Tag: Stock pick

It’s a sea of red on the crypto boards today, with the Bitcoin (CRYPTO: BTC) price tumbling another 4.8% over the past 24 hours.

At time of writing in late morning trade on Friday, the world’s first and biggest digital token is trading for US$87,038 (AU$134,922). That gives it a market cap of US$1.73 trillion.

Now, that’s still a lofty valuation by longer-term standards. After all, only 10 years ago BTC was trading for just US$400.

But it’s certainly been a painful journey for crypto investors arriving late to the party.

As you may recall, it was only on 7 October that the Bitcoin price rocketed to a new record high of US$126,198, according to data from CoinMarketCap.

Meaning crypto investors who bought at those levels will currently be nursing losses of 31%.

And with the vast majority of major cryptos joining the sell-off, we’ve now seen more than US$1 trillion wiped from the global digital asset sector.

Why is the Bitcoin price falling so hard?

Following the past five weeks rout, the Bitcoin price is now down 8.0% since this time last year. That sees the token significantly underperforming the 1.5% gains delivered by the S&P/ASX 200 Index (ASX: XJO).

Not to mention the 84.9% one-year gains posted by the S&P/ASX All Ordinaries Gold Index (ASX: XGD). An unwelcome reminder, perhaps, to those who’ve lauded the token as ‘digital gold’.

The latest pressure on the Bitcoin price comes on several fronts.

First, investors are significantly paring back expectations of another interest rate cut from the US Fed this year. And Bitcoin has proven to be highly sensitive to interest rates.

Second, the token remains a risk asset. And with the Nasdaq Composite Index (NASDAQ: .IXIC) coming under pressure amid growing fears of a pending AI bubble burst, a lot of crypto investors look to be lightening their Bitcoin exposure, along with sending AI chip maker Nvidia Corporation (NASDAQ: NVDA) shares down 3.2% overnight.

Commenting on the US$1 trillion crypto collapse, said James Butterfill, head of research at CoinShares, said (quoted by Bloomberg), “Investors are stabbing in the dark a bit — they haven’t got any direction on macro, so all they can see is what on-chain whales are doing and they’re getting quite worried about it.”

Matthew Hougan, chief investment officer at Bitwise Asset Management, added:

I think we are closer to the end of the selling than the beginning, but markets are uncomfortable and crypto could have more downside here before it finds a base to recover from.

What about Ethereum?

As mentioned, the Bitcoin price is far from the only one getting hammered lately.

Ethereum (CRYPTO: ETH), the world second biggest crypto, is down 6.3% over 24 hours, currently trading for US$2,847.

The Ethereum price is now down 42.5% since the token notched its own record high of US$4,954 on 25 August.

The post Bitcoin price collapse leads US$1 trillion crypto crash appeared first on The Motley Fool Australia.

More reading

• Why are ASX 200 tech stocks getting smashed on Friday?
• AI bubble worries are rising. Nvidia’s $31.9 billion profit says otherwise.
• Where will Nvidia stock be in 3 years?
• Why DroneShield, GQG Partners, Origin Energy, and Worley shares are falling today
• 5 things to watch on the ASX 200 on Thursday

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 positions in and has recommended Bitcoin, Ethereum, and Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The ASX small-cap stock Emeco Holdings Ltd (ASX: EHL) could be one of the most exciting names to invest in right now, based on what broker Macquarie is predicting for the business.

Macquarie describes Emeco as providing heavy equipment rental solutions and contract mining primarily for the mining industry. It has three different segments: rental, Pit n Portal, and workshops.

The rental segment provides earthmoving equipment to customers in Australia. Pit n Portal includes a range of mining services and related services in Australia. Workshops provides maintenance and component build services in Australia.

Let’s get into what’s appealing about the business.

What’s the appeal of the ASX small-cap stock?

Macquarie was pleased with the recent trading update from the business, which showed “solid momentum” as the business enters FY26 with a strengthened balance sheet.

The company is expecting “moderate earnings growth, significant free cash flow and substantial deleveraging”.

Macquarie forecasts the business could grow its operating profit (EBITDA) by 6% to $319 million in FY26.

In the update, Emeco’s FY26 guidance was largely unchanged, apart from the depreciation range being lifted to between $165 million to $170 million, up from $160 million to $165 million previously.

The broker noted that the ASX small-cap stock remains focused on improving the return on capital (ROC), targeting 20%. It finished FY25 with a ROC of 17% and the current run-rate is around 18%. The company is also focused on converting earnings into free cash flow.

Macquarie believes sustained equipment utilisation and operational improvements remain critical.

The broker pointed out that in FY26, Emeco will drive cost efficiencies and increase its focus on business development to support higher utilisation, expand market share through new project opportunities, and grow fully maintained projects through the Force business.

How is the mining industry performing?

As a business heavily involved in serving the mining industry, Emeco’s success is partly linked to the performance of the sector. Macquarie commented on the sector as a whole:

The outlook for FY26 remains positive. Australian mining production volumes are expected to remain buoyant, supported by continued demand for commodities. In particular, bulk commodities is forecast to remain robust (iron ore and coal), driving demand for large mining equipment and rental solutions. Strength in the gold sector, where EHL’s rental and maintenance solutions can drive improved production and returns for clients, also presents growth opportunities for the company.

How attractive is the ASX small-cap stock’s valuation?

Macquarie identifies several potential catalysts for the business, including ongoing deleveraging, margin improvements, generating free cash flow to reduce outstanding debt, and potential capital management initiatives (such as dividends and share buybacks). It’s expecting a capital management update after refinancing its debt facilities.

The broker has a price target of $1.40, implying a potential 12-month rise of 12% from its current level, as well as a possible annual dividend of 5 cents per share, which equates to a dividend yield of 4%. That implies a possible total return of 16% over the next 12 months.

The post Macquarie tips 16% upside for this ASX small-cap stock appeared first on The Motley Fool Australia.

More reading

• Bitcoin price collapse leads US$1 trillion crypto crash
• Up 65% this year: Are Charter Hall Group shares still a buy?
• Macquarie tips 23% upside for this ASX 200 stock
• Why are ASX 200 tech stocks getting smashed on Friday?
• Does Macquarie rate a2 Milk shares a buy, hold, or sell?

Motley Fool contributor Tristan Harrison 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. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Charter Hall Group (ASX: CHC) shares have jumped to an all-time high of $23.92 a piece at the time of writing on Friday morning. Today’s 1.18% increase means the stock is now 4.59% higher over the month. It is also 64.97% higher than this time last year. 

The shares have spiked over 7% since yesterday afternoon. The share price spike was driven by the Australian property investment and funds management company upgrading its FY26 earning guidance.

Investors were thrilled that the group raised its FY26 OEPS guidance by 5.5% to 95 cents per security. The upgrade reflects a 16.7% increase over FY25. The move was driven by strong investment activities and rising revenues.

Charter Hall Group will announce its H1 FY26 Results on 19 February 2026. Its management expects demand for its property funds and further investment opportunities to continue across all core sectors.

Following Charter Hall Group’s announcement yesterday, analysts at Macquarie Group Ltd (ASX: MQG) have updated their outlook on the company’s shares.

Macquarie upgrades its rating on Charter Hall Group shares

In a note to investors, the broker said it has upgraded the company’s shares from underperform to neutral. The broker also raised its target price to $23.83, up from $19.01 previously.

At the time of writing that still represents a potential 0.37% downside for investors over the next 12 months.

“Valuation: TP +25% to $23.83 ($19.01 prior) driven by earnings changes and a higher multiple on FM (16x to 21x) to reflect the improving cycle,” Macquarie said in its note.

Upgrade to Neutral $23.83 TP. Operational metrics continue to improve, resulting in consistent earnings upgrades. However, valuation prevents us from getting more positive with CHC trading on 25x FY26 P/E (~17x LTA).

What did the broker have to say about Charter Hall Group’s earnings upgrade?

The company’s FY26 OEPS guidance is a 5.5% increase, implying 17% OEPS growth versus the prior corresponding period. The broker noted that the upgrade is driven by an acceleration in transaction volumes since June 2025. This has fuelled increased earnings across Property Investment, Development Investment and Funds Management revenue lines. 

The new FY26 OPES guidance of 95 cents is higher than previous market expectations and Macquarie estimates of 91.2 cents and 90 cents respectively.

[The] +5.5% upgrade vs our expectations follows a 3.0% beat when initial FY26 guidance was set and upgrades through FY25. CHC is trading on ~25x FY26 P/E, a peak multiple, which the market seems comfortable with currently. Whilst we are attracted to CHC’s 3-year OEPS CAGR forecast of 13% and prospects of further earnings upgrades, we struggle to justify the valuation from a bottom up perspective and get more positive, without reverting to relative value methods (e.g. PEG).

The post Up 65% this year: Are Charter Hall Group shares still a buy? appeared first on The Motley Fool Australia.

More reading

• Does Macquarie rate a2 Milk shares a buy, hold, or sell?
• Invested in ASX mining shares? Expert recommends diversity over iron ore concentration
• Here are the top 10 ASX 200 shares today
• Charter Hall upgrades FY26 earnings guidance amid strong property momentum
• Why Macquarie expects this fast-rising ASX 200 dividend stock to keep outperforming in 2026

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 Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Engineering firm Worley Ltd (ASX: WOR) has reiterated this week that it expects moderate growth in the current financial year, but if the team at Macquarie are to be believed, the stock is relatively cheap at current levels.

Speaking at the company’s annual general meeting held on Thursday this week, chief executive officer Chris Ashton said Worley had delivered a strong result in FY25, “in a complex global environment marked by economic and political shifts which impacted our customers’ investment decisions”.

He went on to say:

Our result reflects the fourth year of consistent growth in revenue, earnings and margin through the disciplined execution of our strategy.

Steady growth the target

The company’s strategy going forward, he said was defined by the three pillars of strengthen, expand and innovate.

Worley, Mr Ashton said, was also not seeking to chase large “lump-sum” projects, preferring to secure longer-term, sustainable work.

Our overall mix of work is anchored in lower-risk reimbursable contract models. This is deliberate. It supports our quality of earnings, protects downside and aligns our incentives with our customers’ success.

On the outlook for the current year, Mr Ashton said, as previously announced in August, the company was expecting “moderate growth”, with more work weighted to the second half of the year than was usual.

We’re targeting higher growth in revenue than FY25 and growth in underlying EBITA. Whilst we continue to operate in a challenging environment, we remain confident in the strength of our diversified business model, global scale and capability, and market trends which continue to support medium to long-term growth.

Shares looking cheap

The Macquarie team have had a look at Worley’s projections, and believe the shares look like good value buying at the moment.

The Macquarie analysts said it was encouraging that there were buoyant conditions flagged in the areas of resources and liquefied natural gas, and said “we think (the) US power sector is prospective and AI adoption could provide market upside”.

Macquarie now has a $15.75 price target for Worley shares (reduced from $16), compared with the close of $13.22 on Thursday.

Factoring in dividends this would equate to a total shareholder return of 22.8% if that share price were achieved.

Worley narrowly avoided recording a first strike vote against its remuneration report at Thursday’s AGM, with 20.3% of votes cast going against its adoption, where 25% equates to a first strike under Australia corporations law.

The post Macquarie tips 23% upside for this ASX 200 stock appeared first on The Motley Fool Australia.

More reading

• Why DroneShield, GQG Partners, Origin Energy, and Worley shares are falling today
• Worley holds AGM after growing revenue and maintaining its dividend in FY25
• 7 ASX 200 shares upgraded to strong buy ratings
• Macquarie tips 15% upside for this ASX 200 stock
• 2 ASX shares highly recommended to buy: Experts

Motley Fool contributor Cameron England 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.

S&P/ASX 200 Index (ASX: XJO) tech stocks are having a day to forget.

In morning trade on Friday, the ASX 200 is down 1.6%.

The tech sector is broadly mirroring those steep losses, with the S&P/ASX All Technology Index (ASX: XTX) – which also contains some smaller tech companies outside of ASX 200 tech stocks – down 1.7% at this same time.

Here’s how some of Australia’s biggest tech shares are faring on Friday:

• Shares in cloud-based software solutions provider WiseTech Global Ltd (ASX: WTC) are down 1.7%
• Shares in software-as-a-service provider Technology One Ltd (ASX: TNE) are down 2.9%
• Shares in data centre operator NextDc Ltd (ASX: NXT) are down 2.2%
• Shares in location-sharing software developer Life360 Inc (ASX: 360) are down 2.4%
• Shares in accounting software provider Xero Ltd (ASX: XRO) are down 1.8%

Ouch!

Here’s what’s got Aussie investors spooked today.

ASX 200 tech stocks in the red

Aussie investors are taking their cue from US stock markets, which finished sharply lower on Thursday.

Overnight, the S&P 500 Index (SP: .INX) closed down 1.6%. And the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) ended the day down 2.2%.

AI chip-making giant Nvidia Corp (NASDAQ: NVDA) underperformed those losses, closing down 3.2%.

ASX 200 tech stocks, and indeed the broader global stock markets, are catching headwinds on a few fronts.

First, the odds of another interest rate cut from the US Federal Reserve in 2025 are receding. While most Australians were asleep, Fed Governor Michael Barr threw more cold water on a December rate cut, noting the central bank needs to be careful before moving forward with any more interest rate cuts.

The RBA has also signalled it is unlikely to reduce rates anytime soon. And technology-focused companies, often priced with future growth in mind, tend to be very sensitive to interest rate expectations.

Another stiff headwind battering ASX 200 tech stocks today is the growing concern of an AI investment bubble. That’s despite Nvidia’s strong earnings results this week.

What are the experts saying?

Commenting on the US market pullback that’s dragging ASX 200 tech stocks lower on Friday, Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute, said (quoted by Bloomberg):

The Nvidia results, while positive, weren’t enough to dispel doubts around whether valuations had gotten too rich and whether the recent move towards debt-based financing meant the investment levels were too aggressive without enough focus on shareholder returns.

A number of analysts are also pointing to the huge pullback in the Bitcoin (CRYPTO: BTC) price, noting the world’s first and biggest crypto could be a proverbial canary in a coal mine.

Steve Sosnick, chief strategist at Interactive Brokers Group, said, “One of the things I’m watching right now is Bitcoin back to flirting with US$90,000 because, like it or not, it’s become a real proxy for risk tolerance overall among investors.”

Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, added (quoted by The Australian Financial Review), “With Nvidia earnings now behind us and the Fed unlikely to cut in December, investors are left questioning what remains to drive a year-end rally.”

Still, with most ASX 200 tech stocks now well off their highs, I reckon it’s only a matter of time before bargain hunters with long-term investment horizons begin to offer support.

The post Why are ASX 200 tech stocks getting smashed on Friday? appeared first on The Motley Fool Australia.

More reading

• Bitcoin price collapse leads US$1 trillion crypto crash
• Why are WiseTech Global shares tumbling 4% today?
• AI bubble worries are rising. Nvidia’s $31.9 billion profit says otherwise.
• 3 ASX 200 shares that could be top buys for growth
• 3 ASX shares I’d buy with $20,000 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 positions in and has recommended Bitcoin, Life360, Nvidia, Technology One, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Bitcoin, Life360, WiseTech Global, and Xero. The Motley Fool Australia has recommended Nvidia and Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

A2 Milk Company Ltd (ASX: A2M) shares have been strong performers this year.

Since the start of 2025, the infant formula company’s shares have risen a sizeable 60%.

Does this mean it is too late to invest? Let’s see what analysts at Macquarie Group Ltd (ASX: MQG) are saying about the stock following its trading update.

What is the broker saying?

Macquarie notes that A2 Milk has upgraded its guidance for FY 2026 thanks to stronger than expected performances across all segments. It said:

The increased FY26 revenue outlook (~+3pp) was broad-based across IMF, other nutritionals and liquid milk, while lower NZD was also a contributor – we think roughly half of uplift, while FX benefits will be stronger in FY27.

Another positive is that the company reported a stabilisation in the China market and favourable marriage data. In addition, Macquarie points out the company’s opportunity in the Vietnam market, where sales are growing strongly. It adds:

A2M see the China IMF market backdrop as stabilising which has been a positive factor and recent marriage data could be supportive of shallower CY26 birth normalisation, while less impact from supply chain disruption than anticipated has aided guidance. Vietnam was also called out as growing strongly and an attractive opportunity (~$2b market with 1.4m annual births). Some of the newer products including Genesis and fortified Nutritionals are tracking well.

Macquarie also highlights that management has reaffirmed plans to pay a NZ$300 million special dividend. And while the process is taking longer than expected, the broker believes that the more it drags out, the more likely that A2 Milk will pay out even more. It said:

A2M reiterated its intention to declare $300m special dividend subject to approvals in amending the two existing Pokeno CL registrations, and an update is expected in the next 12 months. The longer the timeframe to amend these registrations, the more we see the potential for a larger capital return given FCF generation across the business.

Should you buy A2 Milk shares?

In response to the update, the broker has retained its outperform rating on A2 Milk’s shares with an improved price target of $9.50 (from $8.70).

Based on its current share price of $9.21, this implies modest upside of 3.1% from current levels.

Though, with the broker forecasting a 2.2% dividend yield this year and a 6.4% dividend yield the year after, this does make things more attractive.

Commenting on its recommendation, the broker said:

Maintain Outperform while acknowledging valuation is elevated against history, while part of this is reflecting initial Pokeno losses (~4x to FY26 PER). Continuation of strong execution will allow for ongoing momentum, while Pokeno sets A2M up for strong med-long term growth, with reduced risks.

The post Does Macquarie rate a2 Milk shares a buy, hold, or sell? appeared first on The Motley Fool Australia.

More reading

• Up 65% this year: Are Charter Hall Group shares still a buy?
• Invested in ASX mining shares? Expert recommends diversity over iron ore concentration
• Why Macquarie expects this fast-rising ASX 200 dividend stock to keep outperforming in 2026
• Top Australian stocks to buy right now with $5,000
• A2 Milk shares slip despite guidance upgrade

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. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Zip Co Ltd (ASX: ZIP) share price is $2.88, down 3% on Friday and down 30% over the past month.

The buy now, pay later (BNPL) stock has had a lacklustre first half in FY26 after a rip-snorting period of growth, rising 110% in FY25.

Zip shares maintained momentum in early FY26, but began falling after the company released its 1Q FY26 results on 20 October.

The Zip share price fell 12.4% in October despite a strong first-quarter update, including upgraded FY26 transaction volume guidance.

Zip reported record cash earnings of $62.8 million, up 98.1% year on year, reflecting an operating margin of 19.5%.

The US segment delivered year-on-year TTV and revenue growth of 47.2% and 51.2% respectively.

The ANZ business achieved double-digit TTV growth.

What’s behind the 30% Zip share price dive?

Blackwattle Investment Partners said Zip was among the worst performers in its Small Cap Quality Fund last month.

Portfolio managers, Robert Hawkesford and Daniel Broeren, said the Zip share price fell due to worries about US credit quality.

This followed the collapse of sub-prime auto lender, Tricolor, amid fraud allegations; the bankruptcy of auto parts supplier, First Brands; and an increase in Zip’s bad debts in the US.

In their latest update, the managers said:

While the direction of bad debts is negative, we highlight it has only reached the bottom end of Zip’s bad debt target range, and an increase is expected with strong transaction volume growth.

While negative sentiment is pulling the Zip share price down, the managers said the underlying fundamentals of the business are strong.

… the underlying fundamentals and outlook for Zip remain strong and we see meaningful upside from both a re-rating of the stock and the ongoing penetration of BNPL products in the US which has a significant runway, sitting at only ~2% today, vs ~15% and ~20% in Australia and Europe respectively.

At the annual general meeting on 6 November, management said the company remained on track to deliver its upgraded FY26 guidance.

In a speech, Group CEO and managing director Cynthia Scott said:

We remain on track for our FY26 results to all be within target ranges as previously announced to the market in August and will report on progress at our first half results in February.

Scott said Zip had three strategic priorities for FY26: growth and engagement, product innovation, and platforms for scale.

The decline in the Zip share price presents a buy-the-dip opportunity, according to some experts.

Macquarie recently began covering Zip shares with a buy rating and a 12-month price target of $4.85.

The post Zip share price plunges 30% in a month but fundie tips ‘meaningful upside’ ahead appeared first on The Motley Fool Australia.

More reading

• $10,000 invested in Zip shares in January is now worth…
• These were the 10 most-traded Australian shares last week
• Why are Zip shares down 23% in a month, and what was revealed at the AGM today?
• ASX on fire: 4 momentum stocks to buy right now
• 7 ASX 200 shares upgraded to strong buy ratings

Motley Fool contributor Bronwyn Allen has positions in Zip Co. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Shares in Lovisa Holdings Ltd (ASX: LOV) were sold down sharply on Friday morning after the company announced like for like sales growth figures which missed consensus estimates by a wide margin.

The jewellery retailer said in a statement to the ASX that global total sales for the first 20 weeks of FY26 were up 26.2% on the same period in FY25, while comparable store sales were up 3.5%.

New store openings driving growth

The large growth in total sales came from the company opening a number of new stores, as it said in a statement on Friday.

We continue to maintain our focus on expanding our global store footprint across all markets in which we operate, with 44 net new stores opened for the financial year to date, including 62 new stores opened and 18 closures (including 6 relocations). This has taken the store network to 1,075 stores across more than 50 markets, and we are currently trading from 148 more stores than this time last year.

But while the overall sales growth figures were strong, RBC Capital Markets said on Friday morning that same-store sales missed expectations by a significant margin.

As RBC said:

Total sales for the first 20 weeks for Lovisa have been solid, up 26% on the previous corresponding period, tracking ahead of consensus expectations of 22% for 1H26. However, on a like for like basis, 3.5% is below consensus expectations of 5.3% and showed a deceleration from Lovisa’s August trading update of 5.6%.

RBC also noted that no details were given in the brief trading update released to the ASX about why sales were slow.

We believe this dynamic could be an outcome related to store roll-outs in higher revenue regions. We note the company has previously highlighted that stores in these regions will also exhibit higher cost of doing business.

Analysts divided on the outlook

Macquarie recently issued a research note on Lovisa, with a price target of $40.90 on the stock.

They noted that the collapse of a key competitor, tween fashion retailer Claire’s, which operated about 2,750 stores across 17 countries, could be a positive for Lovisa, both in terms of capturing more market share and potentially acquiring some of its stores.

Macquarie said, for example, there were 57 stores in the UK, “that could provide geographic diversification benefits” were Lovisa to have the opportunity to purchase them.

The team at Citi has an even more bullish price target on Lovisa, recently publishing a price target on the stock of $42.50.

RBC, meanwhile, has a price target of $26 on Lovisa shares.

Lovisa shares were 10.3% lower on Friday morning at $31.22.

The post Lovisa shares tank more than 10% on weaker than expected sales growth appeared first on The Motley Fool Australia.

More reading

• Lovisa holds AGM; provides a positive trading update
• 5 things to watch on the ASX 200 on Friday
• The high-conviction ASX stocks I’d buy and hold forever
• Here are the top 10 ASX 200 shares today
• Top brokers name 3 ASX shares to buy today

Citigroup is an advertising partner of Motley Fool Money. Motley Fool contributor Cameron England 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 Lovisa and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Artificial intelligence (AI) stocks have been in fine form on the stock market in 2025, and this is evident from the healthy gains of 21% clocked by the tech-laden Nasdaq Composite index so far this year.

AI stocks such as Nvidia, Broadcom, AMD, Palantir, and others have delivered outstanding gains to investors in 2025. However, not all companies benefiting from the AI revolution have turned out to be great investments. Meta Platforms (NASDAQ: META) is one such name.

The “Magnificent Seven” stock is up just 4% this year, and that’s because it has witnessed a sharp pullback of late. The stock fell substantially after releasing its third-quarter results on Oct. 29. A massive noncash tax charge that led the company to miss Wall Street’s earnings estimates, and Meta’s decision to boost capital spending to fund its AI initiatives have been weighing on its shares of late.

However, it won’t be surprising to see this tech giant regain its mojo and deliver stronger gains than some of the more popular AI stocks that have outperformed it this year. Let’s see why that may be the case. 

Meta Platforms’ AI efforts are paying off

Meta Platforms reported an impressive year-over-year increase of 26% in Q3 revenue to $51.2 billion. The company’s non-GAAP earnings would have landed at $6.73 per share as compared to the year-ago period’s reading of $6.03 per share had it not been for the $15.9 billion non-cash income tax charge related to the implementation of the “big, beautiful bill.”

Importantly, Meta management believes that it will “recognize significant cash tax savings for the remainder of the current year and future years under the new law.” What’s worth noting is that Meta’s earnings would have increased by double digits (excluding the impact of the tax charge). That’s impressive considering that its costs and expenses increased by 32% year over year in Q3, exceeding its revenue growth.

AI is a key reason why Meta’s bottom line is increasing at a healthy pace despite the higher spending. The company’s AI-driven content recommendations are leading to higher engagement on its social media properties. Specifically, Meta saw a 5% jump in the time spent on Facebook last quarter, along with a 10% jump in time spent on Threads.

This higher engagement combined with Meta’s AI-powered ad tools is contributing to an increase in ad impressions delivered, as well as an increase in the average price per ad. Meta’s ad impressions across its family of apps increased by 14% year over year in Q3. Additionally, the average price per ad jumped by 10%.

It is easy to see why that’s the case. Meta’s AI advertisement solutions are delivering a 22% increase in return on ad spend as compared to non-AI ad tools. The company points out that “for every dollar U.S. advertisers spend with Meta, they see a $4.52 return when they use our new AI-driven advertising tools.”

Not surprisingly, Meta says that it has already achieved an annual revenue run rate of over $60 billion for its end-to-end AI-equipped advertising tools. That suggests Meta generated $15 billion in revenue last quarter from its AI-powered ad tools. This puts the company on track to corner a sizable chunk of the $107 billion revenue opportunity that the adoption of AI tools within the marketing space is expected to create by 2028.

Given that Meta is on track to end 2025 with $198.5 billion in revenue, the AI-related opportunity within advertising should eventually allow the company to deliver solid incremental growth over the next three years.

But what about the expenses?

Meta is going all out to build more AI-equipped tools. This explains why the company is now on track to reach $71 billion in capital expenses this year as compared to its earlier expectation of $69 billion. That’s a big jump over the $39.2 billion that Meta spent in 2024. What’s more, the company points out that its expenses will grow at a faster rate in 2026.

This is a key reason why Meta stock has struggled of late, as investors are probably questioning the rationale behind the heavy AI-related spend the tech giant is incurring. But the good part is that AI is indeed driving tangible growth for Meta, as we saw in the discussion above. That’s why it makes sense for the company to continue investing more in AI infrastructure and talent.

This probably explains why analysts have raised their revenue forecasts for Meta.

META Revenue Estimates for Current Fiscal Year data by YCharts

Even better, investors are now getting a good deal on this stock. It is trading at 8.3 times sales, which is lower than the U.S. technology sector’s average price-to-sales ratio of 9.1. Assuming Meta hits $271 billion in sales at the end of 2027 and trades in line with the tech sector’s average, its market cap could jump to $2.46 trillion.

That suggests a potential jump of nearly 60% from its current market cap. However, the fast-growing adoption of AI tools in the ad space and the head start that Meta has over here suggest that it could end up delivering faster growth, and that could set the stock up for bigger gains. That’s why it would be wise for investors to buy this underperforming tech stock before it steps on the gas.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Prediction: This AI stock could quietly outperform Wall Street favorites appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• US stocks will underperform over next decade: Goldman Sachs
• 2 “Magnificent Seven” stocks to buy before they soar at least 20%, according to select Wall Street analysts
• The 3 US stocks could make ASX investors very rich
• Meta Platforms stock: Should you buy the post-earnings dip?
• Why is Wall Street so bearish on Meta? There’s 1 key reason.

Harsh Chauhan 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 Advanced Micro Devices, Meta Platforms, Nvidia, and Palantir Technologies. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Broadcom. The Motley Fool Australia has recommended Advanced Micro Devices, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Reece Ltd (ASX: REH) share price is in focus after the company released a trading update. The plumbing and HVAC distributor reported 8% revenue growth to $2.41 billion for 1Q FY26, while EBITDA fell 8% to $222 million.

What did Reece report?

• Group sales revenue of $2,407 million, up 8% on prior year (6% on constant currency basis)
• Like-for-like sales increased 2%, with low single-digit growth in ANZ and decline in US
• EBITDA down 8% to $222 million
• EBIT decreased 18% to $129 million, impacted by higher depreciation and amortisation
• Added 15 net new branches during the quarter (5 in ANZ, 10 in US)
• Completed $365 million off-market share buyback at $13.00 per share

What else do investors need to know?

Reece’s sales growth was underpinned by ongoing network expansion across Australia, New Zealand, and the United States, even as underlying markets remained subdued. The company noted elevated costs related to growth investments and labour cost inflation, especially in the US.

The recently completed off-market share buyback returned $365 million to shareholders, funded through a mix of cash and debt. Reece expects gross interest expense on debt and borrowings to be between $65 million and $75 million for FY26.

What did Reece management say?

Peter Wilson, Chair and CEO, said:

As we expected, the first quarter was soft reflecting subdued housing markets. Sales were supported by network expansion over the past 12 months. Costs remain elevated driven by network growth, ongoing investment in core capabilities and the impact of labour cost inflation in competitive markets, especially the US. We are still expecting a period of soft activity in both regions. We have navigated cycles before and, as ever, take a long-term view and will continue to invest to build a stronger business for our team and customers.

What’s next for Reece?

Reece continues to focus on network growth and investing in its core capabilities, despite the soft market environment in both ANZ and the US. Management remains committed to a long-term approach and building resilience for future cycles.

Shareholders can expect ongoing investment to support both expansion and operational improvements, while the group manages costs and monitors borrowing levels following the recent buyback.

Reece share price snapshot

Over the past 12 months, Reece shares have declined 55%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 3% over the same period.

View Original Announcement

The post Reece 1Q FY26: Revenue growth, profit margin pressures, and a $365m buyback appeared first on The Motley Fool Australia.

More reading

• Sims holds AGM following a strong FY25 earnings report
• Lovisa holds AGM; provides a positive trading update
• 3 ASX 200 shares that could be top buys for growth
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Laura Stewart 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.