Morgans rates these ASX 100 shares as buys

A man with a yellow background makes an annoncement, indicating share price changes on the ASX

The S&P/ASX 100 Index (ASX: XTO) is home to a number of blue chip shares. Two that have recently been named as buys by analysts at Morgans are listed below.

Here’s why its analysts are bullish on them:

Tabcorp (ASX: TAH)

Morgans is feeling positive about the Tabcorp share price. This is due partly to the belief that the market is undervaluing its Lotteries and Keno (L&K) business.

The broker currently has an add rating and $5.70 price target on the gambling company’s shares.

Morgans commented: “While COVID restrictions have impacted the earnings recovery for Wagering & Gaming Co, we continue to view the risk/return profile of TAH as asymmetrically skewed to the upside over the next ~12 months as the demerger of the high quality, infrastructure-like Lotteries & Keno business progresses.”

“At current levels, we think L&K is trading on ~15x EBITDA and think this multiple can re-rate to between 16-20x on a standalone basis over time, supported by offshore peer comps and domestic infrastructure names,” it added.

Westpac Banking Corp (ASX: WBC)

Another ASX 100 share the broker is positive on is Westpac. Australia’s oldest bank is Morgans’ preferred pick of the majors due to its belief that it offers the most compelling valuation in the group.

And while there were aspects of its recent full year results that disappointed, Morgans believes the sell off that ensued was an overreaction.

Its analysts currently have an add rating and $30.50 price targets on the bank’s shares.

Morgans explained: “We find the management of the margin-volume tradeoff in Australian home lending in FY21 to be disappointing and we hope for better management of this tradeoff going forward.”

“Having said this, our view has been that the stock was not being priced for perfection and was offering considerable value. While the NIM has now re-based notably lower, we continue to see considerable value in the stock particularly due to our expectation of significant cost out by FY24F,” it added.

The post Morgans rates these ASX 100 shares as buys appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. 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 Westpac Banking Corporation. 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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