Goldman Sachs just put a buy rating on this ASX 50 share

This blue chip could be a top option according to one broker.

| More on:
A happy male investor turns around on his chair to look at a friend while a laptop runs on his desk showing share price movements

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Computershare Ltd (ASX: CPU) share price is pushing higher on Monday despite the market weakness.

In afternoon trade, the ASX 50 administration services company's shares are up 0.5% to $23.64.

This compares favourably to a 0.6% decline by the ASX 200 index.

Why is this ASX 50 share rising?

Today's gain appears to have been driven by a broker note out of Goldman Sachs this morning.

According to the note, the broker has initiated coverage on Computershare's shares with a buy rating and a $27 price target.

This implies a potential upside of 14% for investors over the next 12 months.

Goldman is also forecasting a 5.2% dividend yield in FY 2024, increasing the total potential return to over 19%.

What did the broker say?

Goldman named five reasons why it has just put a buy rating on this ASX 50 share.

This includes its potential to outperform guidance, strong balance sheet, and undemanding valuation compared to long-term multiples. It explains:

1) We see upside to FY24 management EPS guidance of 116cps. 2) CPU's Balance sheet is strong and expected to improve further with margin income and FCF despite below the line costs. 3) FY24/FY25 margin income to remain strong from cash rates, however, CPU is hedging a large share of its exposure to reduce earnings sensitivity to yields. 4) Core business: CPU's core business ex MI should benefit from a recovery in corporate actions through improved transaction / event based revenues as well as lower cost inflation pressures being flagged by management and cost out. 5) Overall, we think valuation is not demanding at close to 13x FY24E vs longer term average of around 17x.

The Computershare share price is down almost 15% over the last 12 months.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Broker Notes

3 amazing ASX 200 shares to buy and hold forever

Brokers think these shares are in the buy zone. Let's see why they could be top buy and hold picks.

Read more »

iPhone with the logo and the word Google spelt multiple times in the background.
Opinions

I've been buying these 2 US stocks in 2025. Here's why

Sometimes the US markets are a better place to go shopping for stocks.

Read more »

Ecstatic woman looking at her phone outside with her fist pumped.
Share Gainers

Why Catapult, Hutchinson, SKS, and West African shares are pushing higher today

These shares are having a strong session despite the market weakness.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Dexus, Mayne Pharma, Nufarm, and Treasury Wine shares are falling today

These shares are having a tough session on Thursday. But why?

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Mergers & Acquisitions

IAG share price lifts off on strategic alliance approval

IAG shares are racing higher in Thursday’s sinking market.

Read more »

Rising gold share price represented by a green arrow on piles of gold block.
Gold

Up 72% in 2025, why is this ASX 200 gold stock racing ahead of the benchmark again today?

Investors are bidding up this high-flying ASX 200 gold stock again on Thursday. But why?

Read more »

A woman wearing a black and white striped t-shirt looks to the sky with her hand to her chin contemplating buying ASX shares today as the market rebounds
Share Market News

Where could the RBA interest rate go in the next 12 months?

Here’s what one expert thinks could happen with interest rates by early 2026.

Read more »

A man holds his head in his hands after seeing bad news on his laptop screen.
Share Market News

5 things to watch on the ASX 200 on Thursday

It looks set to be a tough session for Aussie investors today.

Read more »