Following on from Monday's broker downgrades, today I thought I would take a look at a few shares which have recently found favour with brokers and received recommendation upgrades.
Three key upgrades that caught my eye are as follows:
BlueScope Steel Limited (ASX: BSL)
A research note out of Credit Suisse reveals that its analysts have upgraded the steel manufacturer from neutral to an outperform recommendation with a price target of $13.30. The broker appears to have been impressed with BlueScope's first-half performance and its decision to use its free cash flow to buy back shares and pay a dividend. Whilst I was impressed with its half-year result, I think its shares look fully valued after its recent rally. Because of this I feel there is limited upside potential.
G8 Education Ltd (ASX: GEM)
According to a research note out of Ord Minnett, its analysts have just upgraded the childcare operator to a buy rating with a $4.11 price target. Whilst the broker was pleased with its first-half result, the big news in their opinion is that the company has placed shares at a premium to raise $212.8 million to fund growth opportunities. The company revealed that China First Capital's investment will help fund committed child care centre acquisitions in Australia totalling approximately $200 million and due for settlement over the next two years. I believe this is a big positive for the company and would agree with Ord Minnett that G8 Education is a buy.
Mantra Group Ltd (ASX: MTR)
Analysts at investment bank UBS have upgraded this leading accommodation provider to a buy rating with a price target of $3.15. Whilst UBS doesn't expect much more than Mantra hitting its full-year guidance this year, in FY 2018 it expects organic growth and acquisitions to lead to double-digit earnings per share growth. I would have to agree with UBS on this one as well. Although its CBD portfolio has been a big disappointment in the last two years, I trust management to turn things around to complement the strong performance of the rest of the business. At the current share price I think Mantra is a great long-term buy and hold investment.
