If you're in the market for some new portfolio additions, then it could be worth listening to what Morgans is saying about these ASX 200 shares.
All three have just been rated as buys after releasing their respective updates. Here's what the broker is saying:
A2 Milk Company Ltd (ASX: A2M)
Morgans has upgraded this infant formula company's shares to an add rating with a reduced price target of $5.40. This follows the release of a "slightly better than expected" FY 2023 result on Monday.
And while the broker wasn't overly thrilled with the company's FY 2024 guidance, it feels it is worth sticking with the company. Particularly with this ASX 200 share trading on its "lowest multiples in years." Morgans explains:
2H23 sales trends were weak and given FY24 is a transition year for CL IF under the new GB standards, guidance was rightly conservative and has resulted in material earnings downgrades. While near term earnings uncertainty exists, we believe that decent growth should resume in FY25 and FY26.
Iress Ltd (ASX: IRE)
Another ASX 200 share that Morgans is bullish on is Iress. This financial technology company's shares were sold off following a disappointing first-half update. However, Morgans sees this as a buying opportunity for investors and has upgraded its shares to an add rating with a heavily reduced price target of $8.10. It said:
IRE missed 1H23 EBITDA expectations by ~8%; downgraded FY23 guidance by >17%; and cut the dividend to nil. The underlying dynamics (DPS cut/downgrade) weren't a surprise, however the quantum was larger than expected. […] We note execution risk (again), but see value.
Westpac Banking Corp (ASX: WBC)
Finally, the broker sees Westpac as an ASX 200 share to buy following its third-quarter update. Although it was disappointed with the update, it sees a lot of value in the banking giant's shares at the current level. As a result, the broker has retained its add rating with a trimmed price target of $23.02. It said:
WBC published its Q3 trading update and regulatory capital disclosures. We have made material downgrades to our forecasts and reduced our target price by to $23.02, mainly because of the unexpectedly high cost growth.
The share price performance is disappointing for existing WBC investors. However, for a new investor we think the current price offers potential returns of c.19% (including c.7% cash yield) even after allowing for the reduced target price.
