Many of Australia's leading brokers have been working hard on their financial models and adjusting their recommendations accordingly ahead of earnings season.
Three shares that have come out of this favourably are listed below. Here's why they have been given buy ratings:
Origin Energy Ltd (ASX: ORG)
According to a note out of Morgans, its analysts have retained their add rating and lifted the price target on this energy company's shares to $8.15. The broker believes the sharp decline in its share price over the last 12 months due to regulatory concerns and falling oil prices has created a buying opportunity for investors. Especially given how the company has worked hard to mitigate the risks. In addition to this, Morgans believes that Origin could be well placed to increase its dividends in the future after de-leveraging. While I agree with Morgans on this, I would suggest investors wait until after the election before considering an investment, just in case the energy sector is hit harder than expected.
Reliance Worldwide Corporation Ltd (ASX: RWC)
A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating and $6.40 price target on this plumbing parts company after it reaffirmed its guidance for FY 2019, albeit with a skew to the second half. According to the note, the broker was not expecting Reliance Worldwide to have such a large skew, but it remains confident on its outlook. Reliance Worldwide remains its favourite pick in the sector. I like Reliance Worldwide and feel it could be a good buy and hold investment.
Telstra Corporation Ltd (ASX: TLS)
Analysts at Goldman Sachs have retained their conviction buy rating and $3.60 price target on this telco giant's shares after TPG Telecom Ltd (ASX: TPM) announced that it would end it mobile network rollout. According to the note, Goldman believes Telstra is set to lead the market with its 5G offering, which is a big positive as it sees clear upside for the market's 5G leader. In addition to this, it believes its long term earnings are positive due to its dominant mobile network and the significant opportunity to reduce costs through the digitalisation and simplification of its business. While I agree that Telstra could be a good investment, I intend to wait for its half year results in mid-February before considering an investment.
