The ASX 200 stocks attracting the biggest broker upgrades: Reliance Worldwide, Wisetech

February reporting season has seen nearly double the number of earnings beats compared to misses, according to UBS. However, this apparent strength is somewhat deceptive, as analysts entered the results season with unusually low expectations. Nonetheless, there remains a steady flow of target price upgrades reflecting the robust earnings.

Shares in plumbing supplies group Reliance Worldwide (ASX: RWC) shot up almost 25% after reporting a better-than-expected set of first-half FY24 results.

Adjusted earnings eased 3% to US$124.8 million, yet this still surpassed consensus expectations by approximately 4%. Although sales in the company's largest market, the Americas, remained flat year-on-year, robust margin expansion was achieved through improved product mix and the normalisation of input costs.

"Looking forward, we’re optimistic on the US following a strong result. Margins were solid and, theoretically with structural changes within the business, these could be higher than prior periods on a like-for-like basis," Citi analysts said in a note dated 19 February.

"Consequently, with the trough in earnings now in and what we see as potential margin upside, we upgrade to Buy and our target price is raised to $5.45 per share."

Biggest ASX 200 Upgrades

'Target price' is an aggregate of Refinitiv broker target prices. % Dif compares target prices between Friday, 23 February and Friday, 16 February

Wisetech (ASX: WTC) had one of those results where you knew the stock was going to open high and finish even higher. Just have a look at the below set of numbers:

• Revenue up 32% to $500.4 million or 1.0% ahead of consensus

• Net profit after tax up 5% to $128.4 million or 24% ahead of consensus

• Interim dividend of 7.7 cents per share compared to Citi expectations of 5.8 cents

• Reaffirmed full-year revenue and EBITDA expectations

• Upgraded EBITDA margin range to 44-46% due to the stronger-than-expected first half

• Management said the integration of recent acquisitions is "also progressing well"

Wistech shares opened the session (21 Feb) 5.6% higher and finished up 11.40%.

"CargoWise is a high-quality platform with multiple growth drivers, operating with a sustainable competitive advantage in a winner-takes most market. Strong double-digit FCF generation over the forecast period and solid operating momentum are only tempered by a full valuation," Macquarie said in a note dated 22 February.

The analysts retained a target price of $81.90 and a Neutral rating due to valuation concerns.