Big brokers have run the ruler on new announcements and notable share price movements. Here are the ASX 200 shares that have been upgraded to a buy or buy equivalent rating on Thursday.
4 bullish ASX 200 shares
Bapcor Ltd (ASX: BAP)
Bapcor announced its plans to expand into Asia by acquiring 25% of the issued equity of Tye Soon. Tye Soon is an independent automotive parts distributor in South East and North East Asia, distributing a wide range of parts and aftermarket parts. Bapcor will invest approximately SGD$12.5 million for the 25% stake and work together to maximise opportunities in the Asia and Australasia region.
Citi believes the acquisition will provide Bapcor with a base to grow its Asian business and address the gaps in its specialist wholesale portfolio. The broker eyes South Korea and Malaysia (43% of Tye Soon’s revenue) as key rollout opportunities for Bapcor in Asia.
Citi retained a buy rating with a $9.35 target price, representing an upside of approximately 26%.
Brickworks Limited (ASX: BKW)
The Brickworks share price is on the rise today after announcing its half-year results. At the time of writing, Brickworks shares were trading for $19.80, up 4.7%.
The building products company reported a 4% decline in revenue to $432 million. Earnings before interest and tax (EBIT) fell 6% to $127 million.
These results were better than expected from Citi’s point of view and were boosted by revaluations and sales of property. Excluding property, the operational performance came in below expectations, driven by a weaker Australian building products segment.
The broker retained a buy rating with the belief that its outlook is improving. Its target price of $22.70 represents an upside of approximately 20% at today’s prices.
Graincorp Ltd (ASX: GNC)
Graincorp upgraded its earnings on Wednesday on the back of new operating initiative and completion of its international expansion. This is expected to increase its ‘through-the-cycle’ earnings which refers to a notional year of average East Coast Australia grain production and average tonnes handled by GrainCorp.
Credit Suisse believes the market has underrated the cost reductions that Graincorp has made over the years. The broker also increased its medium-term forecasts, in-line with the company’s new earnings before taxes, depreciation, and amortisation EBITDA guidance.
The broker upgraded Graincorp shares to outperform with a $5.59 target price. With the Graincorp share price pushing another 2.6% higher today to $5.13, the target price represents an upside just shy of 10%.
Polynovo Ltd (ASX: PNV)
The Polynovo share price is making a strong recovery this month after losing more than 30% in value between late December 2020 and mid January 2021.
The company missed earnings expectations when it updated the market back in January. The update reported a 31% increase in sales vs. the commentary from Polynovo managing director that revenue would double again in FY21.
Macquarie Group Ltd (ASX: MQG) believe Polynovo could get back on track with its entry into sizeable markets such as chronic wounds and hernia to support growth in the medium to long term.
The broker upgraded Polynovo shares from neutral to outperform with a $3.20 target price. The Polynovo share price has surged more than 20% this month to $3.02 at the time of writing. The target price represents an upside of 5.40%.
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Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of POLYNOVO FPO. The Motley Fool Australia owns shares of and has recommended Bapcor and Brickworks. 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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