Brexit Delays | Pushpay Update

17 January 2019

 

Global markets continued to rally overnight as Wall Street’s main indexes hit a one-month high, boosted by upbeat earnings from Bank of America and Goldman Sachs which both surged higher.

Once again, we see the current US corporate earnings season as very interesting given weak guidance from several notable companies such as Apple. Earnings had been a clear positive factor for driving the bull market, and we will be watching the current earnings season closely. While it is very early, so far the Bank stocks look to be rallying on better than expected announcements.  

As we touched on yesterday,  the British Parliament handed a large defeat to Prime Minister Theresa May's Brexit plan, rejecting it by a margin of 230 votes, forcing her back to the drawing board with her domestic critics and the European Union. This saw the UK market (FTSE) buck the trend and fall overnight. It is possible that the Brexit failure will result in both the UK and EU agreeing to delay the formal divorce, potentially increasing the chances of a soft Brexit or no Brexit at all.
 

Stock in Focus: Pushpay (PPH:NZX / PPH:ASX)

Pushpay shares have started the year on a positive note, jumping on a well-received update over its important Christmas quarter. 

Pushpay announced it has achieved positive operating earnings and cashflow for that quarter, with positive cash flow expected to continue on an on-going basis. With this hurdle overcome, the next would be to deliver a net profit which we anticipate is not too far off given PPH’s ability to add large churches and impressive revenue growth rate. Pushpay also guided that they remain on track to achieve their revenue target of US$97.5m to $100.5m for the 2019 financial year, with gross margin improvement in the second half as they benefit from increased scale. 

Despite what was a difficult 2018 for the share price, operationally nothing significant has changed in terms of the medium-term outlook. We continue to believe that PPH presents an attractive high risk/high reward opportunity.

Members can login to read our latest full update on Pushpay.

 
Australia & New Zealand Market Movers

The Australian share market was higher yesterday (ASX 200 index +0.35%) although share movements were muted as investors traded cautiously following the defeat of the Theresa May's latest Brexit plan in the British parliament. The financials and technology growth stocks led gains, as China's promise of tax cuts and government spending to support the economy pushed growth stocks higher.

 

The New Zealand market made gains on Wednesday (NZX 50 index +0.70%) buoyed by steady gains in overseas market and a better than expected result from the latest dairy auction. Shares in A2 Milk rallied, leading the market higher, while Synlait Milk and Fonterra Shareholders Fund units also rose. Shares of retailers were mixed after a report showed December retail sales fell -2.3% from November on a seasonally adjusted basis, with spending gaining no apparent boost from lower petrol prices that month.

 

3 Things Markets Will be Watching this Week

  1. US earnings season begins with big Wall Street banks announcing profits. Weak guidance from several notable companies such as Apple and Macy's have heightened the focus on US earnings growth.
  2. US politics continue to dominate headlines, with the ongoing partial shutdown of the US Government.
  3. The UK Parliament votes on Brexit on Tuesday.

 

Have a Great Day,
 

Team

Global markets continued to rally overnight as Wall Street’s main indexes hit a one-month high, boosted by upbeat earnings from Bank of America and Goldman Sachs which both surged higher.

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