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:

CSL Limited (ASX: CSL)

According to a note out of UBS, its analysts have retained their buy rating and $342.00 price target on this biotherapeutics company’s shares. The broker believes that CSL’s Seqirus business is well-positioned to benefit from increasing demand for influenza vaccines in the future because of the current pandemic. It suspects that this could offset any weakness in the core CSL Behring business caused by potential plasma collection disruptions. I agree with UBS and feel CSL would be a great option for investors.

Nearmap Ltd (ASX: NEA)

A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating and lifted the price target on this aerial imagery technology company’s shares to $2.47. Although Nearmap is being impacted by the pandemic, it notes that its sales have remained resilient and usage among existing customers appears strong. I think Macquarie is spot on and believe Nearmap could be a great long term option.

Rio Tinto Limited (ASX: RIO)

Analysts at Goldman Sachs have retained their buy rating and lifted the price target on this mining giant’s shares to $101.10. The broker made the move after upgrading its iron ore price forecasts to account for strong Chinese steel production and weaker supply out of Brazil. It expects the stronger iron ore prices to lead to a better than expected profit from Rio Tinto in FY 2020. Goldman also estimates that its free cash flow will support a fully franked dividend yield of 5%. I would have to agree with this recommendation as well. I think Rio Tinto is a top option for investors wanting exposure to the resources sector.

More reading

• The smartest ASX 200 shares to buy with $2,500 today
• ASX 200 up 1%: Big four banks jump, Afterpay hits record high
• Are our ASX big miners on an earnings upgrade cycle?
• Can ASX 200 retail shares outperform this year?
• 1 ASX 200 tech share to buy and hold for a decade

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. 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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Among the most traded blue chips, the real estate sector is head and shoulders above the rest. It sold off heavily during Monday’s trading, with many investors looking to buy the dip on Tuesdays. 

The real estate sector is faced with continuing uncertainty due to the COVID-19 pandemic. In some cities, residential housing prices are starting to show signs of deterioration. Moreover, shopping centres are still working through issues of rent during the crisis. The full impact on smaller retailers is yet to be clearly determined. 

Most traded blue chip real estate shares

Vicinity Centres (ASX: VCX) led the week announcing a $1.2 billion capital raising through share placement. At the same time, it announced there would be no distribution for the 6 months ending 30 June. Vicinity was down by 1.5% from Friday’s closing price to Tuesday’s closing price. On Tuesday, 65 million shares changed hands.

The move will shore up the company’s balance sheet in light of increased uncertainty due to COVID-19. The placement has allowed it to reduce its level of gearing from 34.9% to 26.6%. In addition, the company now sits with cash and undrawn debt facilities of $2.6 billion. Vicinity invests in shopping centres across Australia.

The Mirvac Group (ASX: MGR) share price has fallen by 2.1% from Friday’s closing price to Tuesday. Over 44 million shares have changed hands since the opening of the ASX this week. Over 60% of its assets are in office real estate. Mirvac removed its FY20 guidance and distributions on 18 March. It disclosed a 5.6% reduction in monthly comparable sales in its retail assets.

Scentre Group (ASX: SCG) saw its share price rise by 2.65% by close of trading on Tuesday. This was after a sharp sell-off on Monday. As one of the week’s most traded blue chips, Scentre saw 79 million shares change hands in the first two days of this week. Scentre holds the domestic shopping centre assets formerly owned by Westfield Corporation. It withdrew guidance on 20 March. Like the other most-traded blue chips, Scentre saw a sharp fall on Monday followed by investors clawing back value on Tuesday.

Foolish takeaway

All three of these real estate investment trusts (REIT’s) are selling at a price to earnings ratio (P/E) of 10 or under. Historically this is a good P/E for this sector and is generally lower than it has been since 2015. The worst news is yet to be announced as April and May have been our worst months as a country during the pandemic. They are all well-managed companies with strong balance sheets. If you are patient then these companies are selling at good entry points over a medium-term of, say, 1–2 years. 

More reading

• Leading brokers name 3 ASX shares to sell today
• Why Evolution, Iress, Pro Medicus, & Vicinity shares are dropping lower
• ASX 200 down 0.1%: Big four banks drag ASX lower ahead of RBA meeting
• The latest ASX 200 stocks to be upgraded by top brokers
• Why a2 Milk, Freedom Foods, Scentre, & TPG Telecom are dropping lower

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre Group. 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.

The post Scentre, Vicinity and Mirvac shares are this week’s most traded ASX blue chips appeared first on Motley Fool Australia.

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In early afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to record a strong gain. At the time of writing the benchmark index is up 0.95% to 5,890.8 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are tumbling lower:

The Austal Limited (ASX: ASB) share price is down 2.5% to $3.44. Investors have been selling the shipbuilder’s shares after it announced the retirement of its CEO. The company’s Chief Operating Officer, Patrick Gregg, will take over from the retiring David Singleton on 1 January 2021. Mr Singleton will continue to work closely with Mr Gregg for the next six months to ensure an efficient handover.

The Evolution Mining Ltd (ASX: EVN) share price has fallen 6.5% to $5.83. This morning analysts at UBS downgraded the gold miner’s shares to a neutral rating from buy. The broker made the move on valuation grounds after its shares surged past its price target of $5.50. Weakness in the gold price is also weighing on its shares.

The Newcrest Mining Limited (ASX: NCM) share price is down 3% to $29.87. Investors have been selling Newcrest and other gold miners after the price of the precious metal weakened overnight. Investors were moving out of safe haven assets and into risk assets amid optimism over the reopening of the U.S. economy. The S&P/ASX All Ordinaries Gold index is down 4.8% at the time of writing.

The Pro Medicus Limited (ASX: PME) share price has dropped 4% to $27.25. The healthcare imaging software provider’s shares have come under pressure since the release of a broker note out of UBS on Tuesday. It downgraded its shares to a neutral rating with a $29.65 price target. While the broker likes Pro Medicus and was pleased with its latest contract win, it isn’t a fan of its current valuation.

More reading

• ASX 200 up 1%: Big four banks jump, Afterpay hits record high
• 5 things to watch on the ASX 200 on Wednesday
• Why Evolution, Iress, Pro Medicus, & Vicinity shares are dropping lower
• Is the Newcrest Mining share price a buy?
• Here are all the ASX 200 companies that announced capital raisings in May

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. 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.

The post Why Austal, Evolution, Newcrest, & Pro Medicus are tumbling lower appeared first on Motley Fool Australia.

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