The bulls refuse to take any sell-off lying down! The S&P/ASX 200 Index (Index:^AXJO) rebounded from its morning sell-off triggered by a weak lead from Wall Street, but eager bargain hunters soon turned the market around.

The top 200 benchmark fell nearly 1% in the first 15 minutes of trade but clawed back to be 0.5% in the black during lunch time trade.

However, the big banks remain under pressure after their big rally pushed them closer to fair value. If you are looking for attractive buys, you may need to look at their smaller rivals as brokers just upgraded three of them to “buy”.

Improving margin

One stock that got moved to the “buy” list is Bendigo and Adelaide Bank Ltd (ASX: BEN).

JP Morgan changed its recommendation on the regional bank to “overweight” from “neutral” today as it believes that the market isn’t fully appreciating the upside.

“With COVID-19 infection rates under control in Australia and lockdown rules easing, there is increased optimism that the Jun-20 quarter trough in the economy will not be as bad as first thought,” said the broker.

“Recent data have pointed to improvements in term deposit spreads. This is likely to continue.”

JP Morgan’s price target on Bendigo Bank is $8.10 a share.

Cum-upgrade cycle

Another bank stock that is under appreciated by the market is the Bank of Queensland Limited (ASX: BOQ) share price.

Goldman Sachs also upgraded its call on BOQ to “buy” from “neutral” as it believes consensus earnings forecasts are too conservative.

“We now have more confidence that BOQ will be able to reach its management target of broadly flat 2H20E NIMs [net interest margins], and sit c.8% above Bloomberg FY21E consensus,” said the broker.

Goldman Sachs increased its price target on the stock to $7.17 from $5.51 a share.

Small cap bank buy

Coincidentally, another Queensland-based bank also got upgraded by Bell Potter to “buy” from “hold”. This is small cap lender Auswide Bank Ltd (ASX: ABA).

Auswide is Australia’s newest bank as it mothed from its previous form as a credit union called Wide Bay Australia.

The broker believes that if the re-rating were to be applied to Auswide, fair value for the stock would increase by 17% to $5.15 a share.

A re-rating is when the implied discount rate on a sector’s valuation is lowered due to higher investor confidence.

Further, Auswide is also sitting on a reasonable forecast yield of 4.5% even after Bell Potter cut its forecast final dividend by 53%.

More reading

• 2 crazy cheap ASX 200 shares you could still buy
• ANZ share price drops lower after Goldman Sachs downgrade
• Does the ASX 200 just follow the US markets?
• ASX 200 up 0.45%: Harvey Norman declares special dividend, gold miners race higher
• Why you can’t afford not to invest in ASX 200 shares in 2020

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 These ASX bank stocks just got upgraded by top brokers to “buy” – and they aren’t the big four appeared first on Motley Fool Australia.

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Yesterday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX 200 shares:

Commonwealth Bank of Australia (ASX: CBA)

According to a note out of Goldman Sachs, it has retained its sell rating and $62.65 price target on this banking giant’s shares. The broker expects Commonwealth Bank’s strong deposit franchise to leave it more vulnerable to the medium term impact of lower rates. In addition to this, it notes that the bank has the highest exposure to more competitive mortgages relative to its peers. Overall, it doesn’t believe its shares deserve to trade at such a premium to the rest of the big four. The Commonwealth Bank share price is trading notably higher than this price target at $71.84.

GPT Group (ASX: GPT)

Analysts at Morgan Stanley have retained their underweight rating and $4.20 price target on this property company’s shares. According to the note, the broker was not surprised to see GPT reduce the valuations of its retail portfolio by a total of 8.8% or $476.7 million. But the devaluations may not stop there. It notes that the company plans to have all its properties independently valued at the end of June. GPT’s shares are changing hands at $4.46 this afternoon.

Wesfarmers Ltd (ASX: WES)

A note out of Citi reveals that its analysts have retained their sell rating but lifted the price target on this conglomerate’s shares to $38.20. According to the note, the broker was pleased with the strong sales growth achieved by Bunnings and Officeworks so far in the second half. However, it notes that this sales growth is coming at a cost. As such, the company is unlikely to benefit as greatly from the sales surge as you might think. Furthermore, Citi is expecting its sales growth to moderate as restrictions ease. As a result, it sees no reason to change its rating at this point. The Wesfarmers share price is up over 4% to $43.57 today.

More reading

• Are Aussies still withdrawing cash like crazy?
• How to be like Warren Buffett and not lose money investing in ASX 200 shares
• Afterpay share price overbought says analyst
• Why the CBA share price is lagging its big four cohorts
• 3 top ASX shares for growth, income, and value investors to buy today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. 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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