Top brokers weigh in on 3 top stocks

BHP Billiton Limited (ASX: BHP) and Challenger Ltd (ASX: CGF) are on brokers' minds this week

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Most investors look out for the changing ratings of popular brokers to signal buy, hold or sell opportunities in their portfolio.

These 3 stocks are on these major broker's minds this Monday morning.

BHP Billiton Limited (ASX: BHP)

Morgan Stanley has rated BHP as overweight after the release of disappointing March quarter production results with only copper meeting the broker's forecasts for the diversified natural resources company.

Shares in BHP have rallied up since the release of the results, in line with its 12-month share price chart which has been trending upwards steadily despite the company cutting its FY18 iron ore output forecast due to reliability issues with its car dumpers.

The Morgan Stanley broker has been concerned about slow progress at the Olympic Dam site but expects the rail car dumper issue to have little impact on earnings, nonetheless.

According to the broker, the sale of US shale assets is the key near-term valuation driver for BHP, with first bids expected in June and the sale tipped to boost BHP's investment capacity and capital management.

BHP shares were up 1% to $31.19 at the time of writing with the Morgan Stanley broker retaining a $34.25 target on the stock.

Challenger Ltd (ASX: CGF)

Morgans has placed a hold rating on Challenger Ltd after the release of March quarter annuity sales that showed a drop of 13%, with weakness over the same segment also noted for competing fund managers Perpetual Limited (ASX: PPT) and AMP Limited (ASX: AMP) which both bottomed out at 52-week lows this month.

Challenger shares have been on a downturn since late 2017, but rebounded slightly during April 20 trade, finishing up 1.8% at $10.98.

Challenger shares are down 1.7% at the time of writing to $10.79.

The Morgans broker thinks Challenger has good long-term value, with a "strong organic growth profile", and considers the stock fair value for buy-ins at its current price, reducing price targets from $12.03 to $11.75.

Challenger reported growth of 3% for March quarter assets under management, but total life sales were down 13% on the previous corresponding period to $1.1 billion.

South32 Ltd (ASX: S32)

Citigroup has placed a neutral rating on South32 Ltd in the wake of mixed results out of its March quarter production update which saw the Citi broker upgrade medium-term EPS forecasts by 12% to 15%.

The diversified miner was one of the biggest movers on the S&P/ASX 200 late last week, with shares closing up 1.2% on April 20 to $3.93 and prices up 0.8% to $3.96 at the time of writing.

The South32 rally was likely due to a surge in metal prices which most aluminium and nickel players reaped the benefits of and while the Citi broker believes South32 has limited growth opportunities in its existing portfolio its strong balance sheet should signal solid returns for shareholders.

Base metal prices may have turned south again with the nickel price down 1.3% after last Wednesday's 7.5% upsurge and possible price dips in the next 12-months attributed to potential oversupply issues.

Citi has upped its price target on South32 from $3.40 to $3.80.

Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger 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 Scott Phillips.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »