Last week saw a large number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.
Here's why brokers think investors ought to buy them next week:
A2 Milk Company Ltd (ASX: A2M)
According to a note out of Citi, its analysts have retained their buy rating and lifted the price target on this infant formula and fresh milk company's shares to $21.50. This follows the release of a positive trading update last week. While Citi acknowledges that a2 Milk Company's stronger than expected third quarter performance was driven by stockpiling, it remains confident on its sales outlook and market share gains. In addition to this, it suspects management has been conservative with its EBITDA margin guidance for the full year. I agree with Citi and feel a2 Milk Company would be a great option for investors.
BHP Group Ltd (ASX: BHP)
A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating but trimmed the price target on this mining giant's shares to $36.00. The broker appears pleased with BHP's performance during the third quarter. However, it has adjusted its valuation to reflect coronavirus-related operational disruptions. Outside this, the broker is confident that BHP will generate bountiful free cash flow and expects it to be returned to shareholders. Though, some of this may be deferred until later in the year when the crisis passes. I agree with Macquarie and would be a buyer of BHP's shares.
Nearmap Ltd (ASX: NEA)
Analysts at Citi have retained their (high risk) buy rating and cut the price target on this aerial imagery technology and location data company's shares to $1.90. The broker appears pleased that Nearmap's performance has not been impacted by the pandemic thus far. Though, it suspects demand could soften over the next 12 months and has downgraded its earnings estimates to reflect this. Nevertheless, it sees value in its shares at the current level and was pleased to see it cutting costs. It believes this means a capital raising is unlikely now. Though, this is dependent on trading conditions returning to normal in FY 2021. I think Citi makes some great points and Nearmap could be a good long term option for investors.
