There could be some dirt cheap ASX 200 shares out there according to analysts at Morgans.
For example, the two shares in this article could more than double in value from current levels according to the broker.
Let's see what it is recommending this month:
Image source: Getty Images
DigiCo Infrastructure REIT (ASX: DGT)
This data centre operator could be seriously undervalued according to the broker.
It highlights that its shares are trading at a deep discount to the net asset value (NAV) despite having high-quality and scarce assets.
Morgans has a buy rating and $4.15 price target on its shares. Based on its current share price of $1.83, this implies potential upside of 125% for investors over the next 12 months. It said:
DGT continues to trade at a c.50% discount to NAV of A$4.62/security, yet that NAV does not yet reflect the full value of the 88MW SYD1 expansion, which management estimates will deliver a further c.A$1.50/security of NAV uplift at a targeted 15% yield on cost. The core thesis rests on three pillars.
First, SYD1 is a genuinely scarce asset, a Tier 1 CBD carrier hotel with secured power and full planning approval operating in a structurally undersupplied market with a 200MW+ qualified demand pipeline. Second, the business has demonstrated operating momentum, yet cash earnings are yet to materialise. Third, Australian capital partnering at or above book value would be a significant valuation catalyst. Acknowledging the share price weakness, we continue to see the opportunity in DGT, retaining our Buy rating with a $4.15/sh price target.
Pro Medicus Ltd (ASX: PME)
Another ASX 200 share that could be dirt cheap according to the broker is health imaging technology company Pro Medicus.
While it was a touch disappointed with its first-half performance, it remains very positive and feels that recent share price weakness has been overdone.
Morgans has a buy rating and $275.00 price target on Pro Medicus' shares. Based on its current share price of $123.48, this implies potential upside of more than 120%. It commented:
PME delivered record revenue and underlying EBIT up ~30% YoY, yet the result fell short of expectations on operating leverage with a jump in staff costs driving an EBITDA miss as Trinity contributed less than anticipated. The longer-term outlook strengthened with more than A$280m of new contracts signed and five-year contracted revenue now around A$1.1bn, though the market remains wary of a heavy 2H execution load and cost base increase.
It is not ideal to deliver a miss in this market, but the reaction feels overcooked and the setup into 2H is far better than the share price implies. Our valuation is reduced to A$275 (from A$290) and we retain our Buy recommendation.
