The ASX 200 stocks attracting the biggest broker upgrades: Seven Group, JB Hi-Fi
Seven Group's 1H24 showcased strong earnings, reduced leverage and the optionality for M&A.
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Seven Group (ASX: SVW) shares rallied 7.0% after its first-half FY24 results lived up to expectations, showcasing a notable outperformance across its key business segments – WesTrac, Coates and Boral.
WesTrac was the standout performer, delivering 31% earnings growth, driven by strong demand in both new equipment sales and product support services.
The overall financial health was another key highlight, with decreased leverage offering room for strategic maneuvers including potential M&A activities. Analysts were bullish on the broader macroeconomic environment, suggesting continued infrastructure investment and industrial services demand will drive Seven Group's future performance.
Macquarie analysts lifted their target prices by 25% to $42.10 but downgraded the stock from Outperform to NEUTRAL due to valuation concerns.
Biggest ASX 200 Upgrades
Ticker | Company | Close Price | 1-Week | Target Price | Prev Target Price | % Dif |
|---|---|---|---|---|---|---|
Seven Group | $40.77 | 10.0% | $39.08 | $33.29 | 17.4% | |
JB Hi-Fi | $64.46 | 14.0% | $58.88 | $51.06 | 15.3% | |
AMP | $1.12 | 14.4% | $1.09 | $0.96 | 13.5% | |
Boral | $5.85 | -0.2% | $5.78 | $5.10 | 13.3% | |
Downer EDI | $5.06 | 16.3% | $4.74 | $4.28 | 10.7% | |
Goodman Group | $28.61 | 7.4% | $29.70 | $27.02 | 9.9% | |
Altium | $66.00 | 28.1% | $51.00 | $46.51 | 9.7% | |
Pro Medicus | $87.24 | -18.3% | $92.20 | $84.91 | 8.6% | |
Car Group | $34.54 | 3.2% | $34.87 | $32.23 | 8.2% | |
Wesfarmers | $62.95 | 8.3% | $57.07 | $53.43 | 6.8% | |
Challenger | $7.12 | 7.9% | $7.46 | $7.09 | 5.2% | |
Beach Energy | $1.79 | 8.2% | $1.84 | $1.75 | 5.1% |
'Target price' is an aggregate of Refinitiv broker target prices. % Dif compares target prices between February 9 and February 16 2024.
JB Hi-Fi (ASX: JBH) was all the rage among retail stocks last week. The stock rallied 7.0% in the day of its half-year results and another 5.6% the next day.
The Good Guys and JB Hi-Fi Australia contributed significantly to the earnings beat, with The Good Guys's gross margin benefitting from a shift towards higher-margin home appliances. Analysts are now expecting EBIT margins to stay above long-term averages, reflecting leverage from strong sales growth, normalising costs and effective cost control.
Analysts also described the company's balance sheet as pristine, with one pointing out potential capital management or M&A optionality.
"JBH is a category leader, with a dominant position in the market, led by a strong management team. It has proven that it can withstand demand pressures, while managing the bottom line. We note the stock has run over the last couple of months. Look to accumulate in the event of a pullback," Macquarie analysts said in a note last week.
A NEUTRAL rating was retained due to valuation and its target price was bumped up by 16% to $64.00
