But there are others that could be facing some pressure after these leading brokers downgraded their recommendations on these ASX stocks today.
The HUB share price tumbled 1.3% to $18.66 while the NWL share price slumped 7% to $8.82 at the time of writing.
The broker was reviewing the latest industry data for ASX-listed wealth platforms, which saw the industry record its second consecutive quarter of capital inflows in the three months to March.
Good times can’t last
“We expect the inflows to be short-lived with the impact of COVID-19 to result in outflows in the typically seasonally stronger June quarter due to superannuation withdrawals and lower contributions,” said Credit Suisse.
“NWL/HUB remained leaders on net flows, capturing an outsized share from the major institutional platforms who generally remained in outflow.
“While NWL/HUB are benefiting from switching, we expect switching to temporarily slow in the June quarter as COVID-19 diverts advisers’ attention to servicing clients.”
Both stocks have also outperformed in recent months and the broker believes consensus expectations may be too lofty.
Credit Suisse lowered its recommendation on HUB24 to “neutral” from “outperform” and Netwealth to “underperform” from “neutral”.
Singing out of key
Meanwhile, UBS cut its rating on the Chorus Ltd (ASX: CNU) share price to “sell” from “neutral”. The NZ and ASX-listed telco outperformed through the coronavirus pandemic as investors sheltered under its relatively defensive earnings and dividends.
But there’s too much optimism priced into the stock and the broker warns that the company could be cutting its dividend.
“CNU benefits from being a COVID-19 defensive but share price assumes ‘more for more’ with implied cumulative over-recovery of ~$2bn and implied retail prices over $100 which most consumers can’t afford,” said UBS.
“Our catalyst tracker expects neutral/negative news over the next 12 months (regulation, dividend policy & 5G launches).”
The broker is forecasting around a 10% drop in Chorus’ long run dividend to NZ55 cents a share from NZ60 cents a share.
UBS’ 12-month price target on the NZ stock is NZ$6.75 a share.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Brendon Lau owns shares of National Australia Bank Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia owns shares of Netwealth. The Motley Fool Australia has recommended Hub24 Ltd. 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.
- This is the only ASX sector tipped to report earnings growth this reporting season – August 4, 2020 5:25pm
- 4 things you need to know about the RBA’s rate decision today – August 4, 2020 3:24pm
- Indiana Resources share price jumps to 3-year high on acquisition news – August 4, 2020 12:46pm