The latest ASX shares that top brokers have upgraded to “buy”

ASX shares have kicked off to a positive start for the week but two stand out after brokers upgraded them to “buy” today.

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ASX shares have kicked off to a positive start for the week but two stand out after brokers upgraded them to “buy” today.

The S&P/ASX 200 Index (Index:^AXJO) inched up 0.3% during lunch time trade. It’s sitting comfortably above the psychologically important 7,000 mark.

While the index has gained close to 30% over the past year, experts say it isn’t too late to join the party.

New ways to get high

One ASX share that became the latest buy idea is the Treasury Wine Estates Ltd (ASX: TWE) share price, according to Morgans.

The broker upgraded the stock to “add” from “hold” following the wine maker’s investor day presentation.

Treasury Wine outlined its growth strategy for the next five years to combat its sudden cut-off from the lucrative Chinese market.

The strategy included the formation of three new divisions: Penfolds, Treasury Americas and Treasury Premium Brands.

New strategy triggers “buy” upgrade for this ASX share

“Importantly, TWE’s FY21 trading update was better than expected despite COVID still impacting some of its higher margin channels and there have been no China sales in the 2H21 following the introduction of the tariffs on Australian wine,” said Morgans.

“We think the new divisions will allow the market to properly value the Penfolds brand and prove that the SOTP is worth more than the whole.

“The new operating model could also lead to some form of corporate activity in the future.”

Morgans’ 12-month price target on the Treasury Wine share price increased to $13 from $11.10 a share.

Winning streak lifts Crown share price

Talking about corporate activity, the Crown Resorts Ltd (ASX: CWN) share price got upgraded by JPMorgan.

However, the broker’s decision to lift the Crown share price to “overweight” from “neutral” isn’t so much due to merger and acquisition (M&A) speculation.

Takeover talks are the only thing firing up the once friendless casino operator. The Crown share price is up by around 10% due to corporate interest, which includes a merger proposal from rival Star Entertainment Group Ltd (ASX: SGR).

Who knows how this will play out? It’s usually a bad idea to buy an ASX share just for its takeover potential.

But there could actually be fundamental value in the Crown share price even after its share price run.

Property is key to broker “buy” upgrade

JPMorgan ponders on how a spin-off of Crown’s property assets could impact on the value of its shares.

Crown did contemplate such a move back in June 2016 too. The idea was to list 49% of its Australian hotels and properties in an ASX property trust, while the casino operator kept the balance.

If Crown did something similar today, it would increase the value of the Crown share price considerably.

In fact, JPMorgan upped its 12-month price target on the shares to $15 from $11 just based on the prospect of such a transaction.

The worst could be over for Crown shareholders, regardless of whether a binding takeover offer emerges.

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*Returns as of January 12th 2022

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. 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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