Many of Australia's leading brokers have been busy adjusting their discounted cash flow models and recommendations to reflect recent developments.
This has led to a number of broker notes hitting the wires. Three shares that are in favour with brokers this week are listed below. Here's why they have buy ratings on their shares:
Costa Group Holdings Ltd (ASX: CGC)
According to a note out of UBS, its analysts have retained their buy rating and $8.20 price target on this horticulture company's shares after it announced an agreement to acquire the farming operations of Nangiloc Colignan Farm. These include high quality citrus and grape production across 567 hectares. UBS believes that the acquisition will be immediately earnings accretive and should provide further upside in the future. The broker currently forecasts earnings growth in the region of 17% per annum for the next three years, excluding the potential benefits from Nangiloc Colignan Farm. I agree with UBS on Costa Group and think it would be a great option for investors.
G8 Education Ltd (ASX: GEM)
A note out of Morgan Stanley reveals that its analysts have upgraded G8 Education to an overweight rating with an increased price target of $3.25. According to the note, the broker has made the move on the belief that occupancy rates have bottomed sooner than expected. It expects this to lead to improvements in its earnings in FY 2019. While I do believe things are looking a lot better in the childcare industry, I intend to wait for signs that the recovery in occupancy levels is not just a one-off.
Kogan.com Ltd (ASX: KGN)
Analysts at UBS have retained their buy rating and $5.50 price target on this ecommerce company's shares following the release of an update at its annual general meeting last week. The broker appears to have been pleased to see improvements in its revenue and gross margin. It also believes that rising costs are to be expected. And due to the importance of the Christmas period, the broker does believe risks are elevated, but not enough for it to take off its buy rating. I like Kogan and think its shares look to be great value, but I'll be waiting for its half-year results before considering an investment.
