With so many shares to choose from on the Australian share market, it can be difficult to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

BlueScope Steel Limited (ASX: BSL)

According to a note out of Goldman Sachs, its analysts have reiterated their buy rating on this steel products company’s shares with an improved price target of $30.10. The broker is feeling positive about BlueScope’s outlook thanks to its exposure to painted steel products. Its analysis indicates the US painted steel growth opportunity could deliver ~$400 million (~20%) EBITDA upside for the company. In addition, the broker believes that BlueScope’s shares are undervalued compared to their US steel peers. As a result, it thinks that this is a great opportunity for investors to pick up shares on the cheap. The BlueScope share price is trading at $20.18 today.

Capricorn Metals Ltd (ASX: CMM)

A note out of Bell Potter reveals that its analysts have retained their buy rating on this gold miner’s shares with an improved price target of $6.53. This follows news that Capricorn Metals has reduced its gold hedge book by 52,000 ounces. Bell Potter notes that the buyback of approximately half of its remaining hedge book mirrors the successful strategy of 2023, which resulted in a relative cash benefit of ~$13 million. And while this has resulted in the broker reducing its earnings forecasts for FY 2024 due to higher financing costs, it has lifted its future earnings estimates meaningfully and has boosted its valuation accordingly. The Capricorn Metals share price is fetching $4.63 at the time of writing.

Light & Wonder Inc (ASX: LNW)

Analysts at Morgans have initiated coverage on this gambling products and services provider’s shares with an add rating and $172.00 price target. According to the note, the broker has been impressed with the way the company’s restructuring and rebranding has resulted in the significant capture of land-based market share in Australia. But the real reason Morgans is bullish is that it believes Light & Wonder can replicate this in the massive United States market. In addition, the broker highlights that its digital segments are performing well with its social casino division, SciPlay, significantly outpacing the rest of the market. The Light & Wonder share price is trading at $140.15 on Monday.

The post Leading brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

More reading

• This ASX 200 stock’s ‘compelling valuation’ makes it a strong buy
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to buy next week
• This fund returned 30% per annum for 3 years. Here are the ASX shares it’s buying now.
• These ASX shares could rise 25% to ~50%

Motley Fool contributor James Mickleboro 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 Goldman Sachs Group and Light & Wonder. The Motley Fool Australia has recommended Light & Wonder. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX growth stock Close The Loop Ltd (ASX: CLG) is showing its growth potential today.

Shares in the company, which provides reuse, recycling, and sustainability solutions, closed on Friday trading for 34 cents. Shares leapt to 36 cents apiece shortly after market open today, up 5.9%.

After some likely profit-taking, shares are currently swapping hands for 35 cents, up 2.9%.

For some context, the All Ordinaries Index (ASX: XAO) is down 0.1% at this same time.

Here’s what’s spurring investor interest in the ASX growth stock today.

ASX growth stock expanding its reach

Investors are bidding up Close The Loop shares on Monday after the company reported on a range of potential growth opportunities.

The ASX growth stock said it is looking into opportunities to expand its footprint in the United States, Europe and the Middle East. Over the next 12 months, the company expects to establish new facilities in these locations to support its expanding operations.

The planned expansions are focused on providing enhanced IT refurbishment services and solutions. That includes a new IT refurbishment plant in Mexicali, Mexico. Close The Loop expects that plant will be operational by October.

The company also highlighted its growing HP Inc relationship, noting that IT refurbishment opportunities have been identified with HP Renew Solutions.

And in Europe, the ASX growth stock is expanding its European print consumables program, Circular Planet, into Spain and Portugal.

Commenting on the growth plans, Close The Loop CEO Joe Foster said: “We are excited about the potential opportunities that lie ahead and are dedicated to ensuring a smooth and successful implementation of this expansion plan.”

According to Foster:

We acknowledge the importance of effectively managing our resources to support our growth objectives without impacting on the FY 2024 guidance or expected financial results as previously advised to the market. As we move forward, we will diligently leverage our existing working capital and debt facilities to achieve our strategic milestones.

Foster added:

FY 2024 has seen Close the Loop focus and refine its growth strategy in the IT refurbishment space. We have an opportunity to expand into new geographies, work deeper into the consumer business electronic product lifecycle and nurture new OEM [original equipment manufacturer] relationships.

These growth opportunities are a validation and realisation of the ISP Tek Services acquisition and the synergies we expected to flow from the combined businesses.

Close the Loop share price snapshot

With today’s intraday moves factored in, the ASX growth stock is down around 7% in 2024.

The post This ASX growth stock just leapt 6% on international expansion plans appeared first on The Motley Fool Australia.

More reading

• 2 great value ASX shares I want to buy
• 1 overlooked ASX growth stock I’m chasing for multibagger potential

Motley Fool contributor Bernd Struben 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 Close The Loop. The Motley Fool Australia has recommended Close The Loop. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There are ways to invest in the property market beyond traditional real estate without incurring a significant amount of debt. One approach is to invest in ASX real estate investment trusts (REITs), which can provide exposure to various areas, including retail, office, logistics and distribution, manufacturing, storage units, childcare centres, healthcare and more.

ASX REITs have recently experienced significant challenges due to higher interest rates. However, it appears that interest rates may now be at or near their peak.

Hence, a fund manager has shared their perspective on whether this is the right time to invest in REITs. Funds management business Janus Henderson has discussed where it sees structural growth and if this is a turning point.

Is it time to invest in REITs?

Janus Henderson notes the commercial real estate sector has been through difficulties over the last two years as central banks tried to tame inflation.

The fund manager suggests a stabilisation of interest rates, with potential interest rate cuts, “should be good news” for ASX REITs.

Janus Henderson suggests the REIT market may be entering “the early innings of a potentially significant recovery”. If so, the cost of and access to capital, particularly debt financing, should “increasingly play a part in differentiating” between businesses and investors in this space.

Janus Henderson’s Guy Barnard, co-head of global property equities, said:

We are hitting an inflection point in underlying commercial real estate markets, where you will see people rebuilding their allocations as it becomes clearer that underlying real estate markets have bottomed.

Where to buy

The fund manager points out that the real estate market is evolving rapidly due to the growth in e-commerce, which has created “significant headwinds” in retail, while a shift to working from home is “creating challenges” in the office sector.

Barnard said:

We are trying to tap into those areas of structural demand from tenants, rather than trying to ride an economic cycle. We see the growth of digitisation as a great tailwind for tech real estate, including areas like data centres and cell towers.

While the fund manager didn’t name any particular stocks, I’ll point out a few. REITs with exposure to warehouses, logistics and distribution include Centuria Industrial REIT (ASX: CIP), Goodman Group (ASX: GMG) and Dexus Industria REIT (ASX: DXI).

Goodman is also rapidly growing its investments in data centres. While Nextdc Ltd (ASX: NXT) is not an ASX REIT, it is a way to play that theme on the ASX of building and owning data centres and generating revenue from them.

Janus Henderson also sees opportunities in demographics where baby boomers enter retirement and require underlying senior housing accommodation. Healthco Healthcare and Wellness REIT (ASX: HCW) can provide some of that exposure, though it has a diversified portfolio. Meanwhile, Ingenia Communities Group (ASX: INA) is a business that owns retirement communities.

The post Are ASX REITs a good investment right now? appeared first on The Motley Fool Australia.

More reading

• Analysts name 3 high yield ASX dividend stocks to buy
• 3 steps to take for a rich retirement with ASX shares
• 2 outstanding ASX 200 shares to buy and hold for a decade
• Top ASX AI stocks to buy in June 2024
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Tristan Harrison 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 Goodman Group. The Motley Fool Australia has recommended Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It has been a tough start to the week for the Winsome Resources Ltd (ASX: WR1) share price.

The ASX lithium stock has returned from a trading halt this morning and crashed deep into the red.

At the time of writing, the lithium developer’s shares are down 16% to 81.5 cents.

Why is this ASX lithium stock crashing?

The catalyst for this weakness has been the completion of the company’s equity raising this morning.

According to the release, firm commitments have been received for a $25 million equity raise at a weighted average price of approximately $1.00 per share.

Winsome Resources notes that it is taking advantage of Canadian flow through provisions with this equity raising before rules change next week. This essentially allows an exploration company to raise funds at a higher price thanks to favourable tax credits.

So much so, the ASX lithium stock was able to raise $13.2 million at $1.275 per new share. This represents a sizeable 32% premium to Winsome Resources’ last traded price.

However, there are some shares changing hands for a big discount. A share placement has been undertaken alongside the Canadian flow through financing to raise a further $11.8 million at a discount of 85 cents per share.

Why is it raising funds?

Management notes that the funds will be used to advance key project initiatives.

This includes the Adina Lithium and Renard project studies, which are on track for completion in the third quarter of 2024, and exploration and resource growth drilling to expand the current mineral resource estimate of 77.9Mt @ 1.15%.

It also notes that the equity raising means that the ASX lithium stock is in a strong financial position to continue its transition from lithium explorer to project developer.

Winsome Resources’ managing director, Chris Evans, said:

Winsome Resources is firmly committed to developing the Adina Lithium Project and is pleased to see the high level of interest from high conviction investors who believe in Winsome’s vision of integrating into the North American EV supply chain.

The flow through financing provisions under Canadian tax law mean we are again able to raise funds at a significant premium to the current share price and therefore at a lower cost of capital. The additional funds put Winsome in an enviable position, with one of the largest and growing lithium deposits in North America, an exclusive option to acquire the billion-dollar Renard operation and associated infrastructure and a clearly defined pathway to production.

Following today’s decline, this ASX lithium stock is down more than 50% over the last 12 months.

The post Why is this ASX lithium stock crashing 16% today? appeared first on The Motley Fool Australia.

More reading

• Why Playside Studios, Pro Medicus, Strike Energy, and Winsome shares are charging higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The All Ordinaries Index (ASX: XAO) is down 0.5% on Monday morning, but this ASX All Ords share isn’t making any moves just yet.

Shares in the New Zealand based company infrastructure investment company entered a trading halt before the opening bell this morning at the company’s request.

This came on the heels of a major AI related capital raise announcement earlier this morning.

Any guesses?

If you said Infratil Ltd (ASX: IFT), go to the head of the virtual class.

Here’s what’s happening.

ASX All Ords share tips hat for $1.1 billion

Infratil said it intends to raise NZ$1.15 billion (approximately AU$1.1 billion) to fund data centre operator CDC’s accelerating growth. The new funds will also be used to provide more flexibility for growth across the ASX All Ords shares’ global portfolio.

The equity raising comprises an underwritten1 NZ$1.0 billion placement of new IFT shares and a NZ$150 million non-underwritten retail offer of new IFT shares.

New shares will be issued for NZ$10.15 apiece. That’s 6.8% below Friday’s closing price.

“CDC continues to see a surge in demand for data centre capacity,” Infratil CEO Jason Boyes said. “Demand continues to accelerate on the back of cloud adoption and significant investments in generative AI.”

He noted that CDC has been one of Infratil’s top investments. The ASX All Ords share’s stake in CDC is valued at NZ$4.42 billion. That’s 10 times what the company first invested in 2016.

According to Boyes:

This rapid increase in demand has seen CDC enter advanced negotiations with customers for over 400MW of capacity at multiple sites across the CDC footprint with this capacity expected to come online over the next four to five years.

CDC expects at least 200MW of capacity to commence construction over the next 12 months. And Infratil said it expects to commit equity funding of around AU$600 million to the data centre developer over the next two years.

“CDC’s growth has accelerated considerably recently, driven by rapid growth in AI-driven data demand,” Boyes said.

CDC CEO Greg Boorer added:

We are seeing an unprecedented increase in the number of customer discussions, many of which are tied to AI-related workloads. CDC has been AI-ready for more than 15 years and is well positioned to capture strong share of AI-driven demand.

Infratil said there was no change to its FY 2025 guidance.

Infratril share price snapshot

If you look back at the chart up top, you’ll notice a remarkably stable long-term uptrend in the Infratil share price.

Over the past 12 months, the ASX All Ords share has gained 14.3%.

The post Guess which ASX All Ords share is raising $1.1 billion to back generative AI appeared first on The Motley Fool Australia.

More reading

• Top ASX green energy stocks in June 2024
• Why Infratil, James Hardie, Sonic Healthcare, and Star Entertainment shares are sinking today
• How I plan to invest my tax cuts

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The market may be edging lower on Monday but that hasn’t stopped one ASX All Ords stock from rocketing.

In morning trade, the Capitol Health Ltd (ASX: CAJ) share price is up 20% to 29.5 cents.

Why is this ASX All Ords stock rocketing?

Investors have been scrambling to buy the diagnostic imaging modalities provider’s shares this morning after it accepted a merger offer from rival Integral Diagnostics Ltd (ASX: IDX).

According to the release, the two parties have entered into a process and exclusivity deed that will see Integral Diagnostics acquire 100% of Capitol Health via a scheme of arrangement.

The offer that was tabled was an implied exchange ratio of 0.12849 Integral Diagnostics shares for every Capitol Health share. Based on Friday’s close prices, this equates to an offer of 32.6 cents per share, which represents a 33% premium.

Capitol Health’s chair, Andrew Demetriou, commented:

The Indicative Proposal reflects attractive value for Capitol shareholders and the Board has determined that it is in the best interests of shareholders to engage with Integral.

Capitol Health advised that that each director intends to recommend shareholders to vote in favour of the proposed transaction. This is subject to entry into the implementation deed, the absence of a superior proposal, and the independent expert’s report.

Not the first offer

The release notes that this indicative proposal was not the first. It follows an unsolicited approach from Integral Diagnostics in late March regarding a potential combination.

However, while that was not accepted, the ASX All Ords stock’s board decided that it was in the best interests of shareholders to engage with Integral Diagnostics and provide non-public information on a confidential and non-exclusive basis to conduct a two-way value based due diligence process.

Following the conclusion of the process, Integral Diagnostics submitted the improved indicative proposal, which has now been accepted.

The ASX All Ords stock’s managing director, Justin Walter, commented:

Today’s proposed merger announcement with Integral, represents an exciting opportunity for all our valued radiologists, technicians, and staff to be part of Australia’s largest pure-play publicly listed imaging company.

This opportunity is a result of their dedicated hard work, particularly over the last five years. The merger will create further value for our shareholders by realising significant benefits through scale, enhanced internal capability, and organic growth.

All underpinned by market leading clinical standards and service to our referrers and their patients.

As things stand, Capitol Health shareholders do not need to take any action regarding the proposal. However, the company warned that it cannot be certain that the proposal will result in a binding transaction.

The post This ASX All Ords stock is rocketing 20% after accepting a takeover offer appeared first on The Motley Fool Australia.

More reading

• 2 ASX healthcare shares to buy now for the AI revolution
• Buy this cheap small-cap ASX share for a very big return

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Integral Diagnostics. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

BHP Group Ltd (ASX: BHP) shares and Wesfarmers Ltd (ASX: WES) shares are some of the most well-known and widely-held stocks on the ASX. They are two of Australia’s leading ASX blue-chip shares.

They are known for their strong market positions in the respective sectors of mining and retail.

Wesfarmers owns the retailers Bunnings, Kmart, Officeworks, Target, Priceline and Catch. It also has a chemicals, energy and fertiliser business called WesCEF, a healthcare division (including Clear Skincare Clinics and Silk Laser Australia), and an industrial division (Blackwoods, Coregas and Workwear).

BHP is a huge iron ore miner, produces copper and metallurgical coal, and owns projects related to potash and nickel.

I’m going to compare the businesses on some of the main factors that would help me decide between the two.

Dividend yield

Dividends aren’t everything but can make up a sizeable part of the return from an ASX blue-chip share.

Large businesses tend to have a more generous dividend payout ratio because there are fewer places for them to invest, so they can send more of the profit generated to shareholders.

The estimate on Commsec suggests that owners of BHP shares could get an annual dividend per share of $2.27 in FY24 and $2.13 in FY26, translating into forward grossed-up dividend yields of 7.5% and 7%, respectively.

The forecast on Commsec suggests owners of Wesfarmers shares could receive an annual dividend per share of $1.95 in FY24 and $2.35 In FY26, translating into forward grossed-up dividend yields of 4.1% and 5%, respectively.

BHP’s yield looks more appealing in the shorter term, but Wesfarmers’ dividend is growing in the right direction.

Growth prospects

Wesfarmers has several impressive businesses that have steadily grown their profits over the years. Kmart and Bunnings are well situated to succeed in the current environment because they can provide customers with a strong value offering.

The retail giant is making good moves to expand its presence in long-term growth industries such as healthcare, a sector where Wesfarmers can utilise its scale and capabilities in numerous ways.

According to Commsec, Wesfarmers is expected to generate earnings per share (EPS) of $2.23 in FY24, which could grow by 21% to $2.70 in FY26.

BHP is working on growing its iron ore production with improved efficiency and infrastructure in Australia. In recent times, the business has endeavoured to grow its exposure to copper, first with the acquisition of Oz Minerals and then the recent failed attempt at Anglo American. It’s clear the business wants to increase its exposure to future-facing commodities.

BHP’s potash project in Canada, Jansen, could also be a compelling earnings generator once operational.

The forecast for BHP EPS is $4.19 in FY24 and $3.82 in FY26, a reduction of 9%.

Is this a good time to invest?

Of the two businesses, I prefer Wesfarmers because of its track record of compounding earnings and its underlying value over time.

With miners, I think it’s better to invest when there’s a cyclical opportunity to do so. With the iron ore price above US$105 per tonne, I don’t think it’s in ‘weak’ territory yet.

I believe Wesfarmers is more likely to be able to keep growing its earnings over the rest of the decade – it does not rely on a positive commodity price change.

Wesfarmers shares are not cheap either, but I like its long-term prospects, particularly as it invests in long-term growth industries.

The post Are BHP or Wesfarmers shares a better buy? appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy next week
• Here’s how the ASX 200 market sectors stacked up last week
• Tax-busters: 5 fully-franked ASX dividend shares I’d buy for FY25
• Where Aussies are spending their money, and the ASX shares that could benefit
• 2 outstanding ASX 200 shares to buy and hold for a decade

Motley Fool contributor Tristan Harrison 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 Wesfarmers. The Motley Fool Australia has positions in and has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Tabcorp Holdings Ltd (ASX: TAH) shares are on the slide on Monday.

In morning trade, the gambling company’s shares are down 4% to 63 cents.

Why are Tabcorp shares falling?

Investors have been selling the company’s shares on Monday after appearing to respond negatively to the announcement of its new leader.

According to the release, Tabcorp has appointed ex-AFL boss Gillon McLachlan as its new managing director and CEO.

McLachlan will join Tabcorp on 5 August and assume the role upon receipt of all necessary regulatory approvals. In the interim, he will act in an observer capacity with Bruce Akhurst continuing to act as executive chairman.

The company appears optimistic that McLachlan could repeat his AFL success with Tabcorp.

The release notes that during his decade leading the AFL, McLachlan more than doubled revenues from $502 million in 2013 to $1,063 million in 2023. This includes securing the largest sports broadcasting rights deal in Australian history.

Tabcorp also highlights that its new CEO has proven success in managing complex stakeholder environments and working productively with all levels of government. He also has extensive racing knowledge as a thoroughbred owner and breeder.

‘One of Australia’s leading CEOs’

Commenting on the appointment, Tabcorp’s executive chair said:

Gill needs no introduction – he is recognised as one of Australia’s leading CEOs and securing Gill is a great vote of confidence for Tabcorp’s future. We’ve laid strong foundations and Gill brings a growth mindset and the capability to capitalise on the opportunities ahead of us.

Gill has a deep understanding of sport, racing and wagering, combined with significant commercial acumen which was highlighted in the substantial growth of AFL revenues under his leadership.

Importantly for us, Gill brings an added dimension of having been responsible for some of the most significant media rights deals in Australian sports history and we’re excited about the potential growth opportunities for our wagering and media business under his leadership.

The company’s incoming CEO revealed that he would be focused on accelerating the growth of Tabcorp:

Tabcorp is a wagering, broadcast and integrity services business and the challenges of growing it are appealing. It’s about creating entertainment for our customers in a safe way and providing a unique customer omni-channel entertainment offering across digital, retail and the media business.

There are enormous opportunities ahead and I’m looking forward to driving the sport category among other things. Tabcorp is part way through its transformation journey and I’m looking forward to working with the leadership team to accelerate and deliver on the growth opportunities.

Tabcorp shares are down approximately 25% in 2024.

The post Tabcorp shares tumble 4% after naming ex-AFL boss as new CEO appeared first on The Motley Fool Australia.

More reading

• Here’s how the ASX 200 market sectors stacked up last week
• Here are the top 10 ASX 200 shares today
• The worst three performing ASX 200 shares in May unmasked

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you’re on the hunt for a top-notch ASX healthcare stock, thinking long-term is the right strategy.

Australia is home to some wonderful health and medical companies – many with terrific prospects over decades to come.

One ASX healthcare company that analysts are bullish on long-term is ResMed Inc (ASX: RMD). Its stock has increased a hefty $10.33 per share since October 22 last year and opens the session today at $31.93. That’s a 47% gain.

Analysts believe it has even more potential. According to CommSec, 19 brokers rate it a buy, six hold, and one sell. Here’s what the experts say.

Why ResMed is a top ASX healthcare stock

ResMed has been a standout performer in the ASX healthcare sector this year. Its share price has surged 25% this year to date.

Lachlan Hughes, a portfolio manager at Swell Asset Management, reckons ResMed is a well-run business with significant growth potential.

He highlights its vast market presence with around 22.5 million customers in a market of 1 billion people. Hughes believes ResMed has “decades of growth ahead as the penetration is low and it’s the number one player in its market”, according to the Australian Financial Review.

The price is off as people said the GLP-1 (weight loss) drugs will negatively impact demand, but we take the opposite view and believe demand for these devices continues to thrive.

The sleep disorder treatment market, where ResMed operates, also presents a massive growth opportunity, according to analysts at Bell Potter. The broker recently noted that more than a billion people worldwide suffered from obstructive sleep apnoea (OSA), with many remaining undiagnosed. This could be bullish for ResMed, it says.

Bell Potter rates ResMed a buy with a price target of $36.00, also citing the ongoing recall of competitor Philips’ respiratory devices as a tailwind.

Moreover, ECP Asset Management finds ResMed’s valuation “very appealing,” despite market concerns about the impact of GLP-1 weight loss drugs.

Regarding the ASX healthcare stock’s selloff from $33.99 in July 2023 to $21.44 per share by September, the broker said that ResMed was “derated due to the frenzy” around these drugs but could still be undervalued.

ResMed’s market position

Investment firm Wilsons’ analysis further supports ResMed’s strong market position. According to my colleague James, Wilsons recently noted that, despite a “solid earnings-driven share price recovery”, ResMed trades at a significant discount to its historical price-to-earnings (P/E) multiples.

It expects the ASX healthcare stock to rise as concerns about GLP-1 weight loss drugs ease, which could allow the market to focus on ResMed’s fundamentals instead.

“We expect RMD’s valuation to re-rate higher as GLP-1 concerns progressively abate and the market shifts its focus to the strong fundamental outlook of the business”, Wilsons said.

In its Q3 FY 2024 update, the company booked a 7% growth in revenues to US $1.2 billion and a 2.6% increase in gross margins to 58%. Growth was underscored by performance in all regions, including an 8% year-over-year increase in sales for its software-as-a-service business.

Management remains “laser-focused” on continuing its innovative solutions in respiratory medicine going forward.

Foolish takeaway

According to many experts, ResMed could be a compelling investment in the ASX healthcare sector.

The ResMed share price has lifted more than 25% this year to date but is flat over the past year.

The post Buy the ASX 200 healthcare stock with ‘decades of growth ahead’ appeared first on The Motley Fool Australia.

More reading

• 3 of the best ASX 200 blue chip shares to buy now
• 3 high-quality ASX 200 shares to buy forever
• 3 ASX 300 healthcare stocks ‘well positioned to outperform’
• Bell Potter names more of the best ASX 200 stocks to buy in June
• Are these 2 ASX healthcare shares the best that money can buy?

Motley Fool contributor Zach Bristow 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 ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.