Some broker price targets are worth a closer look, especially when they point to material upside and the investment case makes sense.
That is how I see the two ASX 200 shares in this article.
Morgans has buy recommendations on both, and its price targets suggest one could rise by more than 20% and the other by more than 50% from current levels.
I also rate both as buys.
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James Hardie Industries plc (ASX: JHX)
The first ASX 200 share is James Hardie.
The building products giant is trading around $31.80 at the time of writing, but Morgans has a buy rating and a $39 price target on the stock.
That implies potential upside of over 20%.
I think James Hardie is interesting because it gives investors exposure to a high-quality building materials business at a time when housing conditions are still subdued.
That might sound strange at first. Weak housing markets can put pressure on demand, volumes, and investor confidence. But I think this is where the long-term opportunity could be forming.
Morgans noted that James Hardie's FY26 result was in line with consensus and slightly ahead of prior guidance. The broker also pointed out that management is not assuming a market recovery in FY27, with affordability pressures and lower builder activity still weighing on conditions.
That is important to me because it means the buy case is not built on a sudden housing rebound.
Instead, FY27 appears to be more about margin recovery, cash generation, and synergies. If James Hardie can improve the business while the broader market remains soft, it could be well placed when conditions eventually improve.
There are risks. Housing can stay weak for longer than expected, and integration or synergy delivery can disappoint. But I like the idea of buying a strong building products business before the cycle feels comfortable again.
Guzman Y Gomez Ltd (ASX: GYG)
The second ASX 200 share is Guzman Y Gomez.
The fast-food company is trading around $19.42 at the time of writing, and Morgans has upgraded its price target to $29.40 this month.
That suggests potential upside of approximately 50%.
This is a very different opportunity to James Hardie. Guzman Y Gomez is a growth stock, and investor sentiment can move quickly when expectations change.
But I think the latest development is a positive one.
Morgans highlighted the company's decision to exit its US operations immediately. The broker viewed this as a positive catalyst because it removes a business that was expected to generate a significant underlying EBITDA loss in FY26 and require more capital than the potential returns could justify.
I think that makes sense.
The US may have offered long-term optionality, but optionality is not always valuable if it consumes too much money and management attention. By stepping away, Guzman Y Gomez can simplify the story and focus more clearly on the Australian business, where performance appears to be tracking well.
Morgans also noted that removing the US losses results in material upgrades to its EBITDA and NPAT forecasts.
That could be powerful for sentiment. Growth companies are often rewarded when the market gets more confidence in the quality of earnings, not just the size of the store rollout opportunity.
Guzman Y Gomez still needs to execute. Competition in quick-service restaurants is high, and the valuation will likely remain sensitive to growth expectations. But I like the cleaner focus and the potential for the Australian business to keep scaling.
Foolish Takeaway
A broker price target is not a guarantee, and investors should never treat one as certainty.
But I think these two buy calls are interesting because the logic is not just about hoping for better market conditions.
James Hardie could benefit from internal improvements while housing remains subdued. Guzman Y Gomez has made a decision that may improve earnings quality and simplify its growth story.
Both shares come with different risks, but I think each has a credible path to being worth more. If Morgans is right, the upside could be significant.
