Buy, hold, sell: ResMed, Sigma, and TechnologyOne shares

If you are on the lookout for some new portfolio additions, then it could be worth hearing what analysts at Morgans are saying about the ASX shares named below, courtesy of The Bull.

Are they bullish, bearish, or something in between? Let’s find out.

ResMed Inc. (ASX: RMD)

Morgans has given its verdict on this sleep treatment company this week.

The broker has concerns that the ASX share could be negatively impacted by cost pressure arising from the conflict in the Middle East.

As a result, it has put a hold rating on ResMed shares. It said:

This global company develops, makes, distributes and markets medical devices for diagnosing, treating and managing respiratory conditions, including sleep disordered breathing. RMD management recently flagged emerging cost pressures from Middle East tensions. It was a response to higher fuel prices and early signs of component inflation.

However, RMD’s fundamentals remain sound, with consistent execution, strong cash generation and structural growth tailwinds from expanding diagnosis and supplies. In our view, investors should continue holding the stock.

Sigma Healthcare Ltd (ASX: SIG)

The team at Morgans thinks that Sigma Healthcare shares could be a buy.

It was pleased with its plan to expand into the UK market and believes it could support quicker than expected growth in its store network. It explains:

Sigma Healthcare is a wholesale distributer of pharmaceutical goods and medicines. Following the merger with Chemist Warehouse to create a leading healthcare franchisor, Sigma recently announced it had signed a memorandum of understanding with Greenlight Healthcare that will launch the Chemist Warehouse brand in the UK market. Sigma will acquire a 75 per cent interest in a number of stores.

Chemist Warehouse has averaged opening 33 new stores per annum over the past five years, but this international expansion could expedite growth. SIG is a first class operator that’s likely to continue its impressive growth track record into the future.

TechnologyOne Ltd (ASX: TNE)

Morgans thinks that TechnologyOne shares are expensive at current levels.

As a result, the broker has put a sell rating on the enterprise software provider’s shares this week.

Commenting on TechnologyOne, the broker said:

TNE is one of Australia’s largest enterprise software-as-a-service companies. TNE provides enterprise resource planning software to thousands of corporations, government departments and statutory authorities. While TNE enjoys strong market positions in Australia and New Zealand, the stock was recently trading on a lofty price-earnings ratio above 65 times, indicating it may be overvalued if growth falters.

The company is exposed to higher interest rates and its subsequent implications regarding valuations of technology companies. Some uncertainty exists about the long term impact of artificial intelligence on companies in the broader technology sector.

The post Buy, hold, sell: ResMed, Sigma, and TechnologyOne shares appeared first on The Motley Fool Australia.

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