Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a large number of broker notes this week.
Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these shares are in the buy zone:
Altium Limited (ASX: ALU)
According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $40.00 price target on the electronic design software company’s shares. The broker notes that Altium expects to fall short of its US$200 million revenue target in FY 2020 because of the pandemic’s impact on smaller businesses. Morgan Stanley isn’t concerned by this and suggests investors should focus on the long term. It feels Altium remains well-positioned to deliver on its 100,000 subscriber target by 2025. I agree with Morgan Stanley and would be a buyer of its shares.
Premier Investments Limited (ASX: PMV)
A note out of UBS reveals that its analysts have retained their buy rating but cut the price target on this retail company’s shares to $17.15. The broker made the move after reducing its earnings estimates for FY 2021 due to the current uncertainty in the retail market. However, UBS remains positive on Premier Investments and believes it is likely to come out of the pandemic in a stronger position. I think UBS is spot on and the Smiggle and Peter Alexander owner would be a good option for investors.
Zip Co Ltd (ASX: Z1P)
Another note out of UBS reveals that its analysts have retained their buy rating and lifted the price target on this buy now pay later company’s shares to $3.70. It believes that Zip Co’s recent update shows that the company is able to perform strongly during the current crisis. It notes that it has been able to grow and manage its credit risk effectively during April. It also sees the easing of restrictions as a positive for Zip Co in the coming months. I would have to agree with this view as well and would be a buyer of its shares with a long term focus.
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Returns as of 7/4/2020
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia owns shares of Altium. 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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