The S&P/ASX 200 Index (Index:^AXJO) hit a high for 2021 and ASX stocks that just got upgraded to “buy” are leading the charge.
The top 200 stock index gained 0.6% in late morning trade to 6,781 with all sectors bar Real Estate trading in the black.
But two ASX stocks that got upgraded by leading brokers are outpacing the broader market gains.
US foreclosures drive upgrade for this ASX stock
The first is the Computershare Ltd (ASX: CPU) share price. The CPU share price jumped over 2% at the time of writing to $14.69.
ASX investors are getting excited after Macquarie Group Ltd (ASX: MQG) lifted its recommendation on the stock to “outperform” from “neutral”.
The broker believes the Computershare share price is under appreciated due to the upside from the group’s US mortgage servicing business.
Growth in higher margin business
“Foreclosures remain prohibited until at least 31 January 2021 which is impacting CPU’s higher margin ancillary revenues (~1/3 of ancillary revenues are foreclosure related),” said Macquarie.
“We are forecasting a gradual recovery in ancillary revenues from February 2021 to the end of FY21.”
The US government banned foreclosures to protect vulnerable households during COVID-19, but the ban is about to expire.
The broker’s 12-month price target on the CPU share price is $15.95 a share.
Market share wins prompts “buy” upgrade
Another stock that’s outrunning the ASX 200 this morning is the Hub24 Ltd (ASX: HUB) share price.
Credit Suisse upgraded its rating on the wealth platform to “outperform” from “neutral” following management’s better-than-expected update yesterday.
HUB reported funds under advice of $22 billion for the December quarter. This is 16% above the previous quarter and 5% better than consensus estimates.
Net capital inflow also hit a record of $1.7 billion. That’s 35% above the September quarter and well ahead of Credit Suisse’s $1.4 billion prediction.
Key growth drivers for HUB share price
“HUB is capturing significant marketshare within the platform industry,” said the broker. “We expect it to grow from 2.1% market share in FY20 to 5.6% by FY25E.”
The expected expansion of the addressable market size for HUB’s platform due to advisors moving to independent practices is one of the drivers for the upgrade.
The broker also believes these advisors will be giving greater allocation of their client’s capital to HUB.
Furthermore, there’s potential upside from large institutional deals.
The broker lifted its 12-month price target on the HUB share price to $26 from $21.50 a share.
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Brendon Lau owns shares of Macquarie Group Limited. Connect with me on Twitter @brenlau.
The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Hub24 Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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