ASX shares continue to dominate, with the S&P/ASX 200 Index (ASX: XJO) advancing to a new all-time high on Wednesday.
With earnings season upon us, brokers have done the heavy lifting in analysing the results. Now, they are coming out with the latest round of recommendations.
Analysts have rated PEXA Group Ltd (ASX: PXA) and Gold Road Resources Ltd (ASX: GOR) as top buys this week, making these ASX shares two to watch.
Let's see what's behind these recommendations.
PEXA upgraded to buy
In a note to clients, Goldman Sachs has upgraded PEXA to a buy rating and revised its target price to $16.00 per share. This implies an 11% upside from its current price of $14.39.
The positive outlook stems from increased confidence in the ASX shares' earnings growth. Goldman projects group operating profit growth of 30% into FY26, which is 3% above consensus, it says.
Analysts say the domestic market looks promising for PEXA, with the property market's recovery expected to drive PEXA transfer volumes up by 5% in FY25. This compares to a 15% decline in FY23.
We upgrade PXA to Buy (from Neutral), with our revised A$16.00 [price target]…This follows:
Improved outlook in the core domestic business: reflecting continued recovery in property markets (GSe FY25E/FY26E PXA transfer volumes +5/+2% vs. FY23 -15%) and transaction mix towards transfers in-line with history.
The pause on interoperability de-risks potential competitive pressures where we see a pathway for PXA's market penetration to reach 93-94% into the medium to longer term (GSe prior 92-93%), primarily driven by growth in QLD, WA and TAS (Aug-24 rollout).
The UK market also presents growth opportunities for PEXA. The company is moving closer to its remortgage and sale and purchase targets. Key partnerships, such as the one with NatWest, which handles over 12% of UK mortgage volumes, are on track for initial transactions in 1H25.
JP Morgan is also bullish on the ASX share. According to my colleague Bronwyn, the broker initiated coverage with an "overweight" rating and a $15 price target.
Gold Road – A golden opportunity?
Gold Road Resources has caught the eye of several top brokers. Despite reporting underwhelming quarterly results on Wednesday, JP Morgan and Moelis both upgraded the gold stock to a buy.
Their price targets are $1.85 and $2.10 per share, respectively.
Meanwhile, Argonaut Securities cut its rating on Gold Road to a hold, according to The Australian.
The ASX share reported gold production at its Gruyere asset of 62,535 ounces in the last quarter, as reported by my colleague Bernd. This is down from 64,323 ounces during the previous three months.
All-in-sustaining costs (AISC) rose roughly 11.3% to $2,441 an ounce from the prior quarter, driven by heavy rains that halted operations in April.
The company subsequently revised its full-year production guidance to 290,000-305,000 ounces, from a previous range of 300,000–335,000 ounces.
Goldman Sachs rated Gold Road shares a buy in a July note, raising its price target to $2.10.
Interestingly, the broker expected production to stabilise in the June quarter, recovering from the rain impacts experienced in April.
It will be worthwhile to observe Goldman's position from here, given the takeouts from the quarter.
Foolish takeouts
PEXA Group and Gold Road Resources are two ASX shares that just received strong endorsements from top brokers.
As with all broker estimates, they remain just that – an estimate. Whilst backed by rigorous analysis, it's essential to conduct your own due diligence and consider a broader risk framework.
