Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

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It has been another busy week for Australia's top brokers. This has led to the release of a number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here's why brokers think these ASX shares are in the buy zone:

James Hardie Industries plc (ASX: JHX)

According to a note out of the Macquarie equities desk, its analysts have upgraded this building materials company's shares to an outperform rating with a trimmed price target of $55.00. Although Macquarie concedes that James Hardie's fourth quarter update and FY 2025 guidance was softer than expected, it believes the selloff of its shares was overdone. Particularly given the broker's belief that the company's competitive position is not weakening. In light of this, Macquarie believes that investors should be taking advantage of the weakness by snapping up its shares while they are out of favour. The James Hardie share price was trading at $47.26 on Friday.

Telstra Group Ltd (ASX: TLS)

A note out of Goldman Sachs reveals that its analysts have retained their buy rating on this telco giant's shares with a lowered price target of $4.25. According to the note, the broker was a disappointed with Telstra's guidance for FY 2025. Its analysts note that the mid point of Telstra's underlying EBITDA guidance of $8.4 billion to $8.7 billion was below its expectations. Goldman was also not a fan of management's decision to scrap its inflation-linked price increases. In response, it has trimmed its earnings and dividend estimates accordingly. However, despite this, the broker sees plenty of value in the company's shares at current levels and has reaffirmed its buy rating. The Telstra share price was fetching $3.45 at Friday's close.

Xero Ltd (ASX: XRO)

Another note out of Goldman Sachs reveals that its analysts have retained their conviction buy rating on this cloud accounting platform provider's shares with an improved price target of $164.00. This follows the release of Xero's full year results for FY 2024. Goldman notes that Xero achieved sales marginally ahead of expectations and earnings comfortably ahead of them. The broker was also pleased to see Xero exceed its Rule of 40 (41%) and record EBIT margins. This is being underpinned by its strong revenue growth, cost controls, and much lower than expected capex. In response to the result, Goldman has upgraded its earnings estimates through to FY 2026 and lifted its valuation. The Xero share price ended the week at $131.19.

Motley Fool contributor James Mickleboro has positions in Xero. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group, Macquarie Group, and Xero. The Motley Fool Australia has positions in and has recommended Macquarie Group, Telstra Group, and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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