Suncorp, Westpac, and Reece shares: Buy, sell, or hold?

Here's what Morgans is saying about these ASX 200 shares.

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There are plenty of ASX 200 shares to choose from on the Australian share market.

To narrow things down, let's take a look at three shares that Morgans has just given its verdict on.

One of these shares has been named as a buy, one as a hold, and one as a sell. They are as follows:

Suncorp Group Ltd (ASX: SUN)

Morgans thinks that this general insurance giant is an ASX 200 share to buy right now. While not blown away by the company's softer than expected FY 2024 result, it was pleased with its guidance for the year ahead and medium term growth strategy. It said:

SUN's FY24 cash NPAT (A$1,372m) was ~-5% below consensus (A$1,425m), mainly due to a softer General Insurance result than expected. FY25 guidance points to solid earnings momentum continuing into this year, and we see SUN's unveiled FY25-FY27 business strategy as uncomplicated, and focused on driving the insurance business harder (which should be well received).

Morgans has an add rating and $18.92 price target on its shares.

Westpac Banking Corp (ASX: WBC)

The broker was impressed with this banking giant's third quarter update, which was ahead of expectations. However, it feels that its shares are fully valued at current levels. It said:

The Q3 trading update indicated WBC is tracking ahead of previous expectations, with NIM higher and costs and impairment charges lower than prior forecasts. Mid-single digit EPS upgrades for FY25-26F. 12 month target price lifts 8% to $26.11 due DCF valuation upgrades.

Morgans has a hold rating and $26.11 price target on its shares.

Reece Ltd (ASX: REH)

Morgans thinks that this plumbing parts company is an ASX 200 share to sell right now. The broker highlights that its FY 2024 results were softer than expected and that trading conditions are expected to remain challenging. As a result, it feels its shares are overvalued at current levels. It commented:

REH's FY24 result was slightly weaker than our expectations but largely in line with Bloomberg consensus. Key positives: Group EBITDA margin rose 30bp to 11.1% due to good cost control despite softer housing conditions in ANZ in 2H24; ROCE increased 20bp to 15.5%; Balance sheet remains strong with ND/EBITDA falling to 0.6x vs 0.9x in FY23. Key negatives: ANZ earnings were below our forecasts as conditions continued to soften; Management expects the near term to remain challenging in both regions.

The broker currently has a reduce rating and $21.00 price target on its shares.

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.

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