Many of Australia's top brokers have been busy adjusting their financial models again, leading to the release of a large number of broker notes this week.
Three buy ratings that have caught my eye are summarised below. Here's why brokers think these ASX shares are in the buy zone:
BHP Group Ltd (ASX: BHP)
According to a note out of the Macquarie equities desk, its analysts have retained their outperform rating with a $41.00 price target on this mining giant's shares. The broker believes that the recent drone attacks on oil refineries in Saudi Arabia means the market will have to add a risk premium to oil prices in the future. In addition to this, its analysts feel that higher oil prices have now removed any downside risk to BHP's earnings in FY 2020, putting the company in a position to deliver a strong profit result and pay out a dividend that provides a yield in excess of 6%. I agree with Macquarie on BHP and feel it is the best option in the resources sector right now.
Qantas Airways Limited (ASX: QAN)
Analysts at Morgan Stanley have upgraded this airline's shares to an overweight rating and lifted the price target on them to $7.00. According to the note, although the broker believes demand for air travel has been a little subdued and oil prices are a risk, it feels comfortable that there is limited near term impact from the recent volatility in the oil price. In addition to this, the broker has been impressed with the growth in Loyalty and has factored this into its valuation, leading to the upgrade. I think Morgan Stanley is spot on and would also class its shares as a buy.
Ramsay Health Care Limited (ASX: RHC)
A note out of Citi reveals that its analysts have retained their buy rating and $74.00 price target on this private hospital operator's shares. According to the note, the broker believes there is an opportunity for Ramsay to bolster its growth through the acquisition of a primary care business in Australia. It believes such an acquisition has the potential to be accretive to earnings. Whilst I think Ramsay is a high quality company, I'm waiting for trading conditions to improve before considering an investment.
