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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:
Flight Centre Travel Group Ltd (ASX: FLT)
According to a note out of Citi, its analysts have retained their buy rating on this travel agent giant’s shares with an increased price target of $16.75. This follows news that the company is acquiring UK based online cruise platform Iglu for 122 million British pounds. Citi notes that this is the second cruise related acquisition the company has made in two years. It believes this indicates that management is making a strategic push into higher-value and less volatile leisure segments. In response to the news, Citi has boosted its earnings estimates and its valuation for the company accordingly. The Flight Centre share price ended the week at $14.81.
A note out of Macquarie reveals that its analysts have retained their outperform rating on this network as a service provider’s shares with an increased price target of $21.70. The broker has been looking at Megaport’s recent acquisition of Latitude. It highlights that it expands the immediate addressable share of customer wallet as customers already consume compute products, but Megaport has not historically sold compute. Furthermore, Latitude’s product offering is highly complementary to its existing product set and offers a direct position in a large and fast-growing end market according to Macquarie. It estimates that Bare Metal as a Service (BMaaS) is a large, end market currently worth US$15 billion, and growing rapidly. Combined with the stabilisation of core revenue, Macquarie believes this leaves Megaport is well-placed for long term growth. The Megaport share price was fetching $13.17 at Friday’s close.
Analysts at Ord Minnett have retained their buy rating on this data centre operator’s shares with an increased price target of $20.50. According to the note, the broker was pleased to see that NextDC has signed a memorandum of understanding with OpenAI. It is the owner of ChatGPT. The deal is for the proposed S7 data centre in Eastern Creek, Sydney, which will be a hyperscale AI campus and the largest in the southern hemisphere with 650MW capacity. Ord Minnett sees big positives from the arrangement and believes it could be a boost to its valuation if it goes ahead as expected. The NextDC share price ended last week at $13.51.