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 ASX 200 shares are in the buy zone:
A2 Milk Company Ltd (ASX: A2M)
According to a note out of UBS, its analysts have retained their buy rating and NZ$22.00 (A$20.55) price target on this fresh milk and infant formula company's shares. Although the broker suspects that market share gains have slowed, it remains confident that a2 Milk Company is on course to deliver a strong result in FY 2020. In addition to this, UBS isn't concerned by the recent launch of a2-only products from rivals such as Bellamy's. It believes a2 Milk Company's strong brand loyalty will help it fend off the competition. I agree with UBS and believe a2 Milk Company would be a great option for investors.
Nearmap Ltd (ASX: NEA)
Analysts at Goldman Sachs have retained their buy rating and lifted the price target on this aerial imagery technology and location data company's shares to $2.55. According to the note, the broker was pleased with Nearmap's market update on Thursday. It is performing better than it expected, which has led to Goldman increasing its forecasts. The broker is now forecasting its annualised contract value growing by a compound annual growth rate of 18% between FY 2019 and FY 2022. The broker also notes that Nearmap has a $2.9 billion opportunity in its current markets, which is materially more than its estimate for revenue of $130 million in FY 2022. I agree with Goldman Sachs and feel Nearmap could be a great long term option.
Telstra Corporation Ltd (ASX: TLS)
A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating but trimmed the price target on this telco giant's shares slightly to $3.90. The broker has reduced its earnings estimates slightly to account for negative impacts of the pandemic. Nevertheless, Macquarie believes Telstra will continue to generate sufficient cash flow to maintain its 16 cents per share dividend over the coming years. This equates to a fully franked 4.9% dividend yield. I think Macquarie is spot on and Telstra remains a great option for investors. Especially those in search of income.
