Many of Australia's top brokers have been busy adjusting their discounted cash flow models and recommendations again this week.
Unsurprisingly, this has led to countless buy, hold, and sell recommendations.
Three buy recommendations that caught my eye are listed below. Here's why these brokers are bullish on them:
Magellan Financial Group Ltd (ASX: MFG)
According to a note out of Credit Suisse, its analysts have upgraded the shares of this fund manager to an outperform rating from neutral and increased the price target on them to $31.00. The broker made the move after upgrading its earnings estimates following the release of a strong quarterly fund performance update this morning. The broker expects first-half performance fees to be over $30 million if this level of performance can be maintained through the current quarter. I think Credit Suisse is spot on and Magellan would be well worth a closer look.
Orora Ltd (ASX: ORA)
A note out of Goldman Sachs reveals that its analysts have added this packaging company to its conviction buy list with an increased price target of $4.24. According to the note, the broker thinks that Orora is "the complete package" and the best option for investors in the industry. It feels that a recent pullback in its share price on the back of input cost concerns has been unwarranted and has predicted solid earnings growth over the next few years. The broker has forecast an EBIT compound annual growth rate of 9.7% between FY 2018 and FY 2021, including acquisitions. I agree with Goldman and would suggest investors take a closer look at Orora after the recent share price weakness.
Qantas Airways Limited (ASX: QAN)
Analysts at Macquarie have retained their outperform rating but cut the price target on this airline's shares slightly to $7.30. In the note the broker points out that Qantas' shares are trading at a significant discount to many of its peers based on its forward enterprise value/operating earnings ratio. This is despite the domestic market remaining solid and the company experiencing improved profitability from its international business. Overall, despite rising fuels costs, the broker sees a lot of value in its shares and I would have to agree.
