Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a large number of broker notes this week.
Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX 200 shares are in the buy zone:
A2 Milk Company Ltd (ASX: A2M)
According to a note out of UBS, its analysts have retained their buy rating and NZ$22.00 (A$20.25) price target on this fresh milk and infant formula company’s shares. The broker believes that strong demand for its infant formula, particularly on Chinese ecommerce platforms, will allow a2 Milk Company to outperform the market’s expectations with its FY 2020 result. And while it has concerns that higher infant formula inventory levels could weigh on its performance in the ANZ market during the first quarter, it remains positive on its outlook. I agree with UBS and would be a buyer of a2 Milk Company’s shares.
Challenger Ltd (ASX: CGF)
A note out of the Macquarie equities desk reveals that its analysts have upgraded this annuities company’s shares to an outperform rating with an improved price target of $4.50. Although Challenger’s guidance for FY 2021 was below expectations, the broker believes recent share price weakness has brought it to an attractive level. Especially given its positive long term outlook. While I agree that Challenger’s valuation is reasonably undemanding, I would prefer to wait for its performance to improve before investing.
NEXTDC Ltd (ASX: NXT)
Another note out of UBS reveals that its analysts have retained their buy rating and lifted the price target on this data centre operator’s shares to $14.15. According to the note, the broker believes that the shift to cloud is accelerating and will continue to do so in the coming years. Especially given how many businesses are shifting the internal data centres to colocation centres. This should lead to strong demand for NEXTDC’s services. I agree with UBs on this one as well and feel NEXTDC could be a great long term option for investors.
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More reading
- ASX 200 down 0.3%: CBA delivers $7.3bn cash profit, gold miners sink, SEEK’s outlook disappoints
- Should you buy these 2 ASX dairy shares instead of A2 Milk?
- Coronavirus: SkyCity share price falls as NZ restrictions tighten
- Why a new CEO is good for the A2 Milk share price
- 5 things to watch on the ASX 200 on Wednesday
Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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