These 3 ASX 200 shares have struggled to deliver shareholder value in the past few months. Big brokers have scrutinised them and believe there could be some upside as earnings momentum recovers or picks up.
1. AGL Energy Limited (ASX: AGL)
Ord Minnett thinks that the tides may have finally turned for the depressed AGL share price. The broker believes that there could be some significant asset restructuring from the company in the near-term, but expects the focus will be to improve the profitability of its assets.
Ord Minnett rates the AGL share price as an 'accumulate' with a $14.04 share price target. This would represent a significant ~40% upside to its current levels.
2. Eagers Automotive Ltd (ASX: APE)
In June 2020, Mercedes-Benz and Honda announced a move from a franchise-based dealership model to a new business model that uses dealers as intermediaries to sell cars from the manufacturer.
Honda is expected to start the new business model in July 2021, while Mercedes-Benz hopes to transition by January 2022.
Morgan Stanley believes that this transition will not impact Eagers Automotive's profitability and that the agency model itself would not be widely adopted any time soon. It also notes that Eagers Automotive has relatively low exposure to the two brands.
The broker retained an overweight rating for Eagers Automotive, with a $17.00 target price.
3. Sonic Healthcare Limited (ASX: SHL)
The Australian government announced an additional $1.1 billion in funding for Australia's health response to COVID-19 this month. This investment will support rapid pathology testing and tracing, building on the more than 14.5 million COVID tests conducted to date.
Sonic has played a crucial role in pandemic control with over 18 million COVID tests performed to date in 60 Sonic laboratories globally. COVID-19 testing has emerged as a significant revenue and earnings contributor alongside its core medical diagnostic services. The additional funding from the Australian government means that the current $100 COVID-19 test fee will remain in place. Credit Suisse expected this fee would be reduced to $50 from 1 April.
The broker believes that the company should see a recovery in growth rates moving into the second half of FY21. Sonic has noted that its global business has become increasingly resilient to the impacts of pandemic waves, evidenced by only a 1% decline in revenue during 1H FY21.
Credit Suisse rates Sonic as an outperform with a $40.00 target price.
