Leading brokers name 3 ASX shares to buy

Brokers across Australia have been busy once again adjusting their discounted cash flow models and recommendations for many of the country’s most popular shares.

Three buy recommendations that caught my eye are summarised below. Should you be buying these shares today?

Class Ltd (ASX: CL1)

According to a note out of Morgans, its analysts have retained their add rating but cut the price target on this SMSF administration software company’s shares to $2.73. The broker still sees value in Class’ shares despite the release of a weak quarterly update last week. That update revealed a quarterly increase of 5,158 accounts onto its platform, bringing the total number of accounts to 169,413. This was the weakest growth in new customer accounts in two years despite Class’ aggressive marketing. I wasn’t overly impressed with the quarter, especially given how Class had been running a promotion offering new users the opportunity to pay nothing until 1 January 2019.


A note out of Morgan Stanley reveals that its analysts have retained their overweight rating and $9.20 price target on this data centre operator’s shares. The broker appears pleased by NEXTDC’s recent announcement that its S1 Sydney data centre has established two new Google Cloud Interconnects, allowing customers to connect to Google Cloud Platform from anywhere in Australia. Morgan Stanley believes this will improve connectivity, bandwidth, and latency for the majority of NEXTDC customers. I agree with Morgan Stanley on this one, however, it is a reasonably high-risk investment due to the premium its shares trade at.

Technology One Limited (ASX: TNE)

Analysts at Ord Minnett have initiated coverage on this enterprise software company with a buy rating and $5.45 price target. The broker believes that Technology One is an attractive option for investors due to offering growth and improving earnings quality. Ord Minnett appears to be particularly optimistic on its cloud services offering. While I agree that its cloud services business could be a strong performer in the future, I have yet to see enough from the rest of the company to put its shares on my shopping list.

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Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia owns shares of Class 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.

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