Many of Australia’s leading brokers have been busy adjusting their discounted cash flow models and recommendations to account for new data.
Three shares that have come out of this favourably are listed below. Here’s why they have been tipped as shares to buy:
Carsales.Com Ltd (ASX: CAR)
According to a note out of UBS, it has retained its buy rating and $13.50 price target on Carsales’ shares despite news that Facebook plans to launch a car dealership inventory listing service in the Australian market. Carsales will be part of the service but is only expected to share part of its inventory with the social media platform. The broker doesn’t believe that the service is a threat to the Carsales business model and continues to see it as a good investment option. While I do have a few concerns over Facebook’s plans, I agree with UBS that its shares remain a buy.
Caltex Australia Limited (ASX: CTX)
A note out of the Macquarie equities desk reveals that it has retained its outperform rating and $34.00 price target on this fuel retailer’s shares following news that Woolworths Limited (ASX: WOW) plans to divest its petrol division to EG Group. Although the broker sees this as a negative to Caltex, it believes that its shares represent compelling value at the current level. Not least because of its strong and defensive core business. I agree with Macquarie and think Caltex is worth considering, especially given the fact that its shares were at a 52-week low recently.
Wesfarmers Ltd (ASX: WES)
Analysts at Goldman Sachs have retained their buy rating and reduced the price target on this conglomerate’s shares slightly to $51.90. The broker made the move after looking into the future of Wesfarmers after the planned Coles demerger. According to the note, Goldman estimates that the Bunnings business will account for 57% of pro forma FY 2020 EBIT post the proposed demerger and other pending divestments. While the broker is bullish on Bunnings and expects EBIT growth of 10% this year, it has trimmed back its growth forecasts to approximately 8% in FY 2020 and FY 2021 due to softening housing trends. It does, however, still believe Wesfarmers is in the buy zone. I would prefer to get in at a lower price, so would class it as a hold for now.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has the following options: short November 2018 $155 calls on Facebook and long November 2018 $135 puts on Facebook. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended carsales.com Limited and Facebook. 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.