Brokers across Australia have once again been busy adjusting their financial models and discounted cash flow projections as new data becomes available.
A couple of shares which have found favour with brokers this week are listed below. Here's why they have been given buy ratings this week:
Collins Foods Ltd (ASX: CKF)
A research note out of UBS reveals that its analysts have upgraded the KFC operator to a buy rating and increased their target price to $6.00. According to the note, its analysts were pleased to see Collins Food recently post a strong full-year result which beat the broker's estimates. A stronger-than-expected performance from KFC Australia and plans to acquire 28 restaurants from Yum! Brands also appear to have caught its eye.
I would have to agree with UBS on this one. I believe Collins Food is a great buy and hold option thanks to its aggressive expansion plans in Australia and also in Europe. At 16x earnings I feel its shares are reasonably cheap given its strong growth prospects.
Santos Ltd (ASX: STO)
According to a note out of Deutsche Bank, analysts at the investment bank have reiterated their buy rating and $4.50 price target on the oil and gas giant. Deutsche is optimistic on Santos' decision to enter into a strategic relationship with Hony Capital and ENN Group.
The strategic relationship is based on mutual cooperation and assistance in order to support the growth of Santos through opportunities in Australia and Papua New Guinea. Whilst I can see a lot of value in the strategic relationship, I'm reasonably bearish on oil prices moving forward. Unfortunately I believe weaker oil prices will ultimately offset any gains from the relationship in the short-term. For this reason I would avoid Santos until prices have bottomed.
