IBM).

According to the release, IBM has appointed the company as a strategic translation service provider on a two-year agreement. This agreement commences in January and comes with an option for an additional two years.

The agreement will see Straker support IBM Cloud Services, IBM Adaptive Translations Services, and IBM Global Media Localisation.

It also extends the company’s current relationship with IBM from one language (Spanish) to 55 languages. This includes a number of key popular languages such as French, Chinese, Portuguese, and Japanese.

The agreement will utilise Straker’s proprietary artificial intelligence-powered RAY platform by directly linking with IBM’s technology platforms.

Straker Translations’ CEO and Co-Founder, Grant Straker, commented: “We are thrilled to have secured this strategic agreement with IBM, and further build our existing relationship with a world leader in data management, software, artificial intelligence and cognitive computing.”

“Our industry, like almost every other, is being fundamentally changed by the accelerating use of AI across all facets of localisation. The agreement requires extensive integration with IBM and the opportunity to build a deep partnership with the world’s leading AI company is hugely exciting. We expect it will open up new opportunities for us to partner on innovation within our industry,” he added.

What is the deal worth?

Due to the nature of the agreement, management advised that it is not possible to quantify the potential revenue that will be generated from IBM.

This is because such financial effect can only be determined over time based on usage volume. However, it notes that historically, the contribution from IBM related translation services has been a material contributor to company revenue.

In addition to this, management advised that the expanded scope means the company anticipates a ~30% increase in its headcount to support future service provision.

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 recommended Straker Translations. 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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Shares registry provider Computershare Limited (ASX: CPU) announced results and issued guidance for FY21 at its annual general meeting (AGM) today. Computershare’s share price rose by 4.58% to $14.17 in early morning trading, amid a broader market rise.

Highlights from the AGM

Note that due the nature of its business, Computershare has always reported its results in US dollars.

• Revenue US$2.3 billion, down 1.9%
• Margin income US$201 million, down 18.3%
• Management (non-audited) earnings before interest, depreciation, and tax (EBITDA) US$650 million, down 3.7%
• Management (non-audited) earnings per share (EPS) 56.3 cents, down 19.8%
• Final dividend per share 23 cents, unchanged
• The company did not reduce headcount during pandemic

Computershare has two main sources of revenues – fees from shares registry and margin income from holding client balances. The company says that as central banks around the world reduced interest rates rapidly, it has significantly impacted its margin income, which explains the 18.3% decrease. As such, management emphasises that investors should view the contribution from margin income independently as that income is impacted by cash deposit yields which are largely outside of the company’s control. 

Guidance for FY21

Computershare announced that for the first four months of this financial year, it’s trading slightly ahead of expectations. 

It expects management earnings per share (EPS) to be down by around 11% in FY21, and expects profit split between the first and second half to be a little more even compared to FY20 when the coronavirus pandemic ravaged the first half of earnings. However, the company says it will not upgrade its FY21 outlook due to the prevailing uncertainties caused by COVID-19.

A bit about Computershare

Computershare is the largest share registry business in the world. The company also provides services in employee equity plans, corporate trust, mortgage, bankruptcy, and a range of other financial and governance services. It manages more than 75 million customer records across all of the major financial markets.

Computershare is the most common share registry used by Australian companies listed on the ASX. Therefore, many Aussie investors hold an account with Computershare to manage information and preferences, access distribution statements, and carry out several other functions.

Quick take on its business

As explained previously, Computershare has a material risk exposure to interest rates by virtue of the interest it earns on client-owned cash balances – its margin income. According to its financial statements as at 30 June, the company held USD$17 billion in client funds across different currencies. As such, the company is also exposed to currency movements risk, particularly the AUD/USD exchange rate.

Margin income represents around 30% of group EBITDA, and its registry business accounts for more than 50%. 

In recent years, the company has attempted to expand outside of the share registry sector by making acquisitions across different industries, such as the mortgage industry. Between 2012 and 2020, acquisition-related costs averaged around US$80 million per year, according to its reports. 

Management has often spoken about the 99% retention rate of its registry clients, as there is a low propensity to switch share registry providers by companies due to potential operational risks.

How has the Computershare share price performed in 2020?

The Computershare share price has lost 20% on a year-to-date basis. It started the year at $16.78, and went through a rough patch in March as its price plunged to $8.60. It has since recovered to today’s price at $14.12. At this price, Computershare commands a market cap of $7.3 billion.

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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 Commonwealth Bank of Australia (ASX: CBA) share price has opened today’s trade up 1.77% at $73.68 per share, following the release of the bank’s first quarter FY21 trading update.

How did Commonwealth Bank perform in the first quarter?

For the 3 months ended 30 September, Commonwealth Bank posted an unaudited net profit after tax of $1.8 billion. This represented a fall of 16% from the prior corresponding period.

Volume growth rose across the business for the quarter versus the June period. Home lending increased by $5.6 billion, household deposits jumped to $15.8 billion and business lending lifted to $1.4 billion. This helped offset lower margins and interest rates experienced by the business through COVID-19.

Non-interest income grew 1%, driven by higher global markets trading income and insurance income from lower general insurance claims.

Operating expenses were 2% higher, excluding customer remediation provisions, to $5.2 billion. The outcome was attributed to increased investment spend and staff costs as a result of the pandemic.

The bank remains in a strong capital position. Net stable funding ratio (NSFR) stands at 125% and liquidity coverage ratio (LCR) at 146%, well above regulatory requirements.

Liquid assets totalled over $183 billion at the end of the quarter.

What did management say?

Commonwealth Bank CEO, Mr Matt Comyn, commented on the first-quarter result:

Disciplined execution of our strategy and strong operational performance continued to deliver good outcomes for our stakeholders during the September quarter.

This was highlighted in the quarter by the Bank achieving the number 1 ranking for Net Promoter Scores (NPS) in each of our core businesses (consumer, business and institutional) for the first time, while retaining our leading NPS ranking in digital banking.

He added:

Balance sheet settings remained strong, with loan loss provisioning coverage further strengthened and a CET1 capital ratio of 11.8%, up 20bpts in the quarter notwithstanding the payment of $1.7bn in 2H20 final dividends to our shareholders.

We continue to contact customers with a range of options as they approach the end of temporary loan repayment deferral periods.

About the Commonwealth Bank share price

As expected, the banking industry was hard hit by COVID-19, but has been slowly recovering. The Commonwealth Bank share price fell to as low as $53.44 during the first lockdown, prompting investor concerns. However, the bank has rallied the past few months, sitting just 10% below from where it was at the start of the year.

As Australia’s largest bank, CommBank has a price-to-earnings (P/E) ratio of 13.8.

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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. 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 Galaxy Resources Ltd (ASX: GXY) share price has rebounded almost 50% following the Tesla Inc (NASDAQ: TSLA) battery day back in late September. Today, Galaxy announced a multi-year year offtake agreement with Chengxin Lithium Group Co Ltd. Could this be a turning point for the lithium producer? 

Tesla battery day sparks fears for lithium demand 

A take-home from Tesla’s battery day was when Elon Musk highlighted that lithium was a widely available resource, “one of the most common resources on the planet”, and that “Nevada alone has enough to power all vehicles in the US”.

This dampened the sentiment for lithium producers that hoped to ride the momentum and increasing relevancy of renewable energy and electric vehicles. On battery day alone, the Galaxy share price slumped 13%. 

Biden to accelerate shift to renewable energy 

President-elect Joe Biden plans to act on climate change immediately and ambitiously. This includes plans for a record $400 billion investment over 10 years, as one part of a broad mobilisation of public investment into clean energy and innovation. 

The breath of fresh air for the renewables industry from Trump to Biden has seen a subtle shift to bet against the fossil-fuel industry and buy renewables. The Galaxy share price has been able to enjoy the recent uplift in sentiment, increasing 17% this month and hitting pre-Tesla battery day levels. 

Multi-year offtake agreement 

On Wednesday, Galaxy signed a three-year agreement with Sichuan Chengtun Lithium Co, a wholly owned subsidary of Chengxin Lithium Group Co Ltd. Chengxin has agreed to purchase 60,000 dmt per annum (+/- 10%) of spodumene concentrate from Galaxy in each year, 2021, 2022 and 2023. To add some perspective, Galaxy shipped 16,753 dmt of spodumene concentrate in the thrird quarter and a further 15,7000 dmt in early October. 

Due to current soft market conditions, Galaxy’s near-term sales volumes and shipping schedules will be largely dictated by the spot price that Galaxy is willing to accept and the pace customers are able to destock their inventory levels. Mt Cattlin’s current final product inventory levels plus forecast production for the fourth quarter of 2020 are sufficient to meet requirements for this quarter. 

Galaxy CEO Simon Hay said the company expected to conclude 2020 with additional shipments to customers and for Galaxy’s spodumene inventory to return to normal levels.

The drawdown of inventory combined with strong customer indications for demand in 2021 has also led Galaxy to examine the potential ramp up of Mt Cattlin back to full rate in 2021, although there will need to be sustained price increases for us to commit to the return of higher production levels. 

While there is an anticipated lithium demand surge in the medium to long term, the lithium spot price currently remains at multi-year lows. Only time will tell if the spot price will match the bullish sentiment for lithium demand and commitment to renewable energies. 

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Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. 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 Eclipx Group Ltd (ASX: ECX) share price is pushing higher this morning following the release of its full year results.

In morning trade the fleet management company’s shares up 1% to $1.71.

How did Eclipx perform in FY 2020?

Eclipx had a relatively positive year and delivered modest bottom line growth in FY 2020 despite weaker revenues.

For the 12 months ended 30 September, Eclipx recorded a 5% decline in revenue from continuing operations to $672.25 million.

However, improvements in its margins led to earnings before interest, tax, depreciation and amortisation (EBITDA) growing 4.3% year on year to $85.4 million.

Also growing in FY 2020 was its core cash net profit after tax and amortisation (NPATA), which came in 2.2% higher year on year at $47.5 million.

Management notes that against a challenging macroeconomic backdrop, the core fleet and novated business delivered a solid result. It feels this reflects the defensiveness of its underlying business.

Simplification Plan update.

The company also provided an update on its Simplification Plan, which was successfully executed one year ahead of schedule.

This has seen all six non-core divestments completed between July 2019 and August 2020.

It has also led to its $15 million cost reduction target being exceeded on an annualised basis and a 56% reduction in gross corporate debt. The latter is down from $350 million to $155 million, which is ahead of $175 million target.

Management notes that post-simplification, Eclipx is a pure-play fleet management platform, with a clear focus on growth in its three target markets. These are the Corporate, Novated and SME markets.

Outlook.

While no guidance was given for the year ahead, management spoke positively on its prospects.

It commented: “The delivery of the Simplification Plan ahead of schedule places the Group in a position of strength. This position provides the Group with confidence, going into FY21, that it will successfully implement the next phase of its strategy, Strategic Pathways. As the Group progresses through FY21, it will assess the best use of excess capital for shareholders having regard to balancing macro risk and organic growth alternatives.”

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. 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 Douugh Ltd (ASX: DOU) share price is storming higher following the release of announcement today.

At the time of writing the neobank and artificial intelligence-driven financial wellness app provider’s shares are up a sizeable 16% to 32 cents.

What did Douugh announce?

This morning Douugh announced the end of its beta program ahead of a full market launch of the Douugh app in the United States in the coming days following extensive market testing and user feedback.

Douugh’s app is aiming to disrupt the business model of banking by helping people better manage their money and live financially healthier. The company’s vision is to one day become a fully autonomous financial control centre.

Management advised that the end of the beta program also marks the successful completion of a number of significant regulatory and development tasks.

In respect to its regulatory and compliance, the company has received the necessary bank approvals following the implementation and validation of advanced protocols to meet anti-money laundering and Office of Foreign Assets Control (OFAC) regulations. It has also collected significant use case data to train up its artificial intelligence-powered fraud detection engine to guard against account takeover and transactional fraud events.

What else has been done?

Management also advised that the company has been busy developing its app to ensure a superior user experience. This includes app optimisation for the latest Apple iOS software and the new iPhones.

In addition to this, the company has extended its development efforts to in-app functionality. It has made improvements such as users being able to see pending transactions. It has also rigorously tested the platform to ensure it is ready to scale and onboard a significant level of new users in anticipation of launch.

As a result of the above, management expects to submit its app to the Apple App Store on 13 November. A full market launch will be announced upon approval.

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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. 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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