It was another busy week of broker note releases following a large number of quarterly and trading updates.
Three buy ratings that caught my eye are summarised below. Here's why brokers think investors ought to buy them next week:
Commonwealth Bank of Australia (ASX: CBA)
According to a note out of Morgans, its analysts have retained their add rating and $76.00 price target on this banking giant's shares ahead of its half year results release next week. Morgans has pencilled in cash earnings of $4,919 million for the first half. This strong profit is expected to be driven by the repricing of its home loans, which Morgans believes will offset some of the headwinds impacting the sector. In addition to this, the broker has predicted an interim dividend of $2.01 per share, which will be one cent higher than the prior corresponding period. While I think CBA shares are a buy if the Royal Commission final report contains no nasty surprises, I see more value in other bank shares.
G8 Education Ltd (ASX: GEM)
Analysts at Morgan Stanley have retained their overweight rating and lifted the price target on this childcare centre operator's shares to $4.00. According to the note, the broker believes that long-term demand for childcare services will be supported by favourable demographics and affordability. In addition to this, the broker believes that the market has yet to price in the potential for G8 Education to go through an upgrade cycle over the coming years. When the oversupply of childcare centres eases, I think G8 Education will be positioned to profit greatly. Though, I'd like to see further proof that trading conditions have improved before investing.
Redbubble Ltd (ASX: RBL)
A note out of Goldman Sachs reveals that its analysts have retained their buy rating but cut the price target on this ecommerce company's shares slightly to $1.50 following the release of its half year update. In the first half Redbubble achieved unaudited operating EBITDA of $5.6 million, up 115.4% on the prior corresponding period and 33% higher than the broker's expectations. This appears to have filled Goldman with confidence that its long-term growth story is intact. It expects Redbubble to benefit from improving network effects, new product launches, partnership program, and the ongoing penetration of new geographies. I think Redbubble could be worth a look after this strong half year update.
