Broker upgrade sends Ansell Limited shares to a 3-month high

Although the market has fallen slightly into the red, in morning trade the Ansell Limited (ASX: ANN) share price has climbed 2.5% to a three-month high of $23.86.

This has brought the health and safety protection solutions provider’s one-month return to approximately 9%.

Why are its shares higher today?

With no news out of Ansell this week, today’s gain is likely to be related to a research note out of Ord Minnett this morning.

According to the note, the broker has upgraded Ansell’s shares to an accumulate rating with an increased price target of $25.50.

This price target implies potential upside of over 7% from the current share price or over 9% when including its trailing fully franked dividend.

Ord Minnett has upgraded its earnings estimates for Ansell ahead of its investor session. The broker appears to believe that the company’s transformation program could soon start to produce a notable improvement in its performance.

Should you invest?

While I don’t plan to invest myself, I do think that Ord Minnett makes some valid points and Ansell could be worth a closer look.

In FY 2018 management expects earnings per share from its continuing operations to be between 91 cents and $1.01.

While even at the high end of its guidance range its shares are priced at a lofty 23x earnings, it is worth remembering that this guidance doesn’t take into account the $365 million after tax gain on the sale of the Sexual Wellness business.

Management continues to review options to redeploy the sale proceeds to create additional shareholder value.

Despite this, I would still choose fellow healthcare shares Ramsay Health Care Limited (ASX: RHC) and Nanosonics Ltd. (ASX: NAN) ahead of Ansell at their current share prices.

Alternatively, these top shares could be even better buy and hold investment options.

Top 3 ASX Blue Chips To Buy In 2017

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2017."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Nanosonics 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 Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.