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 broker buy ratings that have caught my eye are summarised below. Here's why brokers think these ASX shares are in the buy zone:
Afterpay Touch Group Ltd (ASX: APT)
According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $44.00 price target on this payments company's shares following its AUSTRAC update. While Morgan Stanley notes that there was some non-compliance with anti-money laundering rules, this has since being rectified. Furthermore, it notes that the auditor does not recommend significant operating changes or penalties. I agree with Morgan Stanley and would be a buyer of Afterpay's shares.
ELMO Software Ltd (ASX: ELO)
Another note out of Morgan Stanley reveals that its analysts have retained their overweight rating and $9.00 price target on this HR and payroll software provider's shares. According to the note, the broker was pleased but not surprised to see the company reiterate its FY 2020 guidance recently. ELMO expects annualised recurring revenue in the range of $61 million to $63 million and revenue of $53 million to $55 million. In addition to this, the broker has previously spoken positively about ELMO's traction in the lower mid-market and its cross-selling success. I would have to agree with Morgan Stanley on this one as well.
Smartgroup Corporation Ltd (ASX: SIQ)
Analysts at Credit Suisse have retained their outperform rating and lifted the price target on this salary packaging company's shares to $10.10. According to the note, the broker believes the selloff of Smartgroup's shares following the resignation of its CEO has been an overreaction. Since the long-serving CEO announced his resignation, Smartgroup's shares have fallen over 15%. It believes this is a buying opportunity for investors. Whilst it isn't a company that I'm a big fan of, at 15x estimated full year earnings it does look good value.
