If you have room in your portfolio for some new additions, then it could be worth listening to what Goldman Sachs is saying about the ASX 300 stocks in this article.
That's because the broker has just put buy ratings on both stocks this morning. Here's what it is saying about them:
PWR Holdings Ltd (ASX: PWH)
This automotive cooling products company's shares have fallen heavily this month following the release of a trading update.
While this was disappointing, Goldman believes that it may have created a buying opportunity. Commenting on the update, the broker said:
PWR Holdings' recent trading update highlights the difficulties in balancing a largely fixed cost base with short term revenue variability. While cognizant the recent earnings downgrade follows an earnings downgrade in August, we consider both as short-term in nature with PWR Holdings' long-term prospects intact as they transition to their upgraded facility 2025. Maintain Buy.
Goldman has retained its buy rating with a reduced price target of $9.10. This implies potential upside of almost 15% for investors. It adds:
We lower our PT to A$9.10 (from A$11.50) and maintain Buy: We re-base our near-term earnings expectations with downgrades to FY25/26/27E of -36%/-28%/-17%, driven by operating deleverage in FY25/26, and lower our PE multiple to 30x (from 33x) to reflect the risks associated with the transition to the new Australian facility.
Webjet Group (ASX: WJL)
Another ASX 300 stock that gets the thumbs up from analysts at Goldman Sachs is online travel agent Webjet.
The broker notes that Webjet released its half year results this week and delivered a solid set of numbers.
In response, the broker has reiterated its buy rating and lifted its price target slightly to $1.10. Based on its current share price of 84 cents, this implies potential upside of 31% for investors between now and this time next year.
Commenting on the result and its estimates, Goldman said:
[W]e revise our forecasts with FY25-27e group TTV ~-2% and underlying EBITDA -1% to +7% largely on higher GoSee margins with OTA forecasts immaterially changed. We also factor in a full year share base payment of ~A$6mn and thereafter ~A$3mn on the back of accelerated FY23/24 performance rights in FY25 following demerger. Hence, our FY26/27 Statutory NPAT is changed by 0-1%.
We believe that management are conservative in its guidance of "broadly in-line EBITDA in FY25 vs FY24" given improving OTA run-rate as well as reducing GoSee costs and see upside risk. Our valuation is unchanged. TP to A$1.1/sh (vs A$1.05/sh prev); reiterate Buy on revenue/margin optimization opportunities.
