When it comes to looking for outsized gains among ASX shares, it pays to ask the experts.
I've had a look through the broker notes published this week and selected three companies that they believe could deliver serious share price gains.
Let's see who they like.
Image source: Getty Images
ResMed Inc (ASX: RMD)
Macquarie this week issued a new research note on ResMed after the company told shareholders it was going to sell its MatrixCare business for $490 million, with the funds to be used, in part, for an accelerated buyback program.
The company said the sale fit with its 2030 strategy, "by focusing on high-growth, scalable opportunities in sleep health, breathing health and connected home-based healthcare''.
Chair Mick Farrell said regarding the sale:
Today's announcement is about our disciplined approach to portfolio management and our commitment to driving long-term growth. By focusing on areas where we see the greatest opportunity for sleep health innovation and impact, we are strengthening our ability to deliver life-changing health technologies, improve patient outcomes, and create value for our stakeholders.
Macquarie said the sale "offloads a structurally challenged business, improving the group's growth profile''.
The broker has a 12-month price target of $46.60 on ResMed shares, which would represent a 53.7% gain if achieved.
Bhagwan Marine Ltd (ASX: BWN)
This marine services company hosted brokers at an investor day recently, showing them around two of its divisions on the Brisbane River, Bhagwan Marine Services, and Riverside Industrial Sands.
Analysts from Shaw and Partners attended and said the business looks to be in good shape.
They said:
BWN operates Australia's largest and most diverse marine fleet, employing more than 1,000 personnel nationwide. BWN's Queensland Marine Solutions business is … strategically located on the Brisbane River and generates revenue from both contract and spot work. Core activity provides a solid EBITDA base, with fleet utilisation currently around 75%. Higher-margin contract work can lift EBITDA margins to approximately 30%. The business is positioned to benefit from demand associated with the Brisbane Olympics, and management has recently secured several new contracts. Longer term, growth is supported by population expansion and Queensland's substantial infrastructure pipeline.
Shaw and Partners said competition was relatively limited, with only 3 to 4 meaningful participants in the market.
The broker has a price target of 60 cents on Bhagwan shares, which would represent a 90.5% gain if achieved.
Metro Mining Ltd (ASX: MMI)
Shaw and Partners said this bauxite miner remains on track to hit its full-year guidance of 6.6 to 7.1 million tonnes of bauxite for the year.
The analysts said bauxite prices had firmed from lows earlier this year, and the market remained well supported by strong demand growth from China.
They said:
Metro Mining's Bauxite Hills project is well placed to supply the growing Chinese market due to the proximity to markets. As a low value product, freight costs make up almost half the cost of delivering bauxite to China.
Shaw and Partners has a $3 target price on Metro Mining shares, which would be an 89.8% gain if achieved.
The company also pays a 5.8% dividend yield.
