The team at Goldman Sachs has been busy running the rule over some ASX 200 shares recently.
Two that have received big thumbs up are listed below. Here's why they broker thinks they are buys:
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Codan Ltd (ASX: CDA)
Goldman is a fan of this metal detector and communications-focused manufacturer and supplier of electronic solutions.
It believes the ASX 200 share is a buy given the growth potential of both its Metal Detection and Communication segments. It explains:
We consider Codan to be a high-quality electronics company with multiple levers available to grow both its Metal Detection and Communication segments with our Buy rating centered on: 1) Zetron benefiting from US$10-15bn in required USA government funding for NG911 with annual state expenditure accelerating; 2) Tactical Communications supported by a favourable military spending environment and general industry tailwinds; 3) Metal Detection benefiting from market share gains supported by expansion of distribution points and continued product development; and 4) Codan pursuing accretive bolt-on acquisitions, growing its product portfolio, customer base, and geographical reach in Communications.
Goldman Sachs recently initiated coverage on Codan with a buy rating and $18.00 price target.
Pro Medicus Limited (ASX: PME)
Another ASX 200 share that gets a big thumbs up from analysts at Goldman Sachs is Pro Medicus.
It is a leading health imaging technology company developing radiology information system (RIS) software and services for hospitals, diagnostic imaging groups, and other related healthcare providers.
Goldman likes the company due to its industry-leading Visage platform, which has been winning some major contracts recently. The good news is that the broker believes there's plenty more to come. It said:
Key reasons for our positive view: (1) We believe the adoption of Visage is a matter of when, not if, for many US healthcare institutions including academics, IDNs and smaller, independent clinics, with our Visage terminal market share expectations >30% amid increasing competition; (2) As a top 5 US IDN, we expect the Trinity contract to drive a network effect across this cohort which represent >40% of PME's core TAM;
(3) We see a significant opportunity to expand customer spend, through existing products (i.e. Cardiology, AI) and new white space products (i.e. other 'ologies'). Amid an intensely competitive AI healthcare market, we believe PME stands out to succeed given its unique partnership with industry KOLs, launching four new solutions with academics at RSNA 2024; and (4) PME has a track record of delivering profitable growth with best in class margins, including >70% under the 'Rule of 40' which we believe is sustainable through the cycle.
And while Goldman acknowledges that Pro Medicus shares are not cheap, the broker believes its premium valuation is justified due to its "significant long-term opportunity."
The broker has a buy rating and $278.00 price target on the ASX 200 share.
