The S&P/ASX 200 Index (ASX: XJO) is down 1.56% to 8,772 points on Thursday afternoon, putting it on track for its worst session in 6 months.

But you wouldn't know it looking at Megaport Ltd (ASX: MP1).

Megaport shares are up another 3.40% to $18.26 today and have now climbed more than 10% over the past week.

I have been watching this one closely since investors smashed the share price after its FY26 results last month.

Personally, I think the market went too far.

And with the shares starting to move higher again, I think $25 could be back on the table sooner than many investors expect.

Why did Megaport shares get smashed?

Megaport was trading above $22 in August before falling as low as $16 earlier this month.

The big concern was spending.

Management expects capital expenditure of between $1.28 billion and $1.38 billion in FY27 as the company pours money into its growing compute business.

That is obviously a huge number for a company with a market capitalisation of around $4.3 billion.

But I think investors became so focused on the spending that some of the growth numbers were pushed aside.

FY26 revenue increased 37% to $312.2 million, while group annual recurring revenue jumped 62% to $395.2 million.

EBITDA came in at $77.1 million, with a margin of 25%.

And FY27 could be a much bigger year.

Megaport expects revenue of between $620 million and $730 million, meaning revenue could at least double this year.

There is a lot happening here

The part I like is that Megaport isn't simply spending billions and hoping customers eventually turn up.

The company has already signed several large contracts.

Its three major deals through Latitude.sh are worth around US$359 million combined and cover GPU and CPU compute, networking and storage.

Megaport also operates across more than 1,200 enabled data centres in 30 countries.

With AI requiring huge amounts of computing power and data to move between different locations, I think Megaport is sitting in a pretty good spot if demand continues growing.

Of course, management still needs to execute.

But I believe the recent sell-off gave investors a much better entry price than they had only a few weeks ago.

Could Megaport shares reach $25?

I think they can.

Morgans and Morgan Stanley both have $25 price targets on Megaport shares, while Citi recently lifted its target to $24.60.

A move to $25 would mean another gain of around 38% from today's price.

I'm not saying it will happen in a straight line. Megaport has shown us plenty of times how quickly its share price can move in both directions.

But if the company keeps delivering on its contracts and investors remain positive heading into year-end, I think $25 during the Christmas rally is very possible.

The post Megaport shares have surged 10% in a week to $18. I think they could hit $25 appeared first on The Motley Fool Australia.

With the ASX mining giant just a whisker below its June all-time high, investors might be wondering whether there's still fuel in the tank.

Iron ore keeps the cash flowing

Iron ore remains a heavyweight contributor to BHP's earnings, generating the cash flow that helps fund dividends of BHP shares and future growth.

BHP produced record iron ore volumes in FY26, while its Western Australian operations remain among the world's lowest-cost major producers.

The company is also investing in rail and port infrastructure, targeting sustainable production above 305 million tonnes a year. That's a pretty impressive machine, but BHP isn't content to simply sit back and collect the cash.

While China's steel demand could evolve as its economy matures, iron ore should remain important for infrastructure, housing and manufacturing globally.

BHP's low-cost position could help it weather weaker commodity prices when the inevitable mining-cycle wobble arrives.

Copper could be the real star

Here's where things get particularly interesting for BHP shares. The company produced around 2 million tonnes of copper in FY26 for the second consecutive year. At its latest half-year result, copper accounted for 51% of underlying EBITDA.

That could signal a much bigger transformation in BHP's earnings mix. Copper is essential for electricity grids, renewable energy, electric vehicles, data centres and the broader electrification boom.

BHP expects global copper demand to rise by around 70% by 2050. Meanwhile, declining ore grades and lengthy permitting processes could make bringing new supply online increasingly difficult.

BHP is already the world's largest copper producer and expects production to grow by around 5% annually through 2035.

Its assets and opportunities across Chile, South Australia, Argentina and the US give it several ways to benefit if copper demand takes off.

And then there's potash

BHP is also preparing to enter the potash market through its Jansen project in Canada.

Potash helps farmers improve crop yields, potentially giving BHP another long-term growth avenue as the global population expands and arable land becomes scarcer. It also adds another commodity to BHP's already diversified portfolio.

Of course, diversification doesn't make BHP immune to commodity cycles.

Iron ore, copper, coal and eventually potash all have their own supply-and-demand dynamics. Investors shouldn't assume BHP shares can simply climb forever.

What do analysts think?

Analyst sentiment is decidedly mixed. TradingView data shows 14 of 21 brokers rate BHP shares a hold. Five analysts have a strong buy rating, while two rate the stock a sell or strong sell.

Morgan Stanley (NYSE: MS) remains more bullish, reaffirming its buy rating and $67 price target. That implies around 5.5% potential upside from the current share price.

The most bullish TradingView forecast puts the share price at $92.77 in 12 months. That would represent a potential 46% gain from current levels.

The post BHP shares keep climbing: Is $70 the next stop? appeared first on The Motley Fool Australia.

Morgan Stanley (NYSE: MS) has slapped sell ratings on three of Australia's biggest banks – Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), and National Australia Bank Ltd (ASX: NAB).

The common theme? Valuations have raced ahead of fundamentals.

In other words, the broker isn't questioning whether these are great businesses. It simply believes investors are paying too much for them.

Commonwealth Bank of Australia

If Morgan Stanley had a least-favourite ASX bank share, CBA would probably wear the crown. In 2026, CBA shares have risen 4.7% in 2026 to $168.11 but are down 6% over 12 months.

The broker has a target price of $125 on CBA shares, implying around 26% downside from current levels.

Why so bearish? The biggest issue is valuation. CBA trades on the richest price-to-earnings multiple of any major Australian bank despite operating in a mature, highly competitive market.

Morgan Stanley also sees pressure on net interest margins, slowing earnings growth and limited upside from here after years of strong share price performance.

That doesn't mean CBA is suddenly a bad business. Far from it.

It remains Australia's largest bank, with market-leading positions in home lending, deposits and digital banking. It also consistently delivers industry-leading profitability, strong capital generation and fully franked dividends.

Quality isn't the problem. The price investors are paying for that quality is.

Westpac Banking Corp

Westpac shares have also enjoyed a solid run, climbing 4.6% over the past month. They're still down 6% this year, but remain almost 9% higher than a year ago.

Morgan Stanley believes the stock could fall around 13%, assigning a price target of $31.50.

The main risks for this ASX bank share are margin pressure, fierce competition for mortgages and deposits, and limited earnings growth as key risks. Banks continue to fight aggressively for customers, making it harder to grow profits without sacrificing pricing.

Still, Westpac has plenty going for it. Its large retail banking franchise provides stable earnings, while ongoing investments in technology and simplification should gradually improve efficiency.

Like its peers, it also offers an attractive, fully franked dividend that continues to appeal to income-focused investors.

National Australia Bank

NAB has been the strongest performer of the trio recently, jumping 9% over the past month.

Even so, Morgan Stanley isn't buying the rally of the ASX bank share. Its $34.50 price target suggests roughly 12% downside from current levels.

The broker believes business banking competition is intensifying, while slowing economic growth could eventually weigh on business lending demand and bad debts. Rising operating costs also remain a challenge.

On the positive side, NAB arguably boasts Australia's strongest business banking franchise. Its deep relationships with small and medium-sized businesses provide a competitive advantage that's difficult to replicate.

Combined with a solid balance sheet and dependable dividend payments, NAB remains a high-quality bank despite the broker's concerns.

Foolish takeaway

Morgan Stanley's message is clear: great businesses don't always make great investments when expectations become too optimistic.

For long-term investors already holding these ASX bank shares, there's little reason to panic. But for those thinking of buying today, it may be worth asking whether too much good news is already reflected in the share prices.

The post Expert warns: These ASX bank shares could disappoint in FY27 appeared first on The Motley Fool Australia.

What did Netwealth Group report?

• Preliminary FY26 FUA net flows: $15.4 billion
• Projected FY27 FUA net flows: $18–20 billion (up 17%–30% on FY26)
• FY26 EBITDA margin guidance: ~49%
• FY27 expected EBITDA margin: ~47%
• Capitalised software investment: $12 million (FY26), expected $17 million (FY27)
• FY26 dividend to be based on underlying earnings

What else do investors need to know?

Netwealth has expanded its agreement with Morgan Stanley Wealth Management Australia to provide a platform solution for ASX-listed equities and domestic investments. This major win comes on the back of recent investments in technology and product offerings, including the launch of Netwealth Private and integrated iHIN capability.

A subset of Morgan Stanley's clients will transition to the Netwealth platform, which will operate alongside Morgan Stanley's proprietary global platform. Advisers will continue to manage relationships, but the move highlights Netwealth's strategic push into the $600 billion stockbroking and private wealth market.

What did Netwealth Group management say?

CEO and Managing Director Matt Heine said:

We are pleased to announce the expansion of our relationship with Morgan Stanley, which reflects the deliberate, multi-year investment we have made to extend our product and platform capabilities in a highly scalable way. The investment has underpinned the continued development of our product offering, including the delivery of Netwealth Private and individual HIN capability, alongside a platform designed to deliver scale, digital enablement, and a high-quality client experience that supports our adviser clients and their growth.

What's next for Netwealth Group?

The company sees strong growth momentum, supported by structural and demographic trends in the platform market. Netwealth aims to double FUA over the next four years, driven by core growth, new client wins, and expansion into adjacent markets.

Management expects continued investment in product, technology, and service delivery to further enhance platform capability and scalability. The group will remain disciplined with capital allocation, targeting high-return opportunities that support long-term earnings growth.

Netwealth Group share price snapshot

Over the past 12 months, Netwealth shares have risen 43%, outperforming the S&P/ASX 200 Index (ASX: XJO), which has risen 3% over the same period.

View Original Announcement

The post Netwealth posts strong FUA growth and secures Morgan Stanley platform deal appeared first on The Motley Fool Australia.

As the new financial year begins, brokers are running their rulers over several ASX shares and adjusting their ratings and 12-month price targets. 

Let's take a look at some downgrades from the experts this week. 

JB Hi-Fi Ltd (ASX: JBH)

The JB Hi-Fi share price is $76,45, down 2.2% today and down 32% over 12 months. 

UBS downgraded the ASX consumer discretionary share to a hold rating on Tuesday. 

The broker shaved its 12-month price target from $85 to $83.

This suggest a potential 8% upside ahead.

Evolution Mining Ltd (ASX: EVN)

The Evolution Mining share price is $11.80, up 2.1% today and up 51% over 12 months. 

UBS downgraded the ASX 200 gold share to a hold rating on Tuesday.

The broker cut its 12-month price target from $14 to $12.60.

This implies a potential 7% upside ahead.

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven Coal share price is $7.50, up 0.2% on Thursday and up 34% over 12 months. 

UBS downgraded the ASX coal share to a hold rating on Tuesday. 

The broker lowered its 12-month price target from $9.10 to $8.70.

This indicates possible capital gains of 16% over the next year. 

Judo Capital Holdings Ltd (ASX: JDO)

The Judo share price is 90 cents, down 1.4% today and down 44% over 12 months. 

UBS downgraded Judo shares to a hold rating on Monday.

The broker has a 12-month target price of $1.05, indicating a potential 17% upside over FY27. 

Data#3 Ltd (ASX: DTL)

The Data#3 share price is $9.54, up 1.2% today and 25% higher over 12 months. 

Morgan Stanley downgraded the ASX tech share to a hold rating with a $10 target on Wednesday. 

This suggests potential capital growth of 5% over the next year. 

South32 Ltd (ASX: S32)

The South32 share price is $4.23, down 1.2% today and up 36% over 12 months. 

Morgans downgraded its rating on the ASX 200 mining share from accumulate to hold.

The broker cut its price target from $5 to $4.50, suggesting a potential 6% upside ahead.

Morgans said: 

S32 has agreed to sell its entire ali business for total consideration of US$5.6bn (US$4.1bn upfront), and transfer of US$1.2bn closure/rehab liabilities.

Our view on S32's aluminium sale is genuinely mixed. It leaves S32 a simpler and, in important respects, a better business, but also a smaller and less valuable one.

We reduce our valuation on S32's ali assets to in line with the agreed Alcoa deal… As a result we update our rating to HOLD (from Accumulate).

Turaco Gold Ltd (ASX: TCG)

The Turaco Gold share price is 48 cents, up 6.7% today and up 4% over 12 months. 

Morgans downgraded the ASX gold share from a buy to a speculative buy rating this week.

The broker slashed its 12-month price target from $2.19 to $1.18.

This still implies a potential 145% upside ahead.

The post 7 ASX shares downgraded by brokers this week appeared first on The Motley Fool Australia.

Brokers have indicated continuing confidence in several ASX 200 shares this week.

Let's take a look.

BHP Group Ltd (ASX: BHP)

The BHP Group share price is $61.52, down 2% today.

BHP shares hit a new record price of $65.04 on Wednesday.

On Thursday, BHP and other ASX 200 iron ore mining shares fell heavily on news of ramped-up production at Simandou.

The Simandou iron ore project in Africa is the world's largest untapped, high-grade iron ore deposit.

Morgan Stanley reiterated its buy rating on BHP shares on Monday.

The broker has a price target of $67.50, suggesting almost 10% upside remains.

Megaport Ltd (ASX: MP1)

Megaport shares are flying on Friday, up 9.6% to $18.18 apiece.

The Megaport share price is the fastest riser of the entire ASX 200 today.

In earlier trading, the ASX 200 tech share reached a new 52-week high of $21.16.

Megaport shares came out of a trading halt today after the company completed the institutional component of a $827.3 million fully underwritten entitlement offer.

Earlier this week, Megaport announced four new AI infrastructure contracts worth approximately $458.9 million.

The contracts require approximately $369.5 million of capital expenditure, hence the capital raise.

UBS renewed its buy rating on Megaport shares today.

The broker raised its 12-month price target from $16.70 to $24.20.

This suggests a potential 33% upside ahead.

Pro Medicus Ltd (ASX: PME) 

The Pro Medicus share price is $165.48, up 3.9% today.

Over the past month, this ASX 200 healthcare share has soared 21%.

Macquarie maintained its buy rating on Pro Medicus shares with a $221 target this week.

This suggest a potential 34% upside ahead.

Find out why another expert considers Pro Medicus shares the 'most defensively positioned software business' on the ASX.

AMP Ltd (ASX: AMP)

The AMP share price is $1.51, up 2.2% today.

This ASX 200 financial share has fallen 17% in the calendar year to date (YTD).

Citi renewed its buy call on AMP shares with a $1.80 target this week.

This implies potential capital growth of 19% over the next year.

IAG Australia Group Ltd (ASX: IAG)

The IAG share price is $7.55, up 0.1% today and down 5.5% YTD.

UBS reiterated its buy rating on IAG shares with an $8.80 target on Monday.

This implies a potential 17% upside ahead.

Qantas Airways Ltd (ASX: QAN)

The Qantas share price is $9.19, up 0.4% today.

This ASX 200 airline share has lifted 9% over the past month.

Goldman Sachs renewed its buy rating on Qantas shares with a $12.25 target.

This implies potential capital growth of 33% over the next year.

South32 Ltd (ASX: S32)

The South32 share price is $4.64, down 2.2% today.

Over the past month, this ASX 200 mining share has ripped 14% higher.

Morgan Stanley reaffirmed its buy rating on South32 shares with a $4.85 target.

This suggests a potential 4% upside ahead.

The post 7 ASX 200 shares with strengthened buy ratings this week appeared first on The Motley Fool Australia.

The Abacus share price was paused in early morning trade while investors waited for a response from the property group.

Trading has since resumed, with the stock up 2.5% to $1.02 at the time of writing.

Even after today's bounce, it has still been a difficult year for shareholders. Abacus shares are down around 15% in 2026.

Let's take a closer look at what happened.

Abacus responds to media reports

The move follows an article in The Australian, which reported Abacus Group was set to sell its $300 million-plus stake in Abacus Storage King.

According to the report, Morgan Stanley had been working on a plan to sell down Abacus Group's almost 20% stake in the listed storage group.

The Australian said billionaire Nathan Kirsh was expected to acquire half of the stake, while the rest would be placed with institutional investors.

Kirsh is already a major player in Abacus Storage King, with the report saying he owns about 40% of the stock directly.

A sale would have marked another big step in the separation between Abacus Group and Abacus Storage King.

But Abacus has now cooled some of that speculation.

In its ASX release today, Abacus said the "Morgan Stanley transaction has not proceeded".

It also said there were no discussions with Charter Hall Group (ASX: CHC).

The company added that it regularly reviews strategic opportunities and would update the market in line with its disclosure obligations.

What investors are weighing up

The interest makes sense, given Abacus has been going through a major reshaping.

Abacus Storage King was split out from Abacus Group in 2023, creating two separate ASX-listed groups.

More recently, Abacus Group brought the management of Abacus Storage King in-house.

The Australian said this left Abacus with a smaller and cleaner structure, including office assets worth about $1.5 billion and two retail properties worth about $419 million.

The report also said proceeds from any stake sale had been expected to reduce debt, potentially lowering gearing from 34% to somewhere in the 15% to 20% range.

Still with the stock still under pressure, shareholders are looking for anything that could unlock value. A cleaner structure or lower debt load would give the market something new to work with.

It can also raise the possibility of capital management, asset sales, or a broader corporate move.

Charter Hall speculation adds another angle

Charter Hall is the other name sitting in the background.

The Australian reported Charter Hall has been steadily building its position in Abacus Group, with its stake now above 5.8%.

The report said this has brought up questions about whether Charter Hall could eventually make a move on the company.

Abacus has pushed back on that part of the speculation, saying there are no discussions with Charter Hall.

The post This ASX property stock is rising after takeover speculation heats up appeared first on The Motley Fool Australia.

The 'big four' are under pressure again on Wednesday after Morgan Stanley (NYSE: MS) warned that conditions have turned against the sector faster than expected.

Commonwealth Bank of Australia (ASX: CBA) shares are down 0.71% to $161.73 at the time of writing.

Westpac Banking Corp (ASX: WBC) is down 1% to $36.02, National Australia Bank Ltd (ASX: NAB) is 1% lower at $36.73, and ANZ Group Holdings Ltd (ASX: ANZ) is down 1% to $35.31.

The falls add to a rough month for the banks. CBA has dropped 9%, Westpac is down 9%, NAB has lost 14%, and ANZ has fallen 7%.

Morgan Stanley sees more trouble ahead

According to The Australian, Morgan Stanley analyst Richard Wiles believes operating conditions for Australia's major banks have "deteriorated rapidly".

The broker is now expecting consensus earnings per share (EPS) forecasts to fall after a soft reporting season.

Wiles pointed to several pressures landing at once. These include the three RBA interest rate rises, proposed property tax changes in the federal budget, and the global energy shock.

Morgan Stanley had previously lifted its earnings forecasts for the 'big four' by about 4% in February. It has now cut them by a similar amount, with larger downgrades aimed at NAB and Westpac.

Margins and bad debts in focus

Bank investors usually pay close attention to margins, credit quality and capital strength. On those measures, the latest reporting season gave the market a few reasons to be careful.

The Australian reported that margin trends disappointed, while the four major banks set aside about $800 million in extra provisions for potential bad loans.

Capital levels at CBA and NAB also came in below expectations.

NAB has already moved to strengthen its position, raising about $1.8 billion through its dividend reinvestment plan (DRP).

Dividend growth expectations have also cooled. Management teams at CBA, NAB and Westpac have signalled that payout ratios are likely to move back toward the middle of their target ranges.

Valuations still look stretched

Furthermore, the major banks are trading on an average 12-month forward price-to-earnings (P/E) multiple of 18.5 times.

Wiles sees more room for that multiple to fall. His order of preference is ANZ first, followed by Westpac, NAB and CBA last.

CBA remains the standout premium stock in the sector, with a market capitalisation of about $270.65 billion. But its share price is now down 6% over the past year.

ANZ has held up better over 12 months, rising 22%, but it is still down 3% in 2026.

Foolish takeaway

The big four banks are still some of the most profitable businesses on the ASX. But after a strong run, investors are starting to question whether their share prices still leave much room for disappointment.

Lower margins, rising bad debt risks and slower dividend growth aren't a great mix.

Morgan Stanley's warning suggests the sector may need more than steady earnings to keep investors happy.

The post Are CBA, Westpac, NAB and ANZ shares heading for more pain? appeared first on The Motley Fool Australia.

Westpac Banking Corp (ASX: WBC) declared its 2026 interim ordinary dividend on 5 May and the ex-dividend date fell earlier this month.

Here is the full picture of what Westpac is paying and what shareholders can expect for the rest of the year.

What Westpac is paying

Westpac declared a fully franked interim dividend of 77 cents per share, payable on 26 June 2026.

That payment is 100% franked with Australian franking credits at the company tax rate of 30%, and also carries New Zealand imputation credits of NZD 6 cents per share.

Consequently, for Australian taxpayers in higher tax brackets, the effective after-tax yield rises materially above the headline figure once franking credits are grossed up.

Based on Westpac's current share price of approximately $36.40, the interim dividend implies an annualised yield of around 4.2% on a fully franked basis.

The grossed-up yield, including the value of franking credits at the 30% tax rate, brings the grossed-up yield to around 6.0%.

That compares favourably with term deposit rates currently on offer from the major banks, making Westpac a competitive option for income-focused investors who also want exposure to potential capital growth over time.

What about the full year?

Looking further ahead, consensus analyst estimates on CommSec point to a full-year FY2026 dividend of 155 cents per share for Westpac, up from 153 cents in FY2025.

That implies a final dividend of approximately 78 cents per share, payable in December 2026, following the release of Westpac's full-year results in early November.

For retirees in the zero tax bracket, those franking credits translate into additional cash refunds.

What the result showed

The interim dividend reflects a solid first-half result for Westpac.

The bank posted statutory net profit of $3.4 billion for the first half of FY2026, up 3% on the prior corresponding period, alongside total lending and deposit growth of 7% year-on-year.

Management's long-running cost reduction program continues to gain traction.

The bank's capital position also remains well above regulatory minimums.

However, it is worth noting that several major brokers including Macquarie and Morgan Stanley carry underperform or sell ratings on Westpac shares, citing valuation concerns and competitive pressure in the mortgage market.

Foolish takeaway

Westpac offers income investors a reliable, fully franked dividend stream backed by one of the most systemically important banks in the country.

For investors focused on tax-effective passive income rather than capital growth, the upcoming June payment and the promise of a similar final dividend in December would be encouraging.

The post Here is what Westpac is paying shareholders in June 2026 appeared first on The Motley Fool Australia.

The ASX 200 airline share has lifted 7.15% in the year to date (YTD) compared to a 4.9% bump for the S&P/ASX 200 Index (ASX: XJO).

Qantas may have outperformed the ASX 200, but it's delivered lower capital growth than many other ASX 200 large-cap shares in 2025.

There are 60 large-caps in total (market caps above $10 billion) trading today and 32 have delivered positive capital growth this year.

Of those 32 ASX 200 large-caps, the best performer is ASX 200 gold stock Evolution Mining Ltd (ASX: EVN) with 133.5% capital growth.

The large-cap with the lowest capital growth is Washington H. Soul Pattinson and Company Ltd (ASX: SOL) shares with 1.8% growth.

So, Qantas ranks towards the bottom of this list with 7.15%.

What about dividends?

Of course, dividends are an important part of total returns alongside capital growth.

Qantas paid a full-year FY25 dividend of 52.8 cents per share (cps).

Based on the current Qantas share price of $9.77, that's a trailing dividend yield of 5.4%.

The consensus estimate among analysts on CommSec is for Qantas to pay a full-year FY26 dividend of 42.9 cents per share.

This equates to a forward dividend yield of 4.4%.

That's quite a drop, but still higher than the average dividend for ASX 200 shares these days.

So, when will you find out for sure what Qantas shares will pay in dividends next year?

Helpfully, Qantas has released its financial calendar for 2026.

Get your diary out.

Looking ahead to 2026

Here are the dates for Qantas investors to note.

Qantas will release its 1H FY26 results and announce its interim dividend on 26 February.

The airline has not specified the ex-dividend dates for 2026, but they are usually one business day before the record dates.

The record date for the interim dividend will be 11 March.

Qantas will pay the dividend on 15 April.

The ASX 200 airline will announce its FY26 full-year results and final dividend on 27 August.

The record date for the final Qantas dividend will be 16 September.

Qantas will pay the dividend on 14 October.

The annual general meeting is scheduled for 6 November.

Should you buy Qantas shares?

UBS has a buy rating on Qantas shares with a 12-month price target of $11.50.

Morgan Stanley reiterated its buy rating last month but lowered its price target from $13.40 to $12.60.

Ord Minnett has a buy rating but also cut its price target last month from $13.80 to $13.

The post Own Qantas shares? Here are the dividend dates for 2026 appeared first on The Motley Fool Australia.

The price of the metal has soared by about 47% since the start of January to reach all-time highs earlier this month.

But gold is not the only metal commanding attention.

Silver and platinum have both outpaced the gold price in 2025, as has neodymium – a rare earth element used in magnets that power modern-day electronics.

And then there's copper.

The red metal has been making waves of its own on the back of two significant developments in September.

Copper enters the spotlight

Firstly, mining titan Anglo American plc (LON: AAL) unveiled plans to merge with Canadian counterpart Teck Resources Ltd Class B (NYSE: TECK) in an A$85 billion deal.

This tie-up is set to create the world's fifth-largest copper producer.

And just last week, Freeport-McMoran Inc (NYSE: FCX) announced that mining at its globally significant Grasberg mine in Indonesia is set to remain on hold following a tragic mudslide.

Freeport noted that the mine closure will see its copper output fall by 4% in the third quarter of 2025.

It added that its Indonesian production could be 35% lower in 2026 when compared with pre-incident forecasts.

In turn, the price of copper traded on the London Metals Exchange (LME) spiked on Thursday.

It surpassed US$10,300 per tonne to reach its highest level so far this year.

But this could be just the beginning, according to renowned investment bank Morgan Stanley (NYSE: MS).

The broker believes that the copper price could storm higher throughout the rest of the year and into 2026.

And here's the thing.

Mining giant BHP Group Ltd (ASX: BHP) has been ramping up its copper exposure in the past few years to become today's largest copper producer.

So, a favourable copper pricing environment could be welcome news for BHP shares.

Morgan Stanley's viewpoint

Morgan Stanley appears optimistic about the near-term copper price after factoring in Freeport's production setback, as reported in the Financial Review.

It expects supply of the metal to dip in 2025 and 2026, adding that inventory levels outside the US also remain low.

The broker cited several other factors that suggest a positive setting for copper prices.

These include a weakening US dollar, a Federal Reserve more tolerant of inflation, and hopes of further economic stimulus in China.

Overall, Morgan Stanley believes the LME copper price could reach US$13,775 per tonne by Christmas, and as high as US$14,064 per tonne by the end of 2026.

This implies about 37% upside potential for the copper price by the conclusion of next year.

What could this mean for BHP shares?

In a nutshell, a sharp rise in the copper price could potentially be a boon for BHP shares.

In the past few years, the company has sealed a series of copper deals headlined by its A$10 billion acquisition of South Australian miner Oz Minerals.

It also invested A$3.2 billion to acquire Canadian group Filo Corp and its flagship Argentinian project through a joint venture with Lundin Mining Corp (TSE: LUN).

These deals add to BHP's extensive portfolio of copper mines across Chile, Peru, South Australia, and Arizona.

BHP now claims to be the world's largest copper miner, having grown its output of the metal by 28% over the past three years.

It produced a record 2 million tonnes of copper in FY25, with the metal accounting for 45% of its underlying operating earnings (EBITDA).

Looking ahead, management noted that copper fundamentals remain attractive.

In essence, BHP expects global copper demand to grow from about 33 million tonnes today to more than 50 million tonnes by 2050.

However, it believes copper prices need to increase from the levels seen in the second half of FY25 for future supply to be incentivised.

The post BHP shares in pole position as Morgan Stanley flags 37% upside for this critical metal appeared first on The Motley Fool Australia.

First off the rank are the big banks, including JPMorgan Chase & Co (NYSE: JPM), Morgan Stanley (NYSE: MS), and Wells Fargo & Co (NYSE: WFC).

Corporate earnings

In recent weeks, forecasters have become increasingly pessimistic about US corporate earnings. For the first quarter of 2025, analysts now expect growth of 6.7% for the S&P 500 companies, according to Bloomberg. When Trump was first elected back in November, this number sat around 11%. 

For the full year, analysts expect profits to rise 9.4%, which is materially lower than the projected 12.5% at the beginning of the year. 

Investors will also be paying close attention to forward guidance. Management is likely to come under the microscope during the investor calls as analysts interrogate them on the potential tariff impact and broader consequences for the global economy. 

In particular, JP Morgan's earnings and investor call will be closely watched. CEO Jamie Dimon was the first CEO of a major bank to publicly address Trump's tariffs. 

In his 7 April annual letter to shareholders, he wrote:

Whatever you think of the legitimate reasons for the newly announced tariffs – and, of course, there are some – or the long-term effect, good or bad, there are likely to be important short-term effects. We are likely to see inflationary outcomes, not only on imported goods but on domestic prices, as input costs rise and demand increases on domestic products. Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth.

This reflection is especially noteworthy, given that he had initially dismissed the potential long-term impact of tariffs. Now that Trump has paused retaliatory tariffs for all countries except China, investors will be interested to hear whether these changes impact Jamie Dimon's assessment of the economy.

A big month ahead for US-focused ASX ETF investors

The Magnificent Seven companies will report their earnings towards the end of the reporting season (late April and early May). These companies represent a large portion of the S&P 500 Index (SP: .INX) and the Nasdaq Composite Index (NASDAQ: .IXIC). Therefore, investors in US-focused exchange-traded funds (ETFs) such as the iShares S&P 500 AUD ETF (ASX: IVV) and the BetaShares Nasdaq 100 ETF (ASX: NDQ) will be paying close attention. 

Tesla (NASDAQ: TSLA), which is due to report on 22 April, is likely to attract major interest. After taking a role in the Trump administration earlier this year, Tesla CEO Musk will be under the spotlight. This week, Musk also appeared to break with Trump by endorsing free trade between America and Europe. This should make for an especially eventful Tesla earnings call. 

Another company likely to attract strong interest is Apple Inc (NASDAQ: AAPL). The iPhone maker is scheduled to report on 1 May. Apple produces more than 90% of its products in China and has been under the microscope since Trump announced his tariffs. This week, the company briefly lost its spot as the world's largest listed company as its shares took a hit. However, it has since reclaimed its spot. Investors will be tuning in to see what CEO Tim Cook has to say.

One of the last companies to report is Nvidia Corporation (NASDAQ: NVDA). The chip maker will report on 28 May. After appearing unstoppable for the past few years, Nvidia's stock price has been on a roller coaster this year. It was down nearly 40% for the year to date before regaining 19% on Wednesday night. Investors will be keen to hear CEO Jensen Huang's views on DeepSeek and any potential tariff impact. 

Foolish Takeaway

There's been no shortage of action on US markets in recent weeks. This should set the stage for an especially interesting reporting season. Over to the banks!

The post US reporting season kicks off tonight appeared first on The Motley Fool Australia.

But let's talk about what's happening with the Qantas Airways Ltd (ASX: QAN) share price.

Qantas shares are happily defying the broader market to push higher this session. The ASX 200 travel stock and national carrier closed at $9.29 a share yesterday afternoon and opened at $9.30 this morning. But soon after market open, Qantas stock pushed as high as $9.37 a share.

Not only is that a new 52-week high for the airline, but a new all-time record high. Not bad for a company that has been around for more than a century (albeit only a few decades on the ASX).

Qantas stock is not the only prominent ASX share that has received a boost today. This Wednesday's trading session has been kind to Telstra Group Ltd (ASX: TLS) shares, which hit a new 52-week high of their own ($4.09) this morning as well.

But back to Qantas, today's rise puts the Qantas share price up a healthy 4.25% in 2025 so far. The Flying Kangaroo is also up a whopping 76% or so over the past 12 months. So this has been a very lucrative investment to hold in recent times indeed. For investors who picked up Qantas shares for under $2.20 each back in the depths of the COVID crash of 2020, they would now be up more than 300%.

Check that all out for yourself below:

Why is the Qantas share price at a new record high today?

Well, that's a bit of a mystery. We haven't had any major news or announcements out of Qantas itself for quite a while. The last major news ticked came out back in mid-December.

As we covered at the time, this wasn't even positive news, with the airline revealing it had agreed to pay out a compensation package worth $120 million to workers who were allegedly illegally fired during the COVID pandemic.

However, it is possible that investors are taking their leads from brokers when it comes to the Qantas share price.

The airline has been the beneficiary of some broker love in recent weeks. As we discussed late last month, broker Morgan Stanley has been telling clients to buy the carrier, giving Qantas an 'overweight' rating. Morgan Stanley also gave the Qantas share price a 12-month price target of $10.50, which implies a potential upside of around 12.7% from current prices.

The broker anticipates that Qantas will benefit from lower fuel prices in 2025, which should allow the airline to continue its share buybacks and even reinstate a dividend this year.

So perhaps this rosy outlook is driving investors into Qantas stock in 2025 so far, and specifically this Wednesday. Let's see how much higher Qantas shares fly from here.

The post Big ASX news! Qantas share price flies to new all-time high appeared first on The Motley Fool Australia.

With the August earnings season now truly done and dusted, many companies are sitting on large piles of cash, which analysts and investors alike are eyeing very closely.

Brokers have identified several big names in the ASX 200, including Rio Tinto Ltd (ASX: RIO), Ramsay Health Care Ltd (ASX: RHC), JB Hi-Fi Ltd (ASX: JBH), Mineral Resources Ltd (ASX: MIN), and REA Group Ltd (ASX: REA), are sitting on massive piles of excess franking credits.

But what does that mean for shareholders? Let's see what the experts think.

Franking credits and special dividends

When a company pays ASX dividends, the franking credits attached represent the tax it has already paid on its profits.

That's because the Australian dividend imputation system ensures that these profits aren't taxed twice – once in the company's hands and once in the investors'. Instead, it is just at the company level.

Franking credits can offset shareholders' tax obligations. If an investor's tax rate is lower than the company's (usually 30%), they can even receive a refund.

However, companies can accumulate large amounts of franking credits over time, especially if they don't distribute them regularly through dividends.

Often, when companies find themselves in this situation with no option to reinvest the money internally, they return it to shareholders as a special dividend.

Typically, dividends are recurring and follow a fairly normal pattern of payment, such as every half-year period.

But special dividends are a one-off payout, usually because the business has a sudden influx of surplus cash.

Special dividends also allow companies to distribute accumulated franking credits while still retaining enough capital for reinvestment and growth.

The question is, which companies that pay ASX dividends fit the bill here?

ASX dividends for investors

To this point, Morgan Stanley has been busy on the case, scouring the investment universe of ASX dividends.

The broker has released a report identifying the ASX 200 companies with the largest excess franking credit balances. Morgan Stanley had this to say (as reported in the Australian Financial Review):

The recent result season showed an emerging trend for companies with excess franking credits to start paying special dividends.

We expect this to increase over time given limited options to distribute post rule changes to buybacks and highlight companies with largest balances as a starting point.

Analysts at the firm highlighted Rio Tinto, Ramsay Health Care, JB-Hi Fi, Mineral Resources and REA Group as the top five companies with franking credits higher than their last reported dividend per share.

The broker says these companies have a significant capacity to issue special dividends, should their boards choose to do so.

Meanwhile, Plato Investment Management said the decision to pay a special dividend with franking credits was a little more nuanced. Per the AFR:

[The decision has] still got to be in the context of do they have the cash to pay them out and if they've got a high capex budget.

Woodside Energy Group Ltd (ASX: WDS), for instance, has to reinvest high sums of cash to stay competitive. As such, it "can't really afford" a big jump in dividends, Plato says.

Foolish takeaway

According to Morgan Stanley, the trend of companies paying special ASX dividends to distribute excess franking credits could increase over time.

Time will tell if the broker is correct or not. In the meantime, investors can look to companies with excess franking credits with a positive light.

The post Special dividends anyone? 5 ASX 200 stocks with excess franking credits appeared first on The Motley Fool Australia.

The stock's last yearly low was $24.93 apiece on 8 August, and shares are now down 24% this year.

This downtrend is a part of a broader decline in oil prices this year. Concerns over weak demand and an oversupplied market are weighing heavily on energy stocks like Woodside.

Let's take a closer look.

Oil prices slump, dragging Woodside shares down

The global benchmark for oil, the Brent crude oil price, has continued its downward spiral in recent weeks.

Brent currently trades at US$71.88 a barrel, its lowest level since 2021.

According to Trading Economics, fears of a slowdown in the United States and soft economic growth in both China and Europe have been major factors in the slump.

Meanwhile, the US oil industry continues to produce near-record levels of oil, adding to global supply.

In response to this macroeconomic backdrop, Morgan Stanley has cut its oil price forecasts.

The broker now expects Brent crude to average US$75 per barrel in the fourth quarter of 2024, according to the Australian Financial Review.

This is down from an earlier forecast of US$80 per barrel.

Similarly, Citigroup has warned of a potential oversupply. It estimates prices could drop as low as US$60 per barrel by 2025 unless production cuts are started.

This sharp fall in oil prices has hit Woodside shares hard, with the stock down nearly 5% in the past month.

Analysts divided

Analysts are split on the outlook for Woodside shares. Morgans has a buy rating on the stock with a price target of $33 per share.

According to my colleague James, Morgans reckons the company's healthy balance sheet and strong dividend profile make it an attractive investment, especially at these lower levels.

Based on current prices, Morgans is forecasting fully franked dividend yields of around 8% for FY2024.

However, not all analysts are as bullish. Citi recently downgraded Woodside to a sell rating, slashing its price target to $24.50 per share.

Citi analysts are concerned about falling dividends and the potential for further costly acquisitions, warning that Woodside's downgrades might not be over yet.

Foolish takeaway

Woodside shares are trading at new 52-week lows as the oil market faces continued pressure from weak demand and ample supply.

While some analysts see this as a buying opportunity, others remain cautious.

The Woodside share price is down 37% in the past year.

The post Woodside shares burn to 52-week low as oil price outlook worsens appeared first on The Motley Fool Australia.

Over in the United States, companies like Nvidia Corp (NASDAQ: NVDA) and Microsoft Corporation (NASDAQ: MSFT) have been major beneficiaries since entering the AI foray. Both stocks are up 144% and 19% this year to date, respectively.

Life360 Inc (ASX: 360) is another AI stock riding the wave, but right here on the ASX in Australia.

Life60 shares are trading more than 120% higher this year to date, offering investors comparable gains to Nvidia. They are currently swapping hands at $16.70 apiece at the time of writing.

As AI continues to revolutionise various industries and with many shares still rallying, it begs the question of whether it is still worth buying Life360 to capitalise on the AI stock surge. Here's what the experts think.

Why consider this ASX AI stock?

Life360 shares were a major ASX performer in FY24, rallying more than 115% in that period. With the backdrop of AI driving positive sentiment, many brokers are still bullish on the AI stock.

According to CommSec, the consensus of analyst estimates is that it is a strong buy. Here are the main reasons brokers say to buy Life360 shares.

1. Adoption of its technology

The company is leveraging AI to enhance safety and connectivity for families worldwide through its mobile app of the same name.

The app provides real-time location updates, safety alerts while driving, and rapid emergency responses. It doesn't take great imagination to see the benefits of this feature.

And this hard-to-replicate business advantage is pulling through to Life360's financials. Revenues increased by 15% year over year in Q1, reaching US$78.2 million. This growth was driven by a jump in premium subscriptions and reduced churn rates The company put this down to the expansion of its safety features.

Bell Potter analysts are optimistic about Life360 due to the potential expansion of the technology. It recently retained its buy rating on the AI stock with a price target of $17.75. It believes the company has the potential to leverage its large and growing user base to enter and disrupt new markets.

2. Data collection possibilities

The app helps track children, elderly individuals, and those with special medical needs. This broad user base provides valuable data that can be used to fuel AI-driven innovations.

Morgan Stanley analysts see vast data collection capabilities as a competitive advantage for Life360. The company's subscriber base is around 66 million users, which is a tonne of a lot of insights.

The thinking is that Life360 can glean unique and actionable insights from these data points. Data is like digital gold in the modern age, so it's not surprising to see Morgan Stanley's posture so upright on this with the AI stock.

Solaris Investment Management's chief investment officer, Michael Bell, also praised Life360's growth, highlighting that the app has more than 2 million paying circles, ahead of expectations.

3. Future outlook

It's worth noting that Life360 is exploring monetisation opportunities through advertising.

Following its acquisition in 2021, the integration of Tile within the core Life360 subscription model could drive higher conversion rates and lower churn over time. This could also support subscription revenue growth.

Goldman Sachs analysts project the same outlook and estimate that Life360 is exposed to a total global addressable market (TAM) of US$12 billion. In a May note, it saw significant opportunities for the AI stock to expand its product suite and grow average revenue per paying circle (ARPPC).

The broker notes that Life360's subscription business trades at a discount to global peers despite its superior growth outlook.

It rates Life360 a buy:

The company is now scaling margins and earnings rapidly off a low base, with attractive unit economics and potential structural profitability tailwinds on the horizon from a reduction in effective app store fees.

Life360's Subscription business currently trades at a discount to global subscription app peers when adjusting for its superior growth outlook.

We see scope for re-rating as Life360 demonstrates operating leverage, ongoing subscription growth and user monetisation via ads. We are Buy rated on Life360.

Is this AI stock a buy?

Life360's innovative use of AI, robust financial performance, and significant growth potential could make it an attractive option for investors looking to profit from the AI stock surge. Brokers are bullish, and the stock continues its ascent in FY25.

However, as with any investment, it's essential to consider your risk tolerance and investment goals. While Life360 appears poised for continued growth, there's no certainty it will get there. Investors should always weigh the potential rewards against the risks and seek professional advice when necessary.

The post Should I buy Life360 shares to profit from the AI stock surge? appeared first on The Motley Fool Australia.

Of course, we know that what the experts predict will happen next year may or may not eventuate.

As investors, we understand that the proverbial can hit the fan and catch us unawares at any time.

That's called a black swan, by the way. An unexpected negative event that tramples all over our stock valuations for a period. A once-in-a-century pandemic, for example. But I digress.

It's also worth remembering the old adage that investment success is not about timing the market, but time in the market. That's why The Fool advocates long-term investment as opposed to trading.

Thus, no matter what the crystal ball says about likely events next year, the timing of our investments should really come down to when it suits us personally.

That is, when we can afford it and when we have a strategy in place for long-term wealth creation.

With all that said, let's examine the views of two experts and see what they think is likely to happen with shares vs. property in 2024.

What's next for shares vs. property in 2024?

Let's start with bricks and mortar.

Our expert is Louis Christopher, the Head of Research at SQM Research. He's one of Australia's most experienced property price researchers and analysts.

Christopher has just released his annual Housing Boom and Bust Report 2024.

The especially great thing about this report is that Christopher provides a base case scenario, plus a few other scenarios, to give us a well-rounded view of what may happen to property prices under various macroeconomic circumstances. Cool, huh?

Sydney and Melbourne likely to fall

As shown in the chart above, the base case — or most likely scenario, in Christopher's view — is a cash rate of between 4.1% and 5%, continued strong population growth of 460,000 people or less (that's a bit less than 2023 growth), and Australia's unemployment rate moving to between 4.5% and 5.5%.

The alternative scenarios include a global energy crisis and much stronger population growth.

The base case sees Sydney and Melbourne home values either falling or recording anaemic growth. Christopher forecasts -4% to 0% movement for Sydney and -3% to +1% movement for Melbourne.

These two cities are typically the biggest beneficiaries of migration, and if you put continuing strong population growth together with a critical housing supply shortage, we get a reasonably effective offset against rising unemployment, which will limit how far prices may fall in each city overall next year.

But these are expensive property markets. Sydney is the most expensive, with a median house price of $1.12 million, and Melbourne is third-most pricey, with a median of $778,000, according to CoreLogic data.

That means plenty of Sydney and Melbourne householders have big home loans, and Christopher reckons the affordability challenges emanating from higher interest rates will begin to show in 2024.

However, he expects Sydney and Melbourne's prestige sector to continue to do well, benefitting from rising foreign buyer demand. In both cities, he tips apartment price growth to outperform houses.

He said:

The interest rate rises of 2022, 2023 and possibly 2024 will finally start to bite homeowners and would-be homebuyers alike. Distressed selling activity is expected to jump, especially in NSW where we are already starting to see a new trend upwards in that data set.

Canberra could get smashed while the mining capitals surge

Canberra is currently Australia's second-priciest housing market, with a median house price of $961,000.

It has decoupled from the other smaller states and territories to join Sydney and Melbourne at the top of the home valuations tree.

Christopher is tipping a fall in Canberra home values of between -8% and -4% next year. This will be due to reduced Federal Government spending and rising housing supply due to a strong pipeline of new apartment completions.

Meanwhile, Christopher predicts 5% to 9% price growth in Perth and 4% to 8% growth in Brisbane in 2024.

This would be caused by stronger commodity prices brought about by an anticipated uplift in Chinese demand for iron ore.

Most of Australia's mining activity is centred on Western Australia and Queensland, and the families of mining workers often live in the nearest capital cities, adopting a FIFO lifestyle.

Higher demand for commodities could mean more mining industry jobs and higher wages, which would then flow through to property values in the capitals.

Christopher said:

Perth and Brisbane are still very likely to record price rises based on super tight rental conditions, a better-than-expected global commodities market and minimal exposure to the financial services sector, where we believe there maybe be significant job losses.

The Adelaide and Darwin markets are likely to remain steady or record a minor price rise or correction. The base case forecast is price growth of 0% to 3% in Adelaide and -3% to +1% in Darwin.

What about rents?

Well, it's good news for landlords with residential real estate investments. Christopher tips asking rents to keep rising by between 7% and 10% across Australia next year.

He expects Perth rents to increase the most — by a whopping 12% to 15%.

By the way, we recently looked at whether soaring rents are delivering better returns than dividends for investors.

Now, let's move on to the 2024 outlook for ASX shares and how that compares vs. property.

What's the outlook for ASX 200 shares in 2024?

As my Fool colleague Tristan recently reported, top broker Morgan Stanley has a 12-month target of 7,350 points for the benchmark S&P/ASX 200 Index (ASX: XJO).

The ASX 200 closed at 7,040.8 points on Friday.

We've seen sluggish capital growth of 1.36% in 2023 amid much volatility.

If Morgan Stanley has it right, ASX 200 share investors are looking at potential capital gains of 4.39% over the next 12 months.

Morgan Stanley particularly likes the look of ASX mining shares in 2024. It reasons that commodity prices will stay strong and the weaker dollar will remain beneficial, too.

As a result, the broker's model portfolio currently has larger positions in BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO), energy shares, healthcare shares, and insurance shares.

Shares vs. property in 2024: Which wins on predicted gains?

Based on our expert views, ASX 200 shares are tipped to do better vs. property in 2024 in terms of capital gains.

Morgan Stanley is predicting 4.39% growth for ASX 200 shares over the next 12 months.

By comparison, Christopher's overall base case for the combined weighted capital cities is -1% to +3%.

For further reading, check out ASX shares vs. real estate investment: Which wins on 10-year returns?

The post Expert predictions: ASX 200 shares vs. property in 2024 appeared first on The Motley Fool Australia.

The broker believes a stop to the rally could come in the form of rising interest rates and a pullback in consumer spending, thus reducing corporate earnings, the Australian Financial Review reported.

The S&P/ASX 200 Index (ASX: XJO) has lifted 10.4% since 3 October to the present day. It's currently up 0.32% in today's trading session.

Let's cover how Morgan Stanley expects rising interest rates to affect ASX 200 shares moving forward.

What did Morgan Stanley say?

Morgan Stanley's head of Australian strategy Chris Nichol said we may not have felt the full effects of rising interest rates, which will put pressure on companies' bottom lines.

He said:

Investors should brace for impact from the lagged effects of an aggressive tightening cycle. The next six months will see fuller effects from an aggressive monetary hiking cycle impacting domestic focused earnings.

Nichol also believes consumers could be underestimating the effect that rising interest rates might have on the economy, which could be leading to a sense of overconfidence in their spending habits.

[Consumers] are not fully calibrating the true extent of the adjustment in disposable income and asset wealth ahead whilst also potentially underappreciating the job required of policymakers to achieve their goals.

The net result of rising interest rates is that housing prices could fall by as much as 20%, Nichol said. This, in turn, may finally force consumers to spend less on discretionary items, thus kicking off a recessionary cycle in the economy.

However, another expert believes ASX 200 shares could have reached their bottom and are poised to rally again.

Have ASX 200 shares bottomed out?

AMP economist Dr Shane Oliver thinks there have been some "fundamental improvements" in the backdrop of ASX 200 shares that occurred during October.

He said the main reason is that inflation appears to have peaked in the United States, dropping from a high of 9.1% in June to 7.7% year-on-year in October.

Oliver notes that with inflation easing, future interest rate hikes by the Fed are likely to be less severe, thus reducing the chance they will put the economy into a recessionary tailspin.

US equities could also be benefiting from a couple of tailwinds in the short-term, Oliver said, including US midterm elections and the fact ASX 200 shares have entered into a bullish part of the year. These cyclical factors could also be giving them a lift.

Oliver also suggested China could look to focus on growing its economy and lift COVID-zero restrictions by the middle of next year.

Summarising his position, Oliver said the following on the longer-term outlook for ASX shares:

We remain optimistic about shares on a 12-month horizon as investors will start to focus on monetary easing from late next year and then economic recovery.

The post Why ASX 200 'investors should brace for impact': Morgan Stanley appeared first on The Motley Fool Australia.

Leading broker Morgan Stanley rates some leading S&P/ASX 200 Index (ASX: XJO) shares as buys, with compelling upside.

Many businesses on the ASX have seen their share prices drop in recent days and weeks. While there is much fear in the market about the effects of inflation and interest rates, investors may also be able to find some long-term opportunities.

Brokers can give a helpful hint about which ASX 200 shares could be worth owning at these prices, so let's look at two of the buy-rated picks.

Goodman Group (ASX: GMG)

Goodman is one of the largest property businesses on the ASX. It has a global portfolio of properties and projects in the industrial real estate sector.

Morgan Stanley currently rates it as a buy ( or 'overweight') with a price target of $25.98. That implies a potential rise of more than 40% over the next year. One of the key factors that the broker likes about Goodman is its growing rent, which has been increasing at a pleasing pace over the last several years.

As an example, in the company's FY22 third-quarter update, Goodman revealed a 12-month rolling like-for-like net property income (NPI) growth of 3.7%. It also had a five-year weighted average lease expiry (WALE), giving the business income visibility.

Another thing that Morgan Stanley likes is the ASX 200 share's property development pipeline. It said that the concentration of its workbook in desirable locations has allowed it to increase its development work in progress (WIP) to $13.4 billion. Completions for the nine months to 31 March 2022 were $4.7 billion, with $6 billion in total expected for FY22.

Sonic Healthcare Ltd (ASX: SHL)

Sonic Healthcare is a large pathology healthcare business. It has operations in a number of countries including Australia, the US, and Germany.

It's currently rated as a buy ('overweight') by Morgan Stanley. The price target is $40, implying a possible rise of around 20%. The broker points to COVID-19 testing as a positive for earnings in FY22.

The company's COVID-19 testing operations are expected to give FY22 earnings a boost, as they did in FY21. However, the broker is expecting Sonic's earnings to return to a more normal level in FY23. With that in mind, the Sonic Healthcare share price is valued at 10 times FY22's estimated earnings and 16 times FY23's estimated earnings.

The company said within its FY22 half-year result release that it's expecting a "sustainable level of COVID-19 testing into the future, including routine COVID testing, screening programs, variant testing, whole genome sequencing and antibody tests".

However, Sonic's base business revenue is also rising. HY22 base revenue was up 4.3% year on year and up 2.5% compared to HY20 (which was before COVID-19).

A bonus is that Morgan Stanley is expecting the company to keep increasing its dividend over the next couple of years, which matches Sonic's 'progressive dividend policy'.

The post Buy these 2 quality ASX 200 shares: broker appeared first on The Motley Fool Australia.

During the COVID-19 crash of early 2020, the Telstra share price did not fall as dramatically as many other ASX shares did.

Over the last month, Telstra shares have dropped around 2% while the S&P/ASX 200 Index (ASX: XJO) share price has declined around 6% in that time.

Telstra generates relatively consistent profit and cash flow every month, thanks to the essential nature of its services to Australians.

But inflation and interest rates rising present a different conundrum for investors compared to a global pandemic. Is the telecommunications business an opportunity?

Broker opinions on the Telstra share price

As one of the biggest businesses on the ASX, there are plenty of analysts that look at the company.

One of the most recent ratings comes from the broker Morgan Stanley, with a price target of $4.60 and a buy rating. That implies a possible rise that's comfortably more than 10%.

One of the reasons for its optimism is that in the US, 5G telco peer T-Mobile is seeing good operational progress with customers quickly taking to fixed wireless home internet. So far, the changing economic environment in the US is not hurting consumer demand for telco services.

Another broker that rates Telstra as a buy is Ord Minnett. The price target is $4.50, also implying more than 10% upside. One of the positives that the broker has pointed out is the potential for the telco to sell more of its telco tower assets.

Recent updates

One of the major ways that investors like to value businesses is by looking at the profit direction.

Telstra is now expecting its profit to start rising after years of being impacted by the shift to the NBN.

A few months ago, the company said in its T25 strategy to FY25 that it's expecting a compound annual growth rate (CAGR) of mid-single digits for underlying earnings before interest, tax, depreciation and amortisation (EBITDA) and a high-teen growth rate for underlying earnings per share (EPS).

In the recent FY22 half-year result, the company reported "strong" mobile growth with EBITDA rising 25%, post-paid average revenue per user (ARPU) rising 5%, and post-paid services increasing by 84,000.

It also reported that underlying EBITDA rose 5.1% to $3.5 billion, while underlying EPS went up 55% to 6.2 cents.

The company said that it is continuing to see growth in the mobile market on the back of its investment in customer-centric plans.

Telstra also boasts that its 5G network is now more than twice the size of Telstra's nearest competitor, with more than 77.5% of the population covered and almost 2.8 million 5G devices connected to its mobile network.

The business has also made other moves, such as the acquisition of the Digicel Pacific company. Digicel Pacific has 2.5 million customers and leading businesses in PNG, Fiji, Vanuatu, Tonga, Nauru, and Samoa.

Telstra dividend

The board of Telstra has an intention to grow its dividend over time, as earnings and cash flow grow.

At the current Telstra share price, it's expecting to pay a grossed-up dividend yield of 5.8%.

The post Is the Telstra share price a safe haven buy right now? appeared first on The Motley Fool Australia.