Global markets were mixed on Friday, as the US S&P 500 index managed to rally into the close of trade to finish a touch higher for the day.
In the US, positive corporate results on Friday offset lingering scepticism over the China trade deal being solved before a March 1 deadline – as Trump said he will not be able to meet with his Chinese counterpart Xi Jinping before the stated deadline.
For the week ahead, NZ corporate earnings season kicks off today, with Contact Energy the first major company out of the blocks. Australian results have been mixed so far last week, although it is far too early to make any generalisations. Announcements reach top gear with Amcor, Bendigo Bank, JB Hi-Fi and real estate investors GPT all due to release earnings results today. During earnings season, the focus of investors usually shifts away from economic issues and back towards company specific news-flow.
This week also sees the RBNZ make an interest rate decision, which will be particularly interesting given the growing view that there will be interest rate cuts both in NZ and Australia.
Stock in Focus: Pushpay (PPH:NZX / PPH:ASX)
Shares in church payments software business Pushpay were lower last week, after releasing what we saw as another encouraging update – although it appears the market had higher hopes.
For the December 2018 quarter which is seasonally Pushpay’s strongest quarter) total revenue increased to US$27.7 million for the quarter, which represents an increase of 35.2% over the prior corresponding period. Average revenue per customer (ARPC) in the key December quarter increased by 25.6% to US$1,548 and total customers grew by 5.5% to 7,585 (although this revenue per user was a little short of market expectations).
The strong quarter saw operating earnings and cash flow move into positive territory, and Pushpay is now confident it will have positive cashflows on an ongoing basis. It is nice to see the business moving into profitability as the business shows operating leverage.
Pushpay reaffirmed its revenue guidance of US$97.5 million to US100.5 million for the March 2019 year, along with a gross margin above 60%.The company also re-iterated the long-term opportunity as it wants to achieve US$10 billion in annualised processing volume – and as we have noted in the past implies a much higher valuation than the current share price (if they can get there).
We currently have a BUY (High-Risk) rating on Pushpay.
Members should look out for a full update on Pushpay to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market was lower on Friday (ASX 200 index -0.34%). The Reserve Bank has cut key economic forecasts as risks to the Australian and global economies increase and the odds of an interest rate cut rise, threatening the outlook of Treasurer Josh Frydenberg's first budget.
The New Zealand market rallied on Friday (NZX 50 index +0.47%). The local market was one of the few to gain across Asia-Pacific after a weaker lead from Wall Street. Utilities were a favourite among investors given their defensive qualities. Ryman Healthcare and Infratil led the market higher.
3 Things Markets Will be Watching this Week
- US corporate earnings season gets into its latter stages.
- Local earnings season also kicks off in NZ and gets further underway in Australia this week.
- The Reserve Bank of New Zealand holds a press conference & makes an interest rate decision Wednesday morning.
Have a Great Day,