Last week saw a number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

Ansell Limited (ASX: ANN)

According to a note out of Citi, its analysts have retained their buy rating and $46.00 price target on this safety and protective products company’s shares. The broker has been looking at the industry and believes that demand for PPE will remain strong in the near term. And while there will inevitably be a decline in sales once the pandemic passes, the broker believes the average growth rate between FY 2019 and FY 2023 means its shares are good value at the current level. The Ansell share price ended the week at $40.70. 

Bigtincan Holdings Ltd (ASX: BTH)

A note out of Morgan Stanley reveals that its analysts have retained their overweight rating and $1.50 price target on this sales enablement software company’s shares. Morgan Stanley notes that the company has been increasing the range of its offering, providing it with upselling opportunities. It also points out that management has seen opportunities to market the product to sales team that are less informed that their customer base. It believes providing these teams with real time access to content will support their sales. If the company can make a success of this, the broker believes its strong growth could continue for longer. The Bigtincan share price was fetching $1.02 at Friday’s close.

TechnologyOne Ltd (ASX: TNE)

Analysts at Morgans have retained their add rating and lifted their price target on this enterprise software company’s shares to $10.00. This follows the release of a strong first half result last week. In addition to being impressed with its result and software as a service revenue growth, Morgans was pleased with its full year guidance. The broker appears confident more of the same is coming as legacy customers migrate to its cloud offering. The TechnologyOne share price ended the week at $9.20.

More reading

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There are some ASX shares that could be good to look at in June 2021.

The two businesses in this article have a heavy focus on technology with the offerings that they provide for their clients and customers.

These two ASX shares might be interesting to think about in the coming weeks:

Volpara Health Technologies Ltd (ASX: VHT)

Volpara has grown to be one of the leading breast screening businesses in the US with a market share of almost a third. That means that approximately 32% of women have at least one of Volpara’s products used on their images.

The business has been improving its offering for clients. But the acquisition of CRA Health can take it to another level.

Volpara says that there is an increasing push at the biggest US sites to use a single electronic health record (EHR) system. The ASX share recognises that it needs to work closely with these EHRs. CRA Health software is tightly integrated with these systems.

According to Volpara, there are major US tailwinds for personalised breast care. This includes the US CDC pushing for genetics testing and the CMS including breast cancer risk assessment as a quality measure for reimbursement adjustments. The company has also seen that identifying those women who should get genetics testing can significantly increase the average revenue per user (ARPU).

CRA Health was profitable and cashflow positive in the previous three years. Volpara signed its largest contract to date through CRA Health. The contract was worth over US$400,000 per year of annual recurring revenue (ARR). It covers the provision of breast cancer risk scores to a large Indiana-based organisation that has sites across more than 20 states and runs a major electronic health record system.

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is already one of the biggest furniture and homewares businesses in Australia.

The business has been growing at a fast rate and continues to do so. In the first half of FY21 it saw revenue growth of 118% to $161.6 million. The third quarter of FY21 saw revenue growth of 112% year on year. April 2021 revenue increased more than 20% despite April 2020 being a very big month of strong online sales growth during the COVID-19 lockdowns.

Temple & Webster is about to embark on another few years of investment as it aims to capture more market share and capitalise on the opportunity of the continuing shift to digital shopping.

Over time, the ASX share is expecting longer-term profit margins to be higher than many of its comparable offline peers.

There are a few different things that could help Temple & Webster generate much higher margins: improved supplier terms, more repeat customers which will reduce marketing expenses, a slowing of investment in fixed costs and a higher percentage of exclusive products with higher gross profit margins.

Temple & Webster CEO and co-founder Mark Coulter said:

You only need to look at the US to see how the e-commerce market is playing out, and why we remain bullish about the shift from offline to online. We are at the start of this once in a generation shift, and now is the time to put our foot down to secure market leadership and ensure we are the brand for the next generation of furniture shopper.

Temple & Webster aims to remain profitable at the earnings before interest, tax, depreciation and amortisation (EBITDA) level during this scale-up phase.

More reading

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Are you wanting to buy some blue chip ASX shares for your portfolio? Then you might want to check out the ones listed below.

These quality companies have been tipped as blue chips to buy. Here’s what you need to know:

BHP Group Ltd (ASX: BHP)

The first blue chip share to look at is mining giant BHP. If you’re looking for exposure to the resources sector, BHP could be a great way to do it.

This is due to the quality of the Big Australian’s diverse operations and favourable commodity prices. The latter is particularly the case for iron ore, with the steel making ingredient recently hitting record highs. And while it has pulled back since then, it is still generating significant free cash flow from current prices.

This is likely to lead to bumper earnings and dividend payments for shareholders in FY 2021 and FY 2022.

Macquarie expects this to be the case and has put an outperform rating and $57.00 price target on its shares.

ResMed Inc. (ASX: RMD)

Another blue chip for investors to consider is ResMed. It is a medical device company with a focus on sleep disorders.

Although the pandemic has negatively impacted sleep disorder diagnoses and referrals, ResMed has continued to grow at a solid rate over the last 12 months.

Pleasingly, ResMed still has a long runway for growth over the next decade and beyond. In fact, management has set itself a goal of improving 250 million lives in out-of-hospital healthcare in 2025.

Helping it achieve this goal will be its rapidly growing digital health ecosystem, which reached over 12 million cloud connectable medical devices in 2020. This provides ResMed with strong recurring and sticky revenues and high quality data.

Analysts at Credit Suisse are positive on the company. The broker currently has an outperform rating and $29.00 price target on its shares.

More reading

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The property market has been performing very strongly. Does that make the current REA Group Limited (ASX: REA) share price a buy right now?

About REA Group

There are a lot of different parts to the REA Group business.

It’s a multinational digital advertising business that operates many property sites including the country’s leading residential and commercial property websites – realestate.com.au and realcommercial.com.au.

It also owns the country’s leading website dedicated to share property, Flatmates.com.au and Spacely which is a short-term commercial and co-working property website.

REA Group also has a growing exposure to mortgage broking. It owns Smartline Home Loans and is currently going through the process of acquiring Mortgage Choice Limited (ASX: MOC). Another business that it owns is PropTrack, a major provider of property data services.

The final segment is a diverse array of international property website stakes. In Asia, REA Group owns leading portals in Malaysia (iProperty.com.my) and Hong Kong (squarefoot.com.hk), a sizeable portfolio in China (myfun.com) and a leading property review site in Thailand called thinkofliving.com.

In India, REA Group holds a controlling interest in Elara Technologies, which owns the brands of Housing.com, Makaan.com and PropTiger.com.

REA Group also holds a significant shareholding in property websites realtor.com in the US, 99.co and iproperty.com.sg in Singapore and rumah123.com in Indonesia.

How is the business performing at the moment?

REA Group releases its performance number to investors each quarter, so there’s good visibility of its earnings and operating conditions.

In the three months to 31 March 2021, excluding acquisitions revenue after broker commissions went up 8% to $225.6 million. Still excluding acquisitions, earnings before interest, tax, depreciation and amortisation (EBITDA) excluding profit and losses from associates was up 8% to $121.9 million and including those associates EBITDA was up 13% to $123.3 million.

The quarterly free cash flow rose by 5% to $65.4 million excluding acquisitions.

National listing volumes in the third quarter of FY21 were up 8%, with Sydney listings up 5% and Melbourne listings up 13%.

The business is now cycling against the worst of the COVID-19 lockdown period and the property market is also booming. In April, REA Group was seeing increased levels of buyer enquiry underpinned by low interest rates, improving consumer confidence and healthy bank liquidity.

National residential listings were up 98% year on year, with an increase of 127% in Melbourne and 116% in Sydney.

The group continues to target full year positive operating jaws, excluding the impact of acquisitions. Core operating costs for FY21 are expected to increase marginally on FY20 as revenue-related variable costs are higher than previously expected, according to the company.

REA Group CEO Owen Wilson said:

Conditions are aligned for the Australian property market to continue its positive trajectory for the remainder of 2021. This momentum, combined with strategic investments made throughout FY21, positions REA for a strong finish to the year.

Is the REA Group share price?

Some brokers are positive on the business’ trajectory with the strengthening property market, though less excited about the valuation. Credit Suisse is expecting residential volumes to go up 20% in the second half of the year. However, it rates REA Group as a hold/neutral with a price target of $148.

There’s a buy rating from Morgan Stanley with a price target of $175 which is one of the few brokers that thinks REA Group is a buy right now.

More reading

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This month has been a particularly volatile period for ASX shares but some of the worst performers could see a rebound in June.

For one, risk appetite appears to be improving again in the last week or so. This means investors could be in a more forgiving mood as they hunt for bargains.

And what better place to look for value stocks than among ASX shares that have been punished for issuing bad news in May?

Returning to growth

Mind you, not all of May’s ASX sinners are worth a second glance. However, Goldman Sachs reckons the Costa Group Holdings Ltd (ASX: CGC) share price could be one to back.

The fruit and veggies grower is one of the worst performers on the S&P/ASX 200 Index (Index:^AXJO) for the month. Just about all of its losses came in the last two trading days when it warned that labour shortages and weak prices for some of its produce will weigh on its bottom line.

The update triggered a more than 20% crash in the Costa Group share price. But Goldman is urging investors to buy the stock now as it believes the sell-off is an overreaction.

Buy the dip

“The business is well positioned over the medium term. Expansion of international operations is the key growth driver in the business,” said the broker.

“We forecast China/Morocco to contribute 36% to Group EBITDA by FY23 (vs. 17% in CY19).”

Goldman reiterated its “buy” recommendation on the Costa Group share price with a 12-month price target of $4.85 a share.

Catching a breath

Another laggard with a bright medium-term outlook is the Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) share price. The medical device maker shed more than 13% in the past week and is down 18.4% in the month.

Earnings disappointment was the trigger for the sell-off but Goldman believes the mid to longer-term prospects remains positive.

Stronger earnings ahead

“Whilst we had factored a sequential slowdown to reflect the decline in hospitalisations, we had under-estimated the extent,” said Goldman.

“We re-base our consumables forecasts to reflect this lower exit-rate, driving -8-10% revisions to our FY22-25E sales forecasts. The other negative surprise to us today was that air freight costs appear set to remain elevated for some time (currently running at 2x ‘pre-pandemic’ levels).”

But the broker’s earnings before interest, tax, depreciation and amortisation (EBITDA) forecast for FY22 through FY25 are still 4% to 12% above COVID-19 levels.

Goldman is recommending the Fisher & Paykel share price as a “buy” with a price target of $33 a share.

More reading

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• A2 Milk (ASX:A2M) shares are up 4% today. Has a bottom been found?
• These 3 shares are this week’s biggest fallers of the ASX 200

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If you’re looking to invest in a growth share or two, then you might want to consider the ones listed below.

Here’s why these ASX shares could be top options for growth investors:

Afterpay Ltd (ASX: APT)

The first option to look at is Afterpay. This buy now pay later (BNPL) focused payments company has been growing at an explosive rate over the last few years.

This has been driven largely by the successful export of its platform into the United States and UK. The good news is that the payment method continues to resonate with consumers and merchants, which is underpinning rapid customer growth across the globe.

Pleasingly, with the company expanding onto Mainland Europe and weighing up its options in the Asia market, Afterpay still has a significant runway for growth in the BNPL market over the 2020s. This should be complemented by its expansion into other products such as bank accounts and cash flow tools.

One broker that is confident in its growth trajectory is Morgan Stanley. Earlier this month the broker put an overweight rating and $149.00 price target on its shares.

Pushpay Holdings Group Ltd (ASX: PPH)

Another ASX growth share to look at is Pushpay. It is leading donor management and community engagement platform provider for the faith sector.

As with Afterpay, Pushpay has been growing at a quick rate in recent years. This has been driven by the shift to a cashless society, the digitisation of the church, and its industry-leading platform.

Earlier this month the company released its full year results for FY 2021. Pushpay reported a 40% increase in operating revenue to US$179.1 million and a 133% jump in EBITDAF to US$58.9 million. The latter was at the high end of its guidance for EBITDAF of between US$56 million and US$60 million. It is worth noting that this guidance was upgraded three times during the course of the year.

And while the company’s growth will moderate in FY 2022, it is still targeting growth that other companies would be envious of. Pushpay advised that it expects its EBITDAF to increase 12% to 20.5% year on year. However, as we have seen previously, Pushpay has a tendency to under promise and over deliver. There’s every chance this guidance will be upgraded as the year progresses.

Looking further ahead, Pushpay appears well-placed for growth over the coming years thanks to industry tailwinds and also its expansion into new markets. One of those is the lucrative Catholic church market, which the company is entering this year. It is then aiming to win 25% of the Catholic church management system and donor management system market over the next five years.

Ord Minnett currently has a $1.84 price target on the company’s shares.

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There are a few different reasons why the Webjet Limited (ASX: WEB) share price could be an interesting idea at the current value.

The ASX travel share has been through a lot of disruption over the last 15 months because of COVID-19 impacts.

What’s happening right now with the Webjet share price?

In the last few weeks the Webjet share price has been falling as it seems increasingly likely that Australia’s international borders are going stay closed longer than expected.

Since 18 March 2021, the Webjet share price has declined by 17%. However, there has been a recovery since the announcement of the efficacy of the COVID-19 vaccines that are now being distributed around the world.

Investors recently got an insight into the business’ performance and where it sees things going for the coming months. The FY21 report release showed why investors could be positive on the Webjet share price:

Cost efficiencies

Webjet is going through its transformation strategy with WebBeds, its business to business segment. Whilst bookings improved in the second half of its financial year, there are still large-scale restrictions in place in most regions.

But Webjet managed to reduce costs by 42% over the nine month period, reflecting a reduction of headcount and overheads.

The transformation strategy initiatives are on track to deliver at least 20% greater cost efficiencies at scale, which will further cement WebBeds as the clear lowest cost global player, according to management.

Previously before COVID-19, WebBeds was aiming for an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 50%. This would occur with revenue being 8% of total transaction value (TTV) and expenses being 4% of TTV.

However, it now has a new target of expenses being just 3% of TTV, which would lead to an EBITDA margin of 62.5%.

Profitable online travel agency (OTA)

Webjet’s OTA reported that in FY21, being the nine months to 31 March 2021, it saw positive EBITDA of $4.1 million thanks to significant bookings growth in the second half of FY21.

Profitability is increasing as time goes on. The first half (being six months) EBITDA was $1.1 million and the second half (three months) saw EBITDA of $3 million.

The EBITDA margin in the first half was 9.7% whilst the second half EBITDA margin was 30.9%.

Improving outlook

Webjet believes that there is strong pent-up demand for travel, particularly with leisure travel.

The ASX travel share has retained its global footprint and diverse customer base. This will allow it to capture demand when international borders open.

With the OTA business, it said that in April 2021, Australian domestic flight bookings were 95% of April 2019 levels.

The management remain hopeful that vaccines will allow travel markets to reopen. With WebBeds, the US market is opening up fastest, TTV is already at 83% of April 2019 volumes.

All businesses, including Online Republic, are seeing increased bookings and profitability month over month during the 2021 calendar year.

More reading

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Could the Fortescue Metals Group Limited (ASX: FMG) share price be a buy with its 22% grossed-up dividend yield?

The iron ore mining giant has had a volatile time over the last six months. The share price was below $20 six months ago and again towards the end of March 2021. The Fortescue share price has been above $24 in May, February and January 2021.

In recent weeks the iron ore price and Fortescue shares have both been declining on concerns about increasing global supply of iron ore, particularly from Brazil. China also doesn’t want to pay too much for the iron ore that it’s buying, with demand possibly set to ease. 

How is Fortescue performing?

The mining giant continues to achieve high levels of shipments. In the FY21 third quarter, it saw iron ore shipments of 42.3 million tonnes, which was in line with record third quarter shipments last year. Year to date shipments of 132.9mt was 2% higher than the comparable period in FY20.

At the current iron ore price, it is generating a high profit margin. In the third quarter of FY21, the average revenue was US$143 per dry metric tonne. This compared to the C1 cost of US$14.90 per wet metric tonne (wmt).

It’s still producing a lot of resources at a high profit margin.

Balance sheet and dividend

At 31 March 2021, it finished the quarter period with net debt of US$1 billion after the US$3.5 billion payment of its interim dividend.

It has recently improved its capital structure with the issue of US$1.5 billion of senior unsecured notes to refinance debt, extend the debt maturity profile and lower the cost of capital.

Fortescue Future Industries (FFI)

The mining company has recently revised its target to achieve carbon neutrality by 2030, ten years earlier than the previous target.

FFI is an important part of that goal. It’s assessing renewable energy and green hydrogen opportunities globally, as well as green ammonia projects.

It’s developing a ship design powered by green ammonia and trialling that design in new ammonia engine technology at scale.

The business is testing large battery technology in Fortescue’s haulage trucks. It’s trialling hydrogen fuel cell power for Fortescue’s drill rigs. Fortescue is trialling technology on Fortescue’s locomotives to run on green ammonia.

Finally, it’s conducting trials to use renewable energy in the Pilbara region to convert iron ore to green iron at low temperatures, without coal.

A 22% dividend yield?

There are large expectations for the Fortescue dividend in FY21.

The broker Credit Suisse believes that Fortescue could pay a full year dividend of $3.46 per share, which would translate to a grossed-up dividend yield of 22%.

Some brokers that the dividend could be much bigger. One of the most optimistic is Ord Minnett’s FY21 dividend forecast of $4.44 per share – that would be a grossed-up dividend yield of 28.7% for the year.

However, the dividend is then expected to materially reduce in FY22.

Is the Fortescue share price a buy?

Credit Suisse currently rates Fortescue shares as a buy with a price target of $23.

Other price targets are less optimistic. The UBS price target is US$18, with an expectation that the price of iron ore is going to drop over the coming months and drop a bit more over the next couple of years as Chinese demand decreases but international supply increases. That’s why its rating is currently hold/neutral on the iron ore giant. 

Using UBS’ FY22 forecast, the Fortescue share price is valued at 8x FY22’s estimated earnings.

More reading

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• 4 ASX 200 resource shares poised to deliver: AMP Capital

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There are several brokers that all think the two ASX shares in this article are buys.

It might suggest there’s an opportunity for investors if many analysts believe that the same business is worth looking at. Of course, there’s a chance that they’re all simultaneously wrong.

At the moment, these two are highly rated:

Goodman Group (ASX: GMG)

Goodman is currently rated as a buy by at least six brokers. One of those that rates the global property business as a buy is Citi which has a price target on Goodman of $22.10.

Citi noted that things are getting better for Goodman as conditions recover quicker than expected.

In the third quarter of FY21, the business saw total assets under management (AUM) increase to $52.9 billion. Looking at the property portfolio that it owns, it achieved like for like net property income (NPI) growth of 3.3% and a high occupancy rate of 98% which reflects the strong demand for its properties.

Goodman explains that the demand is being driven by increased intensification of use, long-term supply chain requirements, tight supply in urban infill locations and the quality of its assets.

The ASX share noted that location and quality remains critical in meeting clients’ requirements, providing faster lead times to consumers. This is driving consistent long-term cashflow growth to the group.

Goodman’s development workbook continues to grow – it reached $9.6 billion at 31 March 2021 and is expected to be higher by June 2021. The average duration of projects in its current work in progress (WIP) is now around 19 months, so its production rate is currently an annualised $6 billion.

Projects have increased in size and scale, given the concentration in urban locations around the world, with approximately 60% of current WIP now multi-storey.

In FY21, Goodman is expecting operating earnings per share (EPS) to grow by 12%.

TPG Telecom Ltd (ASX: TPG)

TPG is now one of the biggest telecommunication businesses in Australia after the merger with between TPG and Vodafone Australia.

The telco is rated as a buy by at least five analysts, including Ord Minnett which rates the ASX share as a buy with a price target of $6.45.

TPG’s share price has fallen by more than 30% over the last six months. The broker thinks that COVID-19 and leadership changes have been weighing on the stock. Both the TPG chief financial officer (CFO) Stephen Banfield and Chair David Teoh have resigned in recent months.

But, Ord Minnett thinks that TPG can generate growing profit as it achieve the synergies that were expected with the merger. In 2021 it’s targeting $70 million of cost synergies across the group, which excludes the contribution from fixed wireless services and revenue synergies from cross-selling.

In its latest result it said that in the first six months post-merger it generated $342 million of net cash flow and it declared a maiden dividend of 7.5 cents per share.

5G could be an important part of profit generation in future years, it’s now live in more than 350 suburbs in Sydney, Melbourne, Brisbane, Adelaide, Perth, Canberra, Gold Coast and Newcastle.

More reading

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If you’re looking for growth shares to buy, then the tech sector could be a great place to search. At this side of the market there are a number of companies with the potential to grow materially over the next decade.

With that in mind, I have picked out two top tech options to consider. Here’s what you need to know about them:

Nitro Software Ltd (ASX: NTO)

The first tech share to look at is Nitro. It is a global document productivity company helping businesses of all sizes eliminate paper, accelerate business processes, and drive digital transformation.

This is achieved by providing PDF productivity and eSigning for all in a single, affordable solution.

At present, Nitro is helping more than 11,000 businesses globally drive  digital transformation. This includes 68% of the Fortune 500 and three of the Fortune 10.

Demand for its offering continues to grow and is underpinning strong recurring revenue growth. For example, Nitro’s guidance for FY 2021 is ARR in the range of $39 million to $42 million. This will mean year on year growth of 41% to 51.6%.

Morgan Stanley is bullish on the company. Its analysts currently have an overweight rating and $3.70 price target on the company’s shares.

Xero Limited (ASX: XRO)

Another ASX tech share to look at is Xero. Over the last few years it has evolved from an accounting platform provider into a full service cloud-based business and accounting solution to small and medium sized businesses globally.

This evolution has been a huge success and underpinned very strong customer and revenue growth. Positively, Xero still has a long runway for growth over the next decade, or decades, according to analysts at Goldman Sachs.

This is thanks to its international expansion, the shift to the cloud, and the monetisation of its app ecosystem. It is the latter that Goldman Sachs is most positive on. It believes Xero could have a multi-decade runway for strong growth if management can successfully monetise its app ecosystem. 

Goldman has a buy rating and $153.00 price target on its shares.

More reading

• Top brokers name 3 ASX shares to buy today
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• ASX 200 Weekly Wrap: ASX whipsaws in volatile week
• 2 exciting ASX growth shares analysts rate highly

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