2 ASX shares rated as strong buys by brokers

These 2 ASX shares have been rated as buys by brokers.
The post 2 ASX shares rated as strong buys by brokers appeared first on The Motley Fool Australia. –

There are some ASX shares that are rated as buys by multiple different brokers.

Share prices are changing all the time, so different companies can become opportunities at different times.

When many analysts think that a business is a buy, it could mean that the company is an opportunity. That’s the case with these two:

Baby Bunting Group Ltd (ASX BBN)

Baby Bunting is the leading retailer of baby and toddler products in Australia. It’s currently rated as a buy by at least five different brokers including Citi.

The broker thinks that sales were going to improve over the rest of the first half of FY22 after a slow start in the first couple of months.

It was the annual general meeting (AGM) that also revealed a couple of other positive trends that Citi liked the look of.

The ASX share revealed that in FY22 to the beginning of October 2021, its gross profit margin had increased by 120 basis points to 38.7%. That company attributed this improvement to private label and exclusive products, product mix and supply chain efficiencies.

Private label and exclusive products in the year to date (at the time) made up 44.3% of sales. It was 38% in the prior corresponding period. Baby Bunting has a long-term goal for private label and exclusive products making up half of sales.

On Citi’s numbers, Baby Bunting is valued at around 20x FY23’s estimated earnings.

Seven West Media Ltd (ASX: SWM)

Seven West is one of the leading media businesses in Australia, with the key channel 7 channels.

It’s currently rated as a buy by four brokers including UBS which has a price target on the business of $0.95. That’s around 50% higher than where it is today.

The broker has already seen a strong start to FY22 from Seven West.

Seven West is looking to grow digital earnings before interest, tax, depreciation and amortisation (EBITDA) by 100% from $60 million to $120 million in FY22.

Management said that the ASX share is well positioned to achieve its targeted share of 40% in the first half of FY22.

The delivery of its recurring savings target of between $15 million to $20 million is progressing to expectations.

Seven West said at its annual general meeting (AGM) that it was expecting to exceed analyst consensus EBITDA of $260 million by between 7% to 10%.

The company is also in the process of buying all the business and related assets of Prime Media Group Limited (ASX: PRT) which management said would significantly add to earnings, both before and after synergies. A key part of the attraction of the deal was that it would unlock the potential of a combined metro and regional audience base across broadcast and digital platforms. The ACCC said it would not oppose this deal.

According to UBS, the Seven West share price is valued at 5x FY23’s estimated earnings.

The post 2 ASX shares rated as strong buys by brokers appeared first on The Motley Fool Australia.

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More reading

Why Alcidion, Magellan, Redbubble, and Seven West shares are dropping

Seven West Media (ASX:SWM) share price dips despite ACCC green light on Prime Media deal

2 buy-rated ASX shares with big growth plans

Raiz (ASX:RZI) share price climbs 8% as Seven West Media makes strategic investment

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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 recommended Baby Bunting. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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