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 ASX shares are in the buy zone:
Baby Bunting Group Ltd (ASX: BBN)
According to a note out of Citi, its analysts have retained their buy rating and lifted their price target on this baby products retailer’s shares to $6.11. This follows the release of a trading update at its annual general meeting this week. The broker was pleased with Baby Bunting’s update and particularly the progress it is making with its exclusive and private label sales. These are nearing target levels well ahead of expectations. Citi was also pleasantly surprised with its gross margin. The Baby Bunting share price is trading at $5.49 this afternoon.
Magellan Financial Group Ltd (ASX: MFG)
A note out of Macquarie reveals that its analysts have upgraded this fund manager’s shares to an outperform rating but cut the price target on them to $38.00. Macquarie made the move on valuation grounds following a significant de-rating. And while the broker believes that fund flows are likely to remain under pressure for the rest of FY 2022, it feels its shares are too cheap to ignore now. Especially given the potential for a dividend yield of ~7% this financial year. The Magellan share price is fetching $32.06 on Thursday.
Sonic Healthcare Limited (ASX: SHL)
Analysts at Morgan Stanley have retained their overweight rating and $45.50 price target on this healthcare company’s shares. According to the note, the broker has been looking at the performance of European peer Synlab. It notes that Synlab has increased its guidance to reflect higher COVID-19 testing demand. Given the similarities, the broker suspects that Sonic could be benefitting as well. It feels this creates upside risk to revenue and earnings forecasts. The Sonic share price is trading at $40.23 today.
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- Why Afterpay, Austal, Baby Bunting, & Nick Scali shares are storming higher
- The Magellan (ASX:MFG) share price is in focus on $1.5 billion FUM outflow
- Why this broker just upgraded the Baby Bunting (ASX:BBN) share price to buy
- Baby Bunting (ASX:BBN) share price drops following trading update
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Baby Bunting and Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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