In morning trade, the ASX small cap stock is rocketing 43% to 16.5 cents.

Why is this ASX small cap stock rocketing?

Investors have been bidding the tertiary education services provider's shares higher today after it announced a major agreement.

According to the release, the ASX small cap stock has signed an agreement with IH Sydney Training Services and its administrators.

This will see it provide an exclusive right to re-enrol approximately 1,800 English language and vocational students, and to acquire relevant course materials from IH, in Sydney, Melbourne, Adelaide and the Gold Coast.

The company stresses that it is not acquiring a legal entity or a business. No leases or premises are being acquired, nor will any employees be automatically transferring to NextEd.

Rather, students that elect to re-enrol will transition to existing NextEd campuses improving campus utilisation rates, and cashflow.

At present, the small cap ASX stock estimates that approximately 950 English language students and 850 vocational students will re-enrol from IH Sydney Training Services to NextEd. This represents an approximate increase of 30% of English language students and 25% of Vocational students.

Re-enrolment activities, including providing new student agreements and enrolling students into NextEd courses, will take place over the next two weeks with students continuing their studies with the company in the new year.

What are the terms?

The release notes that NextEd will pay $0.7 million to acquire the exclusive rights and course materials. The transaction will be funded from existing cash reserves and completion is scheduled for 20 December.

It is expected to be earnings accretive from the second half of FY 2025 with incremental revenues in the range of $6 million to $7 million for the period. This is based on the expected student re-enrolments, student payments already made, and study durations.

NextEd has agreed to honour any prior student payments made to IH so as not to disadvantage any student re-enrolling.

The ASX small cap stock's CEO, Mark Kehoe, was delighted with the deal. He said:

This is a great outcome for students and for NextEd. We are delighted to be able to assist IH's students to complete their education with us. NextEd's position as one of Australia's largest providers of English Language and Vocational Training means we are uniquely equipped to step in and deliver continuity for students during challenging circumstances. Our ability to act swiftly during market disruptions highlights our capacity and commitment to supporting students and maintaining high education standards.

The post This ASX small cap stock just rocketed 40%! Here's why appeared first on The Motley Fool Australia.

Here's what the broker is saying about them:

LGI Ltd (ASX: LGI)

The first small cap ASX share that has been named as a buy is LGI.

It is the local market leader in the recovery of biogas from landfill, and the subsequent conversion into renewable electricity and saleable environmental products.

Bell Potter was pleased with news that the company has signed a long-term gas management agreement with Bingo Industries, and its subsidiary Dial A Dump, covering the Eastern Creek Landfill site in Western Sydney. The broker commented:

In our view, a contract of this significance further validates LGI's position as an industry leader in biogas recovery, which we view as a significant growth market to facilitate the transition to net-zero. The net result of our changes are minor downgrades to our FY24 estimates but more substantial upgrades to our long-term forecasts based on increased biogas flows from the new Eastern Creek Landfill project, which drives our upgrade to a BUY recommendation.

Bell Potter has upgraded its shares to a buy rating with an improved price target of $2.55. This implies potential upside of 23% for investors.

Nexted Group Ltd (ASX: NXD)

Another small cap ASX share that has been named as a buy is Nexted. It is a provider of tertiary education services to international and domestic students.

Bell Potter notes that Nexted has just released a trading update and guidance for FY 2024. The broker concedes that the update was modestly softer than it was expecting. It explains:

NXD expects to report 1H24 revenue +36% YoY to $59.2m (vs. BPe $59.8m) which is at the lower end of the guidance range as previously flagged ($59.0m-$63.0m).

Nevertheless, its analysts remain very positive on the company due to its exposure to the rebounding international student market. It said:

The re-opening of Australia's international borders and removal of COVID restrictions, has prompted a strong recovery in international students in Australia. NextEd has significant exposure to this market with international students accounting for >75% of the total student and revenue mix. This recovery has (1) driven unprecedented demand for NextEd English language courses and (2) provided a subsequent cross-selling opportunity of progressing English students into other NextEd courses.

Bell Potter has retained its buy rating and $1.05 price target on its shares. This suggests 52% upside for investors.

The post 2 small cap ASX shares to buy for 20% to 50% returns appeared first on The Motley Fool Australia.

In morning trade, the ASX All Ordinaries stock crashed as much as 41% to 70.5 cents.

Its shares have recovered a touch since then but remain down 33% to 80 cents.

Why is this ASX All Ordinaries stock crashing?

Investors have been selling this education services provider's shares after it released an update on emerging implications of the Australian Government's temporary COVID-19 408 Visa.

The release notes that the 408 Visa provides onshore non-residents – including previous student visa holders – unlimited working rights for 12 months without needing to study. This could mean demand for NextEd's services falls materially in the near term.

At this stage, the ASX All Ordinaries stock advised that the impacts of this change are uncertain. It observes the following:

1. The industry expected the temporary COVID-19 408 Visa to end in July 2023, to coincide with the change in working rights for international students. This did not happen. 2. Emerging impacts of continuation of the 408 Visa include: a. some existing ELICOS students are studying for shorter durations to move to the 408 Visa; and b. fewer ELICOS students are progressing into vocational courses. 3. However, a higher volume of ELICOS students are expected to enrol into NextEd to get into Australia, with the aim to access the 408 Visa.

Based on this, NextEd estimates the current annual revenue impact from international students abandoning their studies and moving to the temporary COVID-19 408 Visa to undertake unskilled work is over $0.7 billion to the industry.

Guidance

It is worth noting that management is still expecting the company to deliver strong growth in FY 2024 despite this development. Though, judging by the performance of its shares, investors aren't confident it will achieve its guidance.

NextEd expects revenues for the first half of FY 2024 to be in the range of $59 million to $63 million, which will be 35% to 44% higher than the prior corresponding period.

Furthermore, management currently expects its second-half FY 2024 revenue to be higher than both the first half and the prior corresponding period.

Time will tell if that is the case.

The post Guess which ASX All Ordinaries stock just crashed 41% on a trading update appeared first on The Motley Fool Australia.

Four ASX shares that have failed to follow the market higher today are listed below. Here's why they are falling:

Atlantic Lithium Ltd (ASX: A11)

The Atlantic Lithium share price is down 3% to 48 cents. This is despite there being no news out of the lithium explorer. Though, it is worth highlighting that its shares have been under considerable pressure recently. For example, following today's decline, they are down 20% since this time last month.

Integral Diagnostics Ltd (ASX: IDX)

The Integral Diagnostics share price is down 4% to $3.04. This appears to have been driven by a broker note out of Morgan Stanley today. Its analysts have downgraded the company's shares to an underweight rating with a $2.70 price target. The broker has concerns over the medical imaging company's margin outlook.

Nexted Group Ltd (ASX: NXD)

The Nexted share price is down a further 5% to $1.17. Investors have been selling this education services company's shares since the release of an update on its performance in FY 2023 on Monday. Although Nexted has delivered strong growth in FY 2023, it fell short of the market's expectations. This led to Ord Minnett retaining its buy rating but slashing its price target from $1.90 to $1.65 today.

Serko Ltd (ASX: SKO)

The Serko share price is down 4% to $3.59. This is despite there being no news out of the travel technology company. However, it is worth noting that its shares are up strongly this year and have just hit a 52-week high. This could have led to some investors taking a bit of profit off the table today.

The post Why Atlantic Lithium, Integral Diagnostics, Nexted, and Serko shares are falling today appeared first on The Motley Fool Australia.

Four ASX shares that are falling more than most today are listed below. Here's why they are dropping:

Incannex Healthcare Ltd (ASX: IHL)

The Incannex share price is down 8% to 11 cents. This morning, this cannabis-focused pharmaceutical company announced plans to leave the ASX and join the NASDAQ. Shareholders will be asked to vote on the move later this year. Though, it seems that some aren't sticking around to see how the move pans out.

Magellan Financial Group Ltd (ASX: MFG)

The Magellan share price has continued its slide and is down a further 3.5% to $8.32. Investors have been selling this fund manager's shares since the release of a disappointing funds under management (FUM) update. In addition, this morning, analysts at Macquarie downgraded the company's shares to an underperform rating and cut the price target on them to $7.25.

Nexted Group Ltd (ASX: NXD)

The Nexted share price is down 13.5% to $1.25. Investors have been hitting the sell button today after the education services company released an update on its performance in FY 2023. Nexted is expecting to grow its revenue by 118% to 120% and EBITDA by 392% to 406%. Despite how strong this is, some investors appear to have been expecting even stronger growth.

Strandline Resources Ltd (ASX: STA)

The Strandline Resources share price is down 8% to 25.2 cents. This is despite Strandline announcing its seventh shipment of heavy mineral concentrate. However, taking some of the shine off the news was management advising that mining throughput and production have been constrained at times due to commissioning-related issues. This includes equipment failures and plant availability.

The post Why Incannex, Magellan, Nexted, and Strandline shares are dropping today appeared first on The Motley Fool Australia.