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2 ASX shares rated as strong buys by brokers

The 2 ASX shares in this article have been rated as strong buys by brokers. One of those ideas is Sonic Healthcare Ltd (ASX:SHL).
The post 2 ASX shares rated as strong buys by brokers appeared first on The Motley Fool Australia. –

asx investor daydreaming about US shares

There are some ASX shares that a number of brokers like and have rated as ‘buys’

It can be quite hard to find good businesses that are trading at a good price. One investor might say that BHP Group Ltd (ASX: BHP) is a good buy, whilst another might say that Woolworths Group Ltd (ASX: WOW) is the share to buy.

Brokers are constantly looking at businesses and share prices, thinking about what would be a good investment. There are various brokers out there like Bell Potter, Macquarie Group Ltd (ASX: MQG) and UBS that provide different recommendations about shares.  

With that in mind, these ASX shares are liked by more than one broker. Of course, this still isn’t a guarantee of success – they could all be herding together.

Sonic Healthcare Ltd (ASX: SHL)

Sonic Healthcare is a global pathology business that’s currently involved in testing for COVID-19. It says that it has a pivotal role.

The ASX share is currently liked by at least four brokers.

It has operations across the world in North America, Europe and Australia. The northern hemisphere is/has been going through a second wave of the pandemic, leading to record testing in Europe.

Sonic is a market leader or major player across those markets. It’s a market leader in Australia, Germany UK and Switzerland. It’s a major player in Belgium and the USA.

In FY20 it grew revenue by 11% and underlying net profit increased by 7%.

The ASX share’s base laboratory business revenue (excluding COVID-19 testing) is up on prior levels in most countries, with negative but improving growth in the USA and UK. Strong COVID-19 testing volume is on top of this.

In a trading update, Sonic Healthcare said that its revenue was up 29% in the first quarter of FY21 to $2.1 billion and its earnings before interest, tax, depreciation and amortisation (EBITDA) went up 71% to $580 million.

In the AGM update it revealed that its October 2020 revenue was 33% higher than October 2019.

Brokers like Morgan Stanley thinks that the elevated levels of COVID-19 testing will more than offset any headwinds related to Sonic’s base pathology business.  

Audinate Group Ltd (ASX: AD8)

Audinate owns the Dante platform, which distributes audio signals across computer networks. The company boasts about being the lead supplier of digital and audio video networking for the professional AV industry.

The ASX share is liked by at least two brokers.

Brokers such as UBS said that Audinate is recovering better than expected, which the broker thought was impressive considering the difficult operating environment that it’s currently operating in.

Despite the stronger Australian dollar, UBS thinks the Audinate growth will be stronger than any headwinds being presented.

For the first half of FY21, Audinate made US$11.1 million of revenue which was a 19.3% increase compared to the second half of FY20 and in line with the first half of FY20. This translated to $15.4 million in Australian dollar terms.

At the time of the FY21 trading update, Audinate CEO Aidan Williams said: “Our first half revenue result is pleasing, yet we remain cautious of the near-term economic uncertainty associated with the ongoing impacts of COVID-19 around the world. However, our strong balance sheet has enabled us to remain focused on our medium-term strategic priorities.”

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of Woolworths Limited. The Motley Fool Australia has recommended AUDINATEGL FPO and Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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