Following a series of earnings releases, corporate developments, and wild share price moves, leading brokers have been adjusting their recommendations accordingly this week.
Three shares which have been tipped as buys by brokers are listed below. Here's why they are bullish on them:
Galaxy Resources Limited (ASX: GXY)
According to a note out of Ord Minnett, its analysts have retained their buy rating but reduced their price target on the lithium miner's shares slighly to $3.90. Although Galaxy's full-year result came in a little weaker than the broker expected, it has put this down to timing. I would agree with Ord Minnett on this one. Although it is a volatile share and its increasing short interest is a concern, I think the underlying demand for lithium will allow the company to outperform in the medium to long-term.
IOOF Holdings Limited (ASX: IFL)
A note out of UBS reveals that its analysts have upgraded the financial services company's shares to a buy rating from neutral with an increased price target of $11.50. The broker has made the move after noting IOOF's sizeable share price decline since its announced the acquisition of the ANZ Wealth business from Australia and New Zealand Banking Group (ASX: ANZ). While the market may have concerns that the acquisition could hit its earnings in the short-term, UBS remains confident that going forward its earnings growth potential is strong. While I'm not a huge fan of the company, it does look good value after its recent declines.
Wesfarmers Ltd (ASX: WES)
Analysts at Credit Suisse have retained their outperform rating and $44.98 price target after looking into the potential Coles spin-off. According to the note, Credit Suisse appears confident that a de-merged Coles would be financially sound in the event of increased price competition and higher requirements for capital expenditure. Furthermore, its analysts estimate that the de-merged Coles business would have an equity value of between $15 billion and $18 billion. This implies a potential free cash flow yield of between approximately 4.7% and 5.7%. It wouldn't be my first pick in the retail sector, but I do see value in its shares like Credit Suisse.
