Brokers have had their say about which ASX shares look like good value and could be worth looking at.
These brokers are always on the lookout for opportunities to make good returns. Share prices are changing every day and every week, so they can suddenly become good value if they fall in price or their prospects improve.
Some businesses are rated as buys by several brokers at once. These two ASX shares are heavily liked by brokers at the moment:
Seven Group Holdings Ltd (ASX: SVW)
Seven Group is currently rated as a buy by at least four brokers. Credit Suisse is one that rates Seven Group as a buy, with a price target of $26.25. That means the broker is suggesting the share price could rise more than 20% over the next 12 months.
This is a diversified business which operates across several areas. In industrial services, WesTrac is the sole authorised Caterpillar dealer in Western Australia, New South Wales and the ACT. It also owns Coates High, the largest equipment hire in the business and AllightSykes, a supplier in lighting towers, generators and pumps. The ASX share also owns around 70% of Boral Limited (ASX: BLD).
Seven Group has a growing presence in oil and gas in Australia and the US, as well as a 30% stake in Beach Energy Ltd (ASX: BPT). Finally, it owns around 40% of Seven West Media Ltd (ASX: SWM).
Credit Suisse notes that both WesTrac and Coates are expected to deliver growth in FY22, with continuing growth which could increase in future financial years. This guidance assumes lockdowns and restrictions are not prolonged or too restrictive.
In FY21, Seven Group saw trading revenue growth of 6.1% to $4.8 billion, underlying earnings before interest and tax (EBIT) growth of 7.3% to $792.1 million and operating cashflow growth of 15.6% to $622.4 million.
Credit Suisse thinks Seven Group is valued at 9x FY23's estimated earnings.
Audinate Ltd (ASX: AD8)
Audinate is the provider of the Dante audio over IP networking solution which is used in the professional live sound, commercial installation, broadcast, public address and recording industries.
The company's selling point is that Dante replaces traditional analogue audio cables by transmitting synchronised audio signals across large distances to multiple locations at once, using an ethernet cable.
The ASX share is currently rated as a buy at least three brokers. One of those brokers is UBS, which has a price target on the business of $11.75, which implies the Audinate share price could rise by more than 15% over the next 12 months.
UBS noted that Audinate thinks pre-COVID growth rates will return for the business, despite all of the COVID-19 impacts and logistics problems relating to the supply chain. Dante video could be an important factor for winning over more clients and growing revenue.
In FY21, Audinate generated revenue growth of 22.5% to US$25 million. Gross profit grew by 23.1% to US$19.2 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) surged 50.1% to $3 million. The net loss after tax was $3.4 billion, 17% better than FY20. Its operating cashflow grew 40% to $6.7 million.
The company is hoping to drive further design wins for Dante video and launching new products. It also wants to improve Dante adoption by non-English speakers, strengthen products against cyber issues and implement business scalability initiatives.
UBS thinks Audinate will start making a bottom line net profit in FY23.
