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 shares are in the buy zone:
BHP Group Ltd (ASX: BHP)
According to a note out of Morgan Stanley, its analysts have retained their overweight rating and lifted the price target on this mining giant’s shares to $39.45. The broker has upgraded its iron ore forecasts to reflect stronger steel production in China. It also notes that it prefers BHP over its peers due its ability to generate strong free cash flow even when iron ore prices fall to more sustainable levels. I agree with Morgan Stanley and would be a buyer of BHP’s shares right now.
NEXTDC Ltd (ASX: NXT)
A note out of the Macquarie equities desk reveals that its analysts have upgraded this data centre operator’s shares to an outperform rating with a $12.30 price target. The broker made the move largely on valuation grounds after a recent pullback in the NEXTDC share price. Outside this, it likes the data centre operator due to its belief that it is one of only a handful of companies that stand to benefit from the COVID-19 crisis both in the short and long term. This follows the acceleration of digital transformation plans by businesses globally. I think Macquarie is spot on and NEXTDC would be a great long term option.
TechnologyOne Ltd (ASX: TNE)
Analysts at Morgans have upgraded this enterprise software company’s shares to an add rating with a slightly reduced price target of $8.76. According to the note, the broker is confident that TechnologyOne is well-positioned to deliver on expectations in FY 2020. In light of this, it feels a sharp pullback in its share price is a buying opportunity for investors. Especially given the strength of its business model and its well-funded and large customer base. I think Morgans makes some good points and TechnologyOne could be worth considering.
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Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia has no position in any of the stocks mentioned. 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.
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