Morgans upgrades 3 ASX shares to buy ratings

The team at Morgans has been very busy this month reviewing countless results, updates, and opportunities.

Three ASX shares that have fared well are listed below. Here’s why the broker has upgraded them:

Maas Group Holdings Ltd (ASX: MGH)

This construction materials, equipment and service provider’s shares were sold off after announcing an agreement to sell its Construction Materials (CM) division and pivot to focus on digital, AI and electrification infrastructure.

Morgans appears supportive of the move and has responded by upgrading Maas shares to a buy rating with a $5.10 price target. Based on its current share price of $4.11, this implies potential upside of approximately 25% for investors.

Commenting on its upgrade, the broker said:

The pivot is cornerstoned by a $100m investment in Firmus, further aligning and supporting the recent JLE contract win. The sale of the quarries will deliver MGH a c.$550m net cash balance (post-Firmus investment), which management believe they can reinvest to deliver a 20% Return On Capital (ROC).

To this end, we see lower EPS across FY27/28 as we model a more conservative deployment of capital. At the current share price ($4.11/sh), investors are attributing negative value to the Civil business. At a peer multiple of c.10x FY27 EBIT for the Civil business, plus Corp costs, the valuation offers ample margin of safety. It is on this basis we upgrade to a Buy with a $5.10/sh price target.

Pro Medicus Ltd (ASX: PME)

Morgans thinks that recent weakness in the tech sector has dragged this health imaging technology company’s shares down to an attractive level. The broker has upgraded them to a buy rating with a $290.00 price target, which suggests that upside of 75% is possible between now and this time next year.

The broker doesn’t believe that this ASX tech share will be disrupted by AI. It said:

PME has been sold off heavily as investors increasingly worry that AI could structurally erode the economics and commoditise premium imaging SaaS platforms. For PME, that feels misunderstood. Bravery required with volatility high and trend weak, but this has proven to be a good time to pick up PME shares. Upgrade to BUY on weakness.

REA Group Ltd (ASX: REA)

A third ASX share that has been upgraded is realestate.com.au operator REA Group. The broker has put a buy rating and $211.00 price target on its shares. This implies potential upside of 23% for investors over the next 12 months.

It was reasonably happy with REA Group’s half-year results and sees value in its shares at current levels. It explains:

REA’s 1H26 result was broadly in line with expectations (being only ~1% under Visible Alpha consensus across most line items). Whilst the negative share price reaction on result day was arguably due to a variety of factors (e.g. cost outcomes in the first half, volume guidance being lowered for the full year), the result itself highlighted the resilience of the franchise in a tougher volume environment, with strong yield growth (+14%) offsetting a 6% decline in listings.

The post Morgans upgrades 3 ASX shares to buy ratings appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Pro Medicus and REA Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.