These top brokers have shared their thoughts on these 3 under-the-radar ASX shares.
Here's a round-up.
Pinnacle Investment Management Group Ltd (ASX: PNI)
Financial services company, formerly known as Wilson Group Limited, Pinnacle Investments is "impressive on all horizons" according to Ord Minnett – who has placed a buy recommendation on the stock.
Pinnacle shares are up 87% in the last 12 months from $3.33 at this time last year to today's open of $6.25 and Ord Minnett's revised price target is not far off – at $6.43.
According to the broker, Pinnacle's $46 million investment in Metrics Credit makes "strong strategic and financial sense" with Pinnacle picking up 35% of Metrics.
Ord Minnett is of the belief Pinnacle's manager selection and distribution has been operating incredibly well in recent years, with Antipodes and Spheria's funds under management growing very quickly with Two Trees attracting capital and Firetail flagged to be one of the fastest-growing Australian equity managers ever.
Pinnacle looks to have "significant headroom" across its portfolio, according to Ord Minnett, with only Solaris nearing its capacity with the broker's price target implying a 30x PE for Pinnacle.
One to watch.
Zip Co Ltd (ASX: Z1P)
Ord Minnett has weighed in on emerging digital payments service company Zip Co Ltd, placing an accumulate recommendation on the stock despite its high-risk nature.
According to the broker, Zip's June quarterly update beat its cash flow expectations with the company generating positive operating cash flow (after bad debts) for the period, also beating Ord Minnett's cost expectations.
Zip is not far off Ord Minnett's $1.00 target price, opening today up 0.5% at 97c per share – a 38% rise from its share price of 70c per share at this time last year.
While underlying sales for the quarter did come in under the broker's estimates, Zip added 110,000 customers over the period, taking its tally to more than 786,000.
With repeat customers now at 83% things are looking good for the future in that department, but Ord Minnett does warn investors to consider the company's credit risk, competition risk and regulatory risk as factors.
The fintech space has really been hotting up of late, and if you've not taken much notice of Zip before now, this is your chance to do some research.
Another mover and shaker to watch in the sector is Afterpay Touch Group Ltd (ASX: APT).
Medical Developments International Ltd (ASX: MVP)
The healthcare sector is a topical one, but $284 million market cap anaesthetic machine company Medical Developments International is an under-the-radar compatriot.
While its decline in share price over the last six months, in particular, may have spooked some investors who had backed the niche company, according to Moelis Australia, the stock is one to hold onto for now.
The broker has a target price of $5.32 on Medical Developments – which was sitting at $4.80 at the time of writing – a sharp fall from its July 24 share price of $5.85 off the back of news the company has suffered a setback on FDA approval of its program for Penthrox – a non-opioid analgesic drug.
Moelis think it's pertinent to wait out the FDA issue to see what eventuates for the company, with a belief there is long-term viability in the Penthrox product, but concede reaching peak market penetration in the US by 2025 is unlikely for the company.
Waiting out FDA approval processes can take some time, but investors might like to take the advice of Moelis in this instance and take a punt on the company's overall strategy for its US expansion.
