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The latest large cap ASX stocks to be upgraded by top brokers

ASX investors won’t let the spread of the coronavirus stand in the way of a bull market! News that the SARS-like infection reaching the US couldn’t stop our market from jumping higher.

If anything, gains on the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) accelerated in the afternoon with the index registering a 1% gain in after lunch trade.

Just about every sector is trading in the green and two large cap ASX stocks that just got upgraded by leading brokers are adding to the cheer too.

Climbing the wall of worry

One of these stocks is the QBE Insurance Group Ltd (ASX: QBE) share price. Citigroup upgraded the stock to “buy” from “neutral” and increased its price target to $15.20 from $13.45 a share.

The QBE share price jumped 1.3% to $13.89 at the time of writing. The company’s recent profit downgrade and the spate of natural disasters that are weighing on the insurance sector isn’t enough to turn sentiment against QBE.

“Given QBE’s recent track record, we are a little surprised how relaxed the market appears to have been about another earnings downgrade,” said Citi.

“While we anticipated a good part of the crop related downgrade in advance of the event, the better opportunity to buy the stock we thought would present itself was shorter lived than anticipated.”

The source of the downgrade stems from its crop business. But if you excluded that, the rest of QBE’s businesses are broadly tracking to what the broker is forecasting.

Multiple tailwinds

Another stock that’s enjoying an upgrade is the Fortescue Metals Group Limited (ASX: FMG) share price.

Shares in the iron ore producer surged 5.1% to $12.69 – making it the second best performer on the ASX 200 this afternoon.

The stock is only beaten by the Polynovo Ltd (ASX: PNV) share price and you can find out why Polynovo is setting new record highs by clicking here.

Coming back to Fortescue, Credit Suisse upped its recommendation on the stock to “neutral” from “underperform” and gave its price target a big boost to $11 from $7.50 a share.

What’s driving the upgrade

The broker’s more upbeat forecast for iron ore is only one reason for the upgrade.

“With a far more accommodative house commodity price view, we lift our TP [target price] and rating for FMG to reflect not just material eps changes, but balance sheet strength and a buoyant outlook for dividends,” said Credit Suisse.

What’s good for the goose

You won’t find many sectors outside of mining with cashed-up balance sheets, dividend growth potential and the prospects of capital returns.

This is why mining is one of my overweight sectors for the February reporting season. You can find out more by clicking here.

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Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.