It was another busy week for Australia's top brokers. This has led to the release of a number of broker notes.
Three broker buy ratings that you might want to know more about are summarised below. Here's why brokers think these ASX shares are in the buy zone:
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A2 Milk Company Ltd (ASX: A2M)
According to a note out of Citi, its analysts have retained their buy rating on this infant formula company's shares with a reduced price target of $7.04. This follows the release of A2 Milk's full year results last week. Citi notes that its shares were sold off following the release. It feels that this selloff has created a buying opportunity for investors. Citi thinks that A2 Milk's underlying operational momentum will continue despite its weak guidance for FY 2025. And while the broker has downgraded its earnings estimates, it suggests that this is because of a temporary headwind from supply issues that will ease in time. And with key metrics around demand remaining strong, its analysts think that now could be the time to buy its shares while they are down. The A2 Milk share price ended the week at $5.77.
Megaport Ltd (ASX: MP1)
A note out of Morgans reveals that its analysts have upgraded this network as a service provider's shares to an add rating with a reduced price target of $12.50. The broker made the move in response to a selloff that followed the release of Megaport's FY 2024 results on Thursday. The broker points out that while its results were in line with expectations, its guidance for FY 2025 was a lot softer than expected. However, the broker believes that this guidance is conservative given the trends that its reported during the fourth quarter. So, with its shares crashing deep into the red and the market's expectations lowered, the broker believes investors will be rewarded if an acceleration in sales occurs (like it expects). As a result, it sees the risk/reward on offer as compelling and has upgraded its shares. The Megaport share price was fetching $8.94 at Friday's close.
Telstra Group Ltd (ASX: TLS)
Analysts at Morgan Stanley have retained their overweight rating on this telco giant's shares with an improved price target of $4.40. According to the note, Morgan Stanley was pleased with Telstra's full year results, noting that they were in line with expectations. Though, it acknowledges that this wasn't surprising given a recent trading update. Another positive it highlights was management narrowing its FY 2025 earnings guidance range to the upside. Outside its results, Morgan Stanley believes that Telstra could benefit from interest rate cuts. This is because of how its cost of debt has increased meaningfully in recent times as rates rise. The Telstra share price ended Friday's session at $4.03.
