Many of Australia's top brokers have been busy adjusting their financial models 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 shares are in the buy zone:
Fortescue Metals Group Limited (ASX: FMG)
According to a note out of the Macquarie equities desk, its analysts have retained their outperform rating and $20.00 price target on this iron ore producer's shares. With the spot iron ore price trading well above expectations, the broker appears to believe there could be upside risk to earnings forecasts. In addition to this, Macquarie is positive on dividends in FY 2021 and expects the miner to payout 80% of its earnings to shareholders. This is the high end of its guidance range. I agree with Macquarie and think Fortescue is a good option in the resources sector.
Temple & Webster Group Ltd (ASX: TPW)
Another note out of Macquarie reveals that its analysts have retained their outperform rating and lifted the price target on this online retailer's shares to $10.50. According to the note, the broker was pleased with its strong performance in FY 2020 and the operating leverage it is achieving. And while it acknowledges that current growth rates won't be sustainable over the long term, it remains positive on its prospects in the near term and sees value in its shares at the current level. While I think Macquarie makes some good points, I feel its shares are looking a bit expensive now.
Westpac Banking Corp (ASX: WBC)
Analysts at Credit Suisse have retained their outperform rating and $20.60 price target on this banking giant's shares. According to the note, the broker feels that softness in its capital position is weighing on its shares. However, it notes that Westpac is currently undertaking a major strategic review of its operations. It feels the bank could remove these concerns by divesting some of its non-core businesses. The broker estimates it could command upwards of almost $5 billion in total if it sold the majority of these businesses. I agree with Credit Suisse and feel it is worth sticking with Westpac.
