The S&P/ASX 200 Index (ASX: XJO) rose 1.9% last week to finish the week at 6033.6, having received a mid-week boost on hopes of a coronavirus vaccine. The continued buoyancy of the market indicates an accelerated recovery from COVID-19 is being priced in, but experts have warned of ongoing impacts with a vaccine unlikely to be widely available for at least a year.
Investors looked to lock in gains from recent meteoric share price rises last week, rotating out of high flying technology shares such as Afterpay Ltd (ASX: APT). The technology sector weighed on the share market last week with big names dipping sharply. EML Payments Ltd (ASX: EML) fell 6.3%, Megaport Ltd (ASX: MP1) fell 6.9% and Altium Limited (ASX ALU) fell 4.2%.
We take a look at 5 of the worst performing ASX shares last week.
Avita Therapeutics Inc. (ASX: AVH)
The Avita Therapeutics share price fell 19% to finish last week at $6.38. The Avita Therapeutics share price has been dropping since the company provided an update on 10 July that revealed sales below analyst expectations.
Sales of Avita's RECELL System were US$3.79 million in the 4th quarter, a negligible increase over third quarter sales of $3.78 million. At the end of the quarter the company had cash of approximately US$73.4 million, a decrease of US$5.92 million from the end of the previous quarter.
COVID-19 led to challenging commercial conditions for Avita. Nationwide protective orders led to a decrease in the incidence of burns, which its RECELL System is used to treat. Nonetheless, in the quarterly update CEO Mike Perry said the clear benefits of the system, which include shortened hospital stays along with less invasive and fewer surgeries, were continuing to resonate with hospitals and physicians.
In positive news, the company announced last week that the US Department of Health and Human Services would procure the RECELL System to build preparedness for public health emergencies.
Mesoblast Limited (ASX: MSB)
The Mesoblast share price fell 9.5% last week to close the week at $3.32. There was no news out of the regenerative medicine company to prompt the fall in the share price, however the Mesoblast share price remains up 200% from its March low. It may be that investors are taking profits after the surge in the share price. Mesoblast is behind Remestemcel-L, a product that is being trialed in the treatment of seriously ill coronavirus patients.
Remestemcel-L has been used to treat graft versus host disease and is believed to counteract the inflammatory process involved in several diseases. The product has been shown to improve respiratory and functional outcomes in patients with inflammatory lung disease. In the third quarter Mesoblast recorded a 113% increase in revenues which reached US$31.5 million. Loss after tax was reduced by 34% to US$45.3 million, driven by the increase in revenues, and a 15% decrease in research and development spend.
Polynovo Ltd (ASX: PNV)
The Polynovo share price declined 7% last week to finish the week at $2.26. Polynovo is a medical device company producing dermal regeneration solutions using its patented NovoSorb biodegradable polymer technology. Despite announcing a record US sales month in June, the Polynovo share price declined over the week as investors rotated out of the stock. Sales in the June quarter were 33% greater than the March quarter, with the company forecasting FY20 sales will be at least double those of FY19.
In its recent trading update, Polynovo chair David Williams said:
[S]ales are still lumpy but there is a strong upward trajectory as surgeons embrace our product and the patient result it gives. While FY20 sales will show impressive growth over FY19, the sales run-rate is more impressive and should be a better indicator of the near-term future.
Megaport Ltd (ASX: MP1)
The Megaport share price fell 6.9% last week finishing the week at $13.64. There was no news out of the technology company to prompt the drop in the share price, but investors may have been cashing out after the company rebounded strongly from its March low. Megaport shares fell to $6.74 in March but have since gained 102% (at the time of writing).
Megaport operates in the network-as-a-service space, providing bandwidth which allows users to connect with cloud services and data centres. Having launched services in Japan last year, Megaport now operates in 21 countries and is partnered with Microsoft Azure, Google Cloud, IBM, Alibaba, and Oracle. Megaport reported revenue of $25.9 million in 1H FY20, a 70% increase on the prior corresponding period. Profit after direct network costs increased $8.3 million or 173% to $13.2 million.
Afterpay Ltd (ASX: APT)
The Afterpay share price fell 6.8% last week to finish the week at $67.37. This appears to be the result of profit taking with shares in the buy now, pay later (BNPL) provider hitting a high of $73.50 the week before.
Afterpay in fact announced 2 new partnerships last week, which should help expand its market share. A deal with Apple Pay means customers can now use Apple Pay to make purchases through Afterpay in physical retail stores and online. A partnership with Google Pay means customers using this payment method will also be able to utilise Afterpay.
The largest of the ASX BNPL providers by market capitalisation, Afterpay has been a standout in the post-March market recovery. Growing customer numbers and transaction values have driven the share price higher, although Afterpay is yet to achieve profitability. In 1H FY20, the company reported $4.8 billion in underlying sales. Total income increased 105% to $212.2 million, however a statutory loss after tax of $31.6 million was recorded.
