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:
Metcash Limited (ASX: MTS)
According to a note out of Morgan Stanley, its analysts have retained their overweight rating and lifted the price target on this wholesale distributor's shares to $3.80. The broker believes that its food business is well-placed to benefit from COVID tailwinds. It also notes that competition is easing after a slowdown in Aldi's rollout and Kaufland deciding against expanding into Australia. In addition to this, it believes its hardware business will drive growth, especially given its acquisition of Total Tools. In light of this, it believes it feels its shares are cheap at the current level. I think Morgan Stanley makes some good points and it could be worth a closer look.
NEXTDC Ltd (ASX: NXT)
A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating and lifted their price target on this data centre operator's shares to $14.75. This follows the release of a debt update earlier this week. That update revealed a new debt facility which has lowered its borrowing costs materially. Overall, the broker appears confident that NEXTDC is well-placed for growth in the coming years. I agree with Macquarie and would be a buyer of its shares today.
Telstra Corporation Ltd (ASX: TLS)
Analysts at UBS have retained their buy rating and $3.70 price target on this telco giant's shares following its annual general meeting. According to the note, the broker has lifted its dividend forecast to 16 cents per share in FY 2021 after Telstra revealed that it would be willing to amend its dividend policy in the short term to prevent a dividend cut. I think UBS is spot on with this recommendation and feel it would be a great option. Especially for income investors, given its generous potential yield.
