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Brokers name 3 ASX shares to buy

Australia’s top brokers have been busy adjusting their estimates and recommendations 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 S&P/ASX 200 Index (ASX: XJO) are in the buy zone:

Bapcor Ltd (ASX: BAP)

A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating but cut the price target on this auto parts company’s shares to $5.40. According to the note, the broker has downgraded its estimates to reflect the current trading conditions. However, it expects the company’s sales to rebound quickly when lockdowns end. In addition to this, the broker notes that Bapcor has a solid balance sheet and appears well-placed to navigate these tough times. I think Macquarie makes some good points and Bapcor would be worth considering.

Macquarie Group Ltd (ASX: MQG)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and cut the price target on this investment bank’s shares to $115.00. The broker has reduced its earnings estimates for FY 2020 and expects it to fall short of its guidance. This is due to an expected increase in bad debts and impairment charges. However, Morgan Stanley believes the market has already priced this in and sees its share price weakness as a buying opportunity. Especially given its track record of taking advantage of opportunities in dislocated markets. I agree with Morgan Stanley and would be a buyer of Macquarie’s shares.

Zip Co Ltd (ASX: Z1P)

Analysts at Morgans have retained their add rating and cut the price target on this buy now pay later provider’s shares to $2.57. According to the note, the broker felt that Zip Co delivered a solid quarterly update this week considering the difficult market conditions. And while it expects sales growth and bad debts could be impacted by the COVID-19 pandemic, it remains positive and sees value in its shares at the current level. I agree with Morgans on Zip Co and feel it could be a good option for investors.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Bapcor and Macquarie Group Limited. 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.