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Top brokers name 3 ASX shares to buy

With earnings season just around the corner and quarterly updates coming in thick and fast, brokers across Australia have been kept very busy this month.

Three shares that have found favour with brokers and been given buy ratings are listed below. Here’s why they are rated as buys:

Galaxy Resources Limited (ASX: GXY)

According to a note out of Citi, its analysts have retained their buy rating and $4.30 price target on this lithium miner’s shares following the release of its second-quarter update. Yesterday’s update was in-line with the broker’s expectations. Further, its analysts appear pleased to see that plant upgrades will lead to better volumes and grades in the fourth-quarter of FY 2018. I agree with Citi on this one and think yesterday’s update was a solid one. However, with future lithium prices tipped by some to decline, it does make it a high risk investment.

REA Group Limited (ASX: REA)

Analysts at Morgan Stanley have retained their overweight rating and increased the price target on the operator’s shares to $95.00. According to the note, the broker remains positive on the property listings industry despite recent softening. Morgan Stanley expects REA Group to achieve earnings per share of $2.22 in FY 2018, before rising to $2.69 in FY 2019. This means its shares are changing hands at approximately 33x estimated FY 2019 earnings. While this is not cheap and I do have slight concerns over the housing market, I think REA Group would be a good long-term investment.

Regis Healthcare Ltd (ASX: REG)

A note out of UBS reveals that its analysts have retained their buy rating but reduced their price target on this aged care provider’s shares to $4.80. According to the note, the broker believes that 10 new developments will provide incremental earnings contributions of approximately $5 million and $16 million in FY 2019 and FY 2020, respectively. In light of this, UBS has updated its earnings forecasts for Regis accordingly. It expects Regis to achieve earnings per share of 19 cents in FY 2019 and 20 cents in FY 2020. Considering Australia’s ageing population tailwind, Regis could be worth a closer look.

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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia has recommended REA Group 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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