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:
BINGO Industries Ltd (ASX: BIN)
According to a note out of Credit Suisse, its analysts have initiated coverage on this waste management company’s shares with an outperform rating and a $3.40 price target. The broker likes BINGO due to its defensive earnings, industry-leading margins, and structural growth opportunity. It feels its shares deserve to trade on higher multiples and appears to believe they will rerate higher in time. I agree with Credit Suisse and would also be a buyer of BINGO’s shares this week.
Bubs Australia Ltd (ASX: BUB)
A note out of Citi reveals that its analysts have commenced coverage on this infant formula company’s shares with a (high risk) buy rating and $1.40 price target. According to the note, the broker believes Bubs has a promising brand in a category which is growing quickly. It also notes that Bubs has good connections in the industry. Though, it does warn that it is a high risk option due to its loss-making and early stage operations. Whilst I have a preference for one of its rivals, I think it is worth considering a small investment in its shares.
Xero Limited (ASX: XRO)
Analysts at Morgan Stanley have retained their overweight rating and lifted the price target on this accounting software provider’s shares to $90. Morgan Stanley appears to have been impressed with Xero’s first half result, particularly with its margin expansion. It also notes that Xero’s international contribution margins are breaking even for the first time. Overall, the broker forecasts strong sales growth in FY 2020 and appears confident this can continue in the near term. I think Morgan Stanley is spot on and agree that Xero is a buy.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Xero. The Motley Fool Australia has recommended BUBS AUST FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.