The team at Morgans has been busy running the rule over a number of ASX stocks recently.
Three that have received upgrades are listed below. Let's now dig deeper into these upgrades and see what the broker is saying about these stocks.
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TPG Telecom Ltd (ASX: TPG)
Morgans believes that recent share price weakness has created an opportunity for investors to snap up this telco company.
While it has stopped short of labelling TPG shares a buy, it has put an accumulate rating and $5.50 price target on them. Commenting on the stock, the broker said:
Following recent share price weakness, we upgrade TPG to an ACCUMULATE recommendation. Our target price remains unchanged at $5.50. Recent challenges facing Optus could benefit Vodafone's mobile growth while TPG's upcoming capital management initiatives could deliver share price upside.
Dalrymple Bay Infrastructure Ltd (ASX: DBI)
Another ASX stock that has been upgraded recently is Dalrymple Bay Infrastructure. It is the owner of the Dalrymple Bay Terminal (DBT), which is a major coal export facility.
Once again, Morgans made the move on valuation grounds following a period of share price weakness. It has put an accumulate rating and $4.73 price target on its shares. It also expects a generous dividend yield from its shares. The broker explains:
We upgrade DBI to ACCUMULATE from HOLD given recent share price weakness (albeit has bounced off the share price low) upon the exit of its major shareholder. Forecasts unchanged. 12-month target price remains $4.73/sh. We don't view the fundamentals of the business and asset as having changed with Brookfield's exit. At current prices, we estimate DBI may deliver a 12-month potential return of c.16% (including 5.7% cash yield). We view this as attractive given DBI's low risk profile.
ANZ Group Holdings Ltd (ASX: ANZ)
Finally, this banking giant received an upgrade from Morgans following news of its cost cutting plans.
However, that upgrade was from sell to trim with a $29.24 price target, so this isn't unfortunately a signal to buy. Commenting on the bank, Morgans said:
ANZ announced a headcount reduction that it says will eliminate duplication and complexity, stop work that doesn't support its priorities, and sharpen its focus on improving non-financial risk management. The market may be cynical that the cost-out will be reinvested back into the business, and the headcount reduction will reduce the ability of the bank to compete for revenue and/or undertake business improvements. Perhaps these concerns will be discussed with ANZ's strategy update to investors on 13 October. Our target price lifts to $29.24/sh. We upgrade from SELL to TRIM, with 12 month potential TSR of -6%.
