The S&P/ASX 200 Index (ASX: XJO) is down 0.71% to 8,295.2 points on Friday.
Meantime, top broker Goldman Sachs has updated its ratings on three ASX 200 shares.
Let's check them out.
Broker says buy: 3 ASX 200 shares backed by Goldman
Rio Tinto Ltd (ASX: RIO)
This ASX 200 mining share is trading at $117.77 on Friday, down 0.72%.
Goldman Sachs has a buy rating on the stock with a 12-month share price target of $136.20. This suggests a potential upside of 16% over the next year.
In a new note, Goldman said the Rio Tinto share price was attractive, trading at about 0.8x net asset value (NAV) compared to its major peers, BHP Group Ltd (ASX: BHP) (0.9x NAV) and Fortescue Ltd (ASX: FMG) (1.2x NAV).
The broker likes Rio Tinto's positive free cash flow outlook and its dividend yield.
Goldman is bullish on copper and expects Rio Tinto to grow its production through the ramp-up of the Oyu Tolgoi UG copper mine and a recovery at the Escondida mine.
The broker is also bullish on aluminium and points out that Rio has the world's highest-margin, low-emission aluminium business.
This week, the miner released its third quarter update.
For the three months ended 30 September, Rio Tinto reported Pilbara iron ore shipments of 84.5Mt, up 1% year over year.
Management advised that higher-than-anticipated inflation would likely push Pilbara iron ore unit cash costs higher to the upper half of its guidance. The guidance range is US$21.75 to US$23.50 per tonne.
Challenger Ltd (ASX: CGF)
This ASX 200 financial share is trading at $6.26, up 0.16% today.
Goldman Sachs has a buy rating on Challenger, which is an investment management company and one of Australia's largest retail and institutional annuity providers.
Its 12-month share price target for Challenger is $7.82, implying a potential 25% upside for ASX investors who buy today.
In a new note released this week, the broker explained its investment thesis:
We like CGF because: 1) it has exposure to the superannuation market across Life and Funds Management; 2) Yields are supportive of a favorable sales environment for retail annuities; 3) annuity book growth looks well-supported through a diversified distribution strategy / capital position.
This week, Challenger released its first quarter update.
The company revealed total annuity sales of $2.4 billion for the period.
This was due to strong sales in retail lifetime annuities, Japanese annuities, and Challenger Index Plus, as well as lower fixed-term annuity sales. Funds under management rose 1% to $119 billion.
Treasury Wine Estates Ltd (ASX: TWE)
This ASX 200 wine share is trading at $11.71 on Friday, down 0.17%.
Goldman Sachs has a buy rating on Treasury with a 12-month share price target of $15.20, implying a potential 30% upside.
Treasury released its first quarter update this week.
Management said its luxury wine focus was driving strong top-line performance. The company achieved double-digit organic group net sales revenue (NSR) growth over the quarter.
In a new note, Goldman said:
Our Buy rating on TWE is premised on accelerating double-digit EPS growth in FY24-27e driven by 1) continued global expansion of Penfolds, especially post the removal of China import tariffs on Australian wine; our recent channel checks suggest positive reception to the returning Australian sourced Penfolds and we expect a ~63pct pre-tariff recovery by 2027; and 2) its rank as the #1 luxury wine company in the US (most sales in luxury wine) with the recent acquisitions of Frank Family Vineyards (FFV) and DAOU which have been growth and margin accretive, combined with a stable portfolio of Premium Brands.
