Cochlear – Buy

300Cochlear announced an $850mn equity raise to enhance liquidity. The $800mn raise is underwritten via an institutional placement at $140 per share.

Following the placement, we estimate COH will have total liquidity of
$1.0bn +  with little in the way of debt maturities until 2022.

The raise now removed balance sheet risk but time to elective surgery recovery remains unclear. We maintain our accumulate rating within the $150 – $170 price range.

 

Australian Share Market – What you need to know

S&P/ASX has run into resistance at 5250 points. Portfolios should be positioned defensively until we see a break back above this level.

The list below highlights the themes we will be focusing on in the coming weeks.

  1. Watch gold for buying support
  2. BBOZ & BBUS provide downside protection
  3. Banks and property to come under further pressure
  4. Revisit buying levels in technology and healthcare
  5. Oil sub $20 and Nat Gas sub $1.60 provides an opportunity
  6. Expect discounted rights issues to shore up balance sheets
  7. Impact on bank earnings will be substantial
  8. Iron Ore prices have remained strong, can it continue?
  9. Will the Government consider stimulating housing construction?
  10. Strategies to protect and grow portfolios.

Keep an eye out for our “Opportunities in Review” webinar invitation and feel free to call our office on 1300 614 002 to discuss our preferred strategies in the current market.

REA Group – Value Has Emerged

REA Group is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.

The share price has corrected over 40% due to the impact of COVID-19. Earnings will decline over the coming months as restrictions impacting open homes and slower vendor listings bite in the short-term.

In the medium term, we see scope for a full recovery in the business and therefore, the current share price at 20x forward earnings looks attractive.