Analysts at Goldman Sachs have adjusted their economic forecasts following the improved trajectory for COVID-19 in Australia.
While the investment bank still expects a sharp -10% quarter on quarter contraction in GDP in the second quarter of 2020, it now expects a consumer-led recovery to commence one quarter earlier in the third quarter.
In response to this, Goldman Sachs has been looking through the mid cap sector and has adjusted its recommendations accordingly.
Here’s what the broker thinks about these four mid cap ASX share:
Breville Group Ltd (ASX: BRG)
Goldman has retained its neutral rating and $16.70 price target on this appliance manufacturer’s shares. It notes that Breville is a high quality business (strong balance sheet, solid returns and long-term growth potential in the US and UK/EU markets remains very attractive), however, it feels the current valuation reflects these strengths.
City Chic Collective Ltd (ASX: CCX)
The broker has retained its buy rating and $3.25 price target on this fashion retailer’s shares. It likes City Chic and believes it is a strong retailer in its clearly defined category (plus sized clothing). It also notes that it has a strong online presence, with 60% of sales from online channels. Other positives include its capital light business model and growth potential across multiple geographies (US/UK/EU).
GUD Holdings Limited (ASX: GUD)
Goldman Sachs has upgraded this products company’s shares from a neutral rating to a buy rating with a $10.50 price target. It made the move on valuation grounds, noting that its shares are changing hands at a lowly 13x estimated FY 2022 earnings.
Reject Shop Ltd (ASX: TRS)
Finally, the broker has upgraded this discount retailer’s shares from a sell rating to buy with a $4.75 price target. The broker likes Reject Shop due to its turnaround story with a new executive team, its robust balance sheet, and the potential for material improvements in efficiencies in labour, rent and stock turn. It also notes that the company has a strong cash balance, with its net cash representing approximately 28% of its market capitalisation.
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Returns as of 7/4/2020
More reading
- Leading brokers name 3 ASX shares to buy today
- Who said ASX retail shares were dead?
- 4 ASX retail shares up more than 100% in the past month
- Revealed: Which ASX shares will grow during coronavirus?
- 2 ASX retail shares that could thrive after COVID-19
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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