Tag: Stock pick

Superloop Ltd (ASX: SLC) and Aussie Broadband Ltd (ASX: ABB) are both Australian telecommunications companies with a lust for growth through acquisitions. Their shares have both seen robust growth over the past 6 months, thanks to solid financial results and expanding customer bases.

At the time of writing, Aussie Broadband shares are in deficit, down 2.82% for the day at $5 a piece. Today’s decline means the shares are now 14.62% lower over the month and 16% lower than their 3.5-year peak in late October. Thanks to huge gains over the past 6 months, Aussie Broadband shares are still 37.98% higher over the year.

Superloop shares are also trading in the red this afternoon. At the time of writing, the shares are 5.17% lower for the day, trading at $2.30 each. The decline has pushed the shares 29.82% lower over the month, but they’re still 11.71% higher over the year, again, mostly owing to strong gains since May.

In a new note to investors this morning, analysts at Macquarie Group Ltd (ASX: MQG) have updated their outlook on the two shares. And there is one clear winner.

Macquarie’s take on Aussie Broadband shares

The broker has lowered its outlook on Aussie Broadband shares to neutral, from outperform. It has also cut its 12-month price target on the stock by 20% to $5.10, from $6.35 previously.

At the time of writing, the revised price target implies a potential 2% upside for investors over the next 12 months.

“Our ABB target price cut of -20% reflects: 1) EPS Change: Revisions of -3% in FY26E, -7% in FY27E, -9% in FY28E…. 2) DCF: Beta increase from 1 to 1.2, reflecting increased potential volatility from pricing changes if OPT/TPG/Vodafone also lower prices, or TLS continues to lower prices further…. 3) PE-Rel Valuation: P/E Multiple used to value the business reduced from 37x NTM P/E to 30x P/E on NTM earnings, which represents a decrease to only +10% above its historical Long-Run Average P/E Relative to the ASX300,” the broker said in its note.

“Our rating change to Neutral reflects a lower TSR (0%), given our target price change.”

Macquarie’s take on Superloop shares

Macquarie analysts have, however, maintained their outperform rating on Superloop shares, putting the telco as the favourite. The target price was also reduced by 7% to $3.30, down from $3.55 previously.

At the time of writing, this represents a potential 43.5% upside for investors over the next 12 months.

“Our SLC target price cut of -7%, reflects: 1) EPS Changes: Our EPS changes (-4% in FY26E & FY27E, -3% in FY28E) reflect a moderation in our estimates for Users growth in SLC’s Consumer business…. 2) DCF: Beta increase from 1.05 to 1.15, reflecting increased potential volatility from competitor pricing moves,” Macquarie analysts explained in the note.

The post Superloop vs Aussie Broadband shares: Which has the strongest upside? appeared first on The Motley Fool Australia.

More reading

• Up 30% this year, how much further upside does Macquarie predict for Superloop shares?
• Superloop posts strong revenue growth and its first net profit since 2020
• Up 60% this year and tipped to storm even higher: Watch out for this ASX All Ords telco stock
• Brokers rate these 3 top ASX shares as buys in November
• 2 ASX shares highly recommended to buy: Experts

Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Aussie Broadband and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Aussie Broadband. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Steadfast Group Ltd (ASX: SDF) shares are having a tough session on Wednesday.

In afternoon trade, the insurance broker network’s shares are down 5% to $5.10.

Why are Steadfast shares sinking today?

Today’s decline appears to have been driven by the release of a broker note out of Macquarie Group Ltd (ASX: MQG) this morning.

Macquarie has been looking into the industry and highlights that commission rate cuts are accelerating. It said:

Our market analysis has uncovered an accelerating pace of commission rate cuts. Although Home and Personal Motor products are generally not profitable for insurance brokers, as these products are pushed into the direct channel, we are concerned customer retention for Business Package could deteriorate.

In addition, the broker thinks that the weakness in premium rates that Steadfast has been battling could stay for longer than previously expected. It adds:

We now forecast weakness to last longer than the next 12 months, putting pressure on SDF’s ability to hub their wholly owned insurance brokers, which has not necessarily been successful in the past.

This comes at a time when the ASX 200 stock has announced a change of leadership, which is something Macquarie notes can weigh on the performance of a share price. The broker explains:

Our ESG analysts recently reviewed stock price performance for companies undergoing executive changes. 12-month underperformance was witnessed across founder exits, internal replacements and ESG related exits.

Downgraded

In light of the above, this morning Macquarie has downgraded Steadfast shares to a neutral rating (from outperform) and slashed its valuation to $4.90 (from $7.00). This is a touch below where its shares are currently trading.

Commenting on its downgrade and new valuation, the broker said:

Downgrade to Neutral (from Outperform). As commission rates fall and the premium rate cycle threatens to be softer for longer, we downgrade our recommendation to Neutral (from Outperform).

Valuation methodology change: In addition to changing our PERel/DCF methodology to PERel only as the premium cycle slows, we now incorporate a 25% discount reflecting: #1) heightened regulatory attention for Strata, ACCC M&A intervention; ASIC insider trading investigation; #2) increased weight applied to cost-out as the premium rate cycle slows, something which has not been successful in the past; and #3) long term succession risk of the Group CEO at the same time as the CFO and Chair have exited.

The post Why are Steadfast shares sinking 5% today? appeared first on The Motley Fool Australia.

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• James Hardie shares tipped to soar another 53%: Here’s why
• Are these 2 ASX 200 media stocks ready to rebound?
• Macquarie tips more than 20% upside for this ASX mining stock
• Buy, hold, sell: APA Group, Macquarie, and Rio Tinto shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group and Steadfast Group. The Motley Fool Australia has positions in and has recommended Macquarie Group and Steadfast Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) is up a slender 0.05% in early afternoon trade, but it’s not getting any help from these three ASX 200 stocks that are all plumbing 52-week-plus lows today.

Here’s what’s happening.

ASX 200 stocks sinking to 52-week-plus lows

The first company trading at one-year lows today is News Corp (ASX: NWS).

Shares in the diversified media conglomerate are down 0.3% at the time of writing, trading for $44.10. That’s the lowest price since early November last year, with News Corp shares having closed in the red for the previous six trading days.

That selling follows a positive response to the ASX 200 stock’s first-quarter (Q1 FY 2025) update, released on 7 November.

News Corp shares closed up 3% on the day, with the company reporting a 2% increase in revenue for the quarter to US$2.14 billion. Earnings before interest, taxes, depreciation and amortisation (EBITDA) were up 5% to US$340 million.

Moving on to the second ASX 200 stock plumbing to one-year lows, we have Guzman Y Gomez (ASX: GYG).

Shares in the Mexican fast-food restaurant chain are down 4.2% at the time of writing, changing hands for $22 apiece. That’s certainly unwelcome news to shareholders. Though not to the raft of short-sellers betting against the stock. Guzman Y Gomez shares are the sixth most shorted on the ASX this week, with a short interest of 11.8%.

Guzman Y Gomez began trading on the ASX on 20 June 2024, and shares are now at the lowest level since the company listed.

Which brings us to…

Also plunging to new all-time lows

The third ASX 200 stock marking new 52-week plus lows is TPG Telecom Ltd (ASX: TPG).

Shares in Australia’s third-largest telecommunications company are down 4% in afternoon trade today, at $3.65 each, after exiting Monday’s trading halt. That marks a new all-time low for the stock.

TPG Telecom shares are under pressure today after the company announced it had raised $300 million through an Institutional Reinvestment Plan. TPG issued about 83 million new shares for $3.61 each. That’s a 5% discount to last Friday’s closing price of $3.81.

Speaking of last Friday, the ASX 200 stock closed down a precipitous 31.1% on the day.

However, as the Motley Fool’s James Mickleboro noted on the day, the sell-down wasn’t nearly as tough for existing shareholders as you might think.

That’s because TPG Telecom traded ex-dividend on Friday for an outsized capital return. That was comprised of a $1.52 per share capital reduction and a 9-cent per share unfranked dividend.

That saw investors achieve a whopping 28.8% yield relative to the previous day’s closing price.

The post 3 ASX 200 stocks plumbing 52-week lows today appeared first on The Motley Fool Australia.

More reading

• Why Ausgold, DroneShield, EML, and TPG shares are falling today
• TPG Telecom raises $300m in Institutional Reinvestment Plan
• Brokers say buy: 3 ASX 200 shares at 52-week lows today
• TPG Telecom provides Triple Zero update and investor plan progress
• Why are TPG Telecom shares in a trading halt today?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.