It was a busy week for Australia's top brokers. This has led to a number of broker notes being released.
Three broker buy ratings that you might want to know more about are summarised below. Here's why brokers think these ASX shares are in the buy zone:
Image source: Getty Images
Coles Group Ltd (ASX: COL)
According to a note out of Macquarie, its analysts have retained their outperform rating and $25.10 price target on this supermarket giant's shares. This follows news that the company has walked away from a potential $4 billion deal to buy Petbarn's owner Greencross. Coles revealed that it has ceased talks with private equity firm TPG Capital over the potential buyout of the pets and vets business. Macquarie believes the news removes an overhang. Though, it concedes that the market may still price lingering questions on strategy given the share price performance around the news. Overall, the broker believes the long-term strategy in the Supermarkets business remains intact and continues to see growth opportunities from increased private label penetration and retail media. The Coles share price ended the week at $23.21.
Harvey Norman Holdings Ltd (ASX: HVN)
A note out of Bell Potter reveals that its analysts have retained their buy rating on this retail giant's shares with a reduced price target of $6.00. While the broker suspects that FY 2027 could be a tough year for retailers like Harvey Norman, it feels this is more than priced in. Bell Potter highlights that Harvey Norman's shares are trading on a 1-year forward P/E ratio of ~13x, which it believes is attractive. In addition, it continues to see mid-longer term growth catalysts. This includes new store-driven growth in international retailing (UK, Malaysia, Croatia), the refit program in Australia, and the expansion of brand partnerships in the mid- premium end of the whitegoods market. Bell Potter also sees opportunities to grow its real estate portfolio as Australia's single largest owner in large format retail with a global portfolio of ~$4.6 billion. The Harvey Norman share price was fetching $4.78 at Friday's close.
ResMed Inc. (ASX: RMD)
Analysts at Morgans have retained their buy rating on this sleep disorder-focused medical device company's shares with a slightly trimmed price target of $40.97. According to the note, Morgans believes the divestment of the MatrixCare business for US$490 million crystallises a disappointing financial outcome (ResMed paid US$750 million in 2018). However, strategically, the broker believes the transaction makes sense. It notes that it simplifies the portfolio and retains Brightree and MEDIFOX DAN, while exiting a lower-growth, non-core software business. In addition, net proceeds will largely be returned to shareholders via an accelerated share repurchase, which it believes should substantially offset earnings dilution from both the MatrixCare disposal and the recently completed Noctrix acquisition. As a result, it remains positive and continues to see lots of value on offer here. The ResMed share price ended the week at $28.75.
