Bell Potter has been busy running the rule over a number of ASX 200 shares.
The good news for two of them is that they have just been upgraded to buy ratings on Monday.
Here's what the broker is recommending to clients:
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Capricorn Metals Ltd (ASX: CMM)
The first ASX 200 share that has been upgraded is gold miner Capricorn Metals.
Bell Potter was pleased to see the company complete the Karlawinda Expansion Project on time. It said:
The new circuit is currently processing low grade ore and will transition to run of mine (ROM) grade ore over the next week, lifting to steady state throughput of 6.5Mtpa and a guided 150kozpa run-rate. This delivers the first leg of growth for CMM, lifting production from the KGP's prior guided run-rate of ~120kozpa.
In response, the broker has upgraded the ASX 200 share to a buy rating with an improved price target of $18.10 (from $18.05). Based on its current share price of $15.40, this implies potential upside of almost 18%.
Commenting on its investment thesis, Bell Potter said:
CMM's track record of capital efficient project development and operation can result in growth being priced in early and good value entry points to the stock hard to find. The current pullback offers such an entry point, in our view. We make minor upgrades to our FY27 forecasts, but the KGP completion is largely consistent with our expectations. EPS changes in this report are: FY27: +3%, FY28: 0%, FY29: 0%. Our NPV-based valuation lifts incrementally to $18.10/sh. We upgrade our rating to Buy, following a recent pullback in the share price. CMM is unhedged and debt free, fully funded to grow production from ~120kozpa to +400kozpa in FY29.
Codan Ltd (ASX: CDA)
Another ASX 200 share that has been upgraded by Bell Potter is metal detector manufacturer Codan.
According to the note, the broker has upgraded its shares to a buy rating with an improved price target of $60.00 (from $54.00).
Based on its current share price of $52.25, this implies potential upside of 15% for investors over the next 12 months.
Commenting on the upgrade, Bell Potter said:
We lift EBIT +0%/+4%/+8% across FY27/28/29e on higher Unmanned and Minelab Africa revenue and lower corporate costs, partly offset by lower Minelab ROW sales. TP rises on a target EBIT multiple of 45x, up from 40x, partly offset by a higher risk free rate.
We upgrade to Buy from Hold. Notwithstanding potential supply chain constraints in global electronics which CDA is "monitoring", we expect current rapidly expanding production rates of Group 2 UAS to drive Communications revenue upgrades in 1H27/FY27. CDA trades at 32x EBIT, a full valuation without consensus upgrades.
