Buy, hold, sell: Mesoblast, Dicker Data, ASX shares

Analysts are just getting back into the swing of things after reporting season and the research reports are starting to flow.

I’ve picked out three companies that brokers have tipped for differing fortunes.

Let’s have a look.

Mesoblast Ltd (ASX: MSB)

Bell Potter published a research report last week which said that the outlook for Mesoblast’s short term revenue growth “remains highly attractive”.

There are also some pivotal events in the wings next year, including the interim readout on the clinical study for Mesoblast’s drug Ryoncil to be used in adults to treat graft versus host disease, and the headline data for a study of another compound in treating chronic lower back pain.

Bell Potter said:

Both are substantially larger markets than paediatric GvHD, nevertheless the market remains cautious. Australian biotech has had a difficult 12 months with several randomised clinical trials failing to meet clinical endpoints and we expect this has undermined investor confidence in the sector and is a contributing factor to the recent MSB share price.

The broker said the lower back pain drug could be a blockbuster in its own right, but the bar for approval was high.

They added:

Randomised controlled trials in pain management are difficult, however, the first Phase 3 in this indication achieved highly statistically significant reductions in pain from baseline. Since then patient selection criteria has been tightened and clinical endpoints refined in moves which we believe enhance the prospects for meeting the clinical endpoints in next year’s headline data readout.

Bell Potter has a $4.45 price target on Mesoblast shares compared to $1.98 currently.

Dicker Data Ltd (ASX: DDR)

Computer hardware company Dicker Data has just announced a deal to buy Sektor Group in New Zealand for $111.8 million.

Broker UBS said the motivation for the deal was to drive more growth in the southeast Asian region, “and further bolster its dominant Trans-Tasman offering within high margin technology”.

UBS said it was a positive incremental step for Dicker Data with the deal transacted at an attractive multiple.

The broker added:

Given the transaction consideration is entirely cash and no explicit management retention arrangements have been disclosed, retention of key personnel and vendor/ reseller relationships will be important to successful integration.

UBS has a neutral recommendation on Dicker Data shares and a $15.40 price target compared to $16.08 currently.

ASX Ltd (ASX: ASX)

Macquarie released a new research report into ASX, saying they were cautious on the company due to leadership transition and downside earnings risk from potential higher than expected capital expenditure.

The broker increased their price target from $52 to $53. However, it remains well below the current price of $61.10.

They also have an underperform rating on the company. At the time of writing, ASX is valued at $11.96 billion.

The post Buy, hold, sell: Mesoblast, Dicker Data, ASX shares appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Buy, hold, sell: Mesoblast, Transurban, NextDC shares
• Top brokers name 3 ASX shares to buy next week
• 2 ASX 200 shares tipped to rise 39% to 130%
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Dicker Data. The Motley Fool Australia has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.