Goldman Sachs has been busy running the rule over some recent results and has picked a couple of ASX 200 shares it thinks investors should buy.
Here are the two ASX 200 shares the broker rates very highly:
IDP Education Ltd (ASX: IEL)
Goldman Sachs is a fan of this language testing and student placement company. Following a better than expected half-year result, the broker commented that IDP is "a structural grower with risks diminishing".
Its analysts have upgraded their earnings estimates for the second half (and beyond). This is because they expect a recovery in Australian student placements.
Discussing the ASX 200 share, Goldman said:
We expect a stronger than usual 2H for IDP driven by an emerging recovery in Australian Student Placements, continued strength in Multi-destination SP and greater than initially forecast synergies in the Indian IELTS operations. There were also some one-off costs in 1H22 that shouldn't repeat, such as A$4m of make-good staff costs as compensation for cuts taken in the pcp. We have increased our FY22 EBIT 7.6% to A$150m. FY22/FY23/FY24 EPS estimates increase +6.3%/+1.3%/+1.2%.
The broker retained its buy rating and lifted its share price target to $35.00. This implies a 28% upside based on the current IDP share price of $27.28.
Megaport Ltd (ASX: MP1)
This network as a service company is another ASX 200 share also in favour with Goldman Sachs.
Following the release of Megaport's first-half results, the broker reiterated its buy rating. Goldman says it is confident that the company's growth will accelerate in the second half.
The broker explained:
We believe incremental commentary today was broadly positive and supportive of our 2H22 revenue acceleration (+42%/+48% in 1H/2H), driven by MVE and Partner channel traction.
We note: (1) Revenue per MVE customer grew to $11k (vs. $5k at FY21), with the company expecting it to largely stabilize at these levels (some dilution from smaller customers expected, but the new Fortune 500 customer was > $15k and expected to grow meaningfully over time); (2) Strong volume growth is expected, noting the MVE pipeline grew to 202 (vs. 129 at FY21); (3) Data centre rollout to accelerate in 2H to c.+40 (incl. 4 in Mexico, vs. +6 in 1H22); (4) MCR trends were highlighted as a very positive development (+20% connection in 6 months); (5) APAC trends were positive across all markets; Europe was better than we expected, ahead of meaningful channel upside.
Goldman has a buy rating and a $19.90 price target on Megaport shares. This suggests there is a 45% upside for investors based on the current Megaport share price of $13.69.
