There are a few ASX shares that multiple brokers like simultaneously right now.
A business that many brokers like at once might indicate that it’s an opportunity for investors to think about.
Brokers are always on the lookout for ideas that could be good to own. Of course, they could all be wrong at the same time.
Keeping that in mind, here are two that are liked by the broker industry:
IOOF Holdings Limited (ASX: IFL)
IOOF is a large financial services business. It provides financial advice through its network of financial advisers, portfolio and estate administration for advisers, their clients and hundreds of employers, and investment management products.
It’s currently rated as a buy by at least three brokers. One of the brokers that likes IOOF is Citi with a price target of $4.95. The broker was impressed by its quarterly update for the three months to 30 June 2021. One of the highlights was the net inflows in some areas.
IOOF’s portfolio and estate administration saw $606 million of net inflows and investment management saw a turnaround in flows with “robust” net inflows of $90 million.
However, financial advice saw $1.8 billion of net outflows, and pensions and investments (P&I) experienced net outflows of $895 million. The outflows were not as bad for the ASX share as the broker had been thinking.
Funds under management, advice and administration (FUMA) at 30 June 2021 was $213.3 billion, which was an increase of $9.4 billion over the quarter thanks to market movements.
MLC’s assets under management and funds under administration were $301.2 billion, up $11.4 billion over the fourth quarter. Currently, the two different businesses use different reporting methodology.
According to Citi, IOOF is valued at 12x FY22’s estimated earnings with a forward grossed-up dividend yield of 7.5%.
Telstra Corporation Ltd (ASX: TLS)
The telco giant is another ASX share that brokers like. It’s currently rated as a buy by at least four brokers including Credit Suisse.
The broker points to the asset sale of a minority stake of its towers business as a reason to be positive about the telco.
A few weeks ago, Telstra announce that it was going to sell 49% of its towers business for $2.8 billion as well as announcing returns for shareholders.
This towers business has approximately 8,200 towers, it’s the largest mobile tower infrastructure provider in Australia.
Telstra expects net cash proceeds after transaction costs of $2.8 billion at completion, which is expected in the first quarter of FY22.
The ASX share said it intends to return approximately 50% of net proceeds to shareholders in FY22.
Telstra said it was able to maximise overall value for shareholders whilst maintaining control of the assets. But it was also important for Telstra to preserve its “strategic differentiation in mobiles and protect” its “network leadership”.
The ASX share has entered into a 15-year agreement (with the option to extend) to secure ongoing access to existing and new towers.
Some of the net proceeds will be used to reduce debt so it can maintain balance sheet strength and flexibility.