The team at Morgans has been busy this week looking at a number of popular ASX shares.
Does the broker think they are buys, holds, or sells? Here’s what Morgans is recommending to clients:
Collins Foods Ltd (ASX: CKF)
The broker was pleased with news that this KFC restaurant operator is expanding its footprint in Germany with an attractive acquisition.
In response to the news, the broker has reaffirmed its buy rating on Collins Foods shares with a slightly improved price target of $12.70. It said:
CKF has announced what we see as a high-quality German KFC bolt-on at attractive economics. CKF is acquiring an eight-restaurant Bavarian portfolio at just under 6x restaurant-level EBITDA (pre-AASB 16) and expects the deal to be immediately EPS accretive. The Germany runway has been extended through the German Development Agreement (DA) to 45-90 new restaurants (from 40-70), materially extending the organic growth runway.
We believe this was a sensible, returns-focused deal that adds weight to the Germany growth story; execution is still key, but with a refreshed team and strong operators at the helm, success in Germany should be the catalyst for a re-rate despite lingering Netherlands noise. We upgrade to a BUY with a $12.70 target (was $12.40).
Endeavour Group Ltd (ASX: EDV)
Another ASX share that Morgans has been looking at is Dan Murphy’s owner Endeavour Group.
It was relatively pleased with its half-year results. However, for now, the broker thinks its shares are fairly valued and has retained its hold rating with a $3.65 price target. It said:
There were no major surprises in EDV’s 1H26 result following the company’s trading update in January. While EDV continues to work on its refreshed strategy with further details to be provided at an investor day on 27 May, management confirmed that the combined Retail and Hotels portfolio will be retained.
Management also noted that they will continue investing in Dan Murphy’s to restore its price leadership, while accelerating hotel renewals and electronic gaming machine (EGM) replacements. We decrease FY26-28F underlying EBIT by between 0-1%. Our target price falls to $3.65 (from $3.70) and we retain our HOLD rating.
Magellan Financial Group Ltd (ASX: MFG)
Morgans has also been looking at Magellan shares. It notes that the company is planning to merge with Barrenjoey.
And while it feels the deal is more favourable to Barrenjoey, it thinks it has created a buying opportunity for investors. It has upgraded its shares to a buy rating with an improved price target of $12.43. It said:
MFG has entered into an arrangement to merge with Barrenjoey. We think the deal makes strategic sense and will reinvigorate the MFG story. Nevertheless, deal pricing appears tilted in Barrenjoey’s favour (in our view). We assume the merger closes at the end of FY26. Changes to our MFG FY26F/FY27F/FY28F EPS are -27%/+10%/~+25% reflecting the incorporation of the deal and upgrades to our assessment of Barrenjoey’s earnings profile (based on new disclosures).
Our price target is set at A$12.43 (previously A$9.80). We think the Barrenjoey merger fundamentally changes MFG’s overall outlook, strengthening the business and providing additional pathways to growth. MFG also retains a strong balance sheet (~A$690m of liquidity, post deal). Move to a BUY.
The post Buy, hold, sell: Collins Foods, Endeavour, and Magellan shares appeared first on The Motley Fool Australia.
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Motley Fool contributor James Mickleboro has positions in Collins Foods and Endeavour Group. 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 Collins Foods. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.