Many of Australia's leading brokers have been busy crunching numbers and adjusting their discounted cash flow models as new data becomes available.
Three top shares that have come out of this favourably with buy ratings are listed below. Here's why brokers like them:
Macquarie Atlas Roads Limited (ASX: MQA)
According to a note out of UBS, its analysts have retained their buy rating and increased the price target on the toll road company's shares to $7.10 from $6.65 after it announced plans to internalise management from the middle of next year. UBS believes the move is a positive step and expects cost savings and improved investor sentiment will lead to an improved share price performance. I agree with UBS on this one and think it is a great option for investors and a cheaper alternative to Transurban Group (ASX: TCL).
Sims Metal Management Ltd (ASX: SGM)
A note out of Goldman Sachs reveals that it has retained its conviction buy rating and $19.45 price target on the scrap metal company after the U.S. Census Bureau released its ferrous scrap trade data for the month of February. That data revealed that total US ferrous scrap exports are +16% year-to-date. However, within the data, Sims Metal Management-exposed ports have had a slower start to the year and are up +2% year-to-date. While this data has presented some uncertainty in the near term, the broker believes the underlying market fundamentals remain very strong and that Sims Metal Management is well placed over the medium term. Whilst I'm not a huge fan of the company, I do think it is attractively priced right now.
Wesfarmers Ltd (ASX: WES)
Analysts at Credit Suisse have retained their outperform rating and $44.98 price target on the conglomerate's shares. According to the note, the broker believes that the de-merger of Coles would leave Wesfarmers well-funded and with an adequate level of growth. Its analysts also expect the company to exit Bunnings UK in the not so distant future. I would agree with Credit Suisse that Wesfarmers would be more attractive following the Coles de-merger, however I plan to hold off an investment until its Bunnings UK business is either offloaded or has its performance successfully turned around.
