The team at Morgans has been busy updating its view on a number of ASX shares this week.
Three that have fared well and received upgraded ratings are listed below. Here's what the leading broker is saying:
Mitchell Services Ltd (ASX: MSV)
Morgans was impressed with this drilling services provider's performance during the first quarter and believes it supports its view that earnings leverage is emerging.
As a result, the broker has upgraded Mitchell Services shares to a speculative buy rating with an improved price target of 80 cents. It commented:
MSV's 1Q27 result reinforces our view that earnings leverage is beginning to emerge. Operating rigs increased to 66 during the quarter and MSV expects a further 10 rigs to commence by 3Q27. With underlying margins remaining strong at 22.9% and utilisation at 85%, we believe this increased operating activity should increasingly translate into earnings growth as drilling markets recover.
Pathway to 80 – MSV has also stated it sees a pathway to having 80 operating rigs by FY27-end. Against an FY26 average operating fleet of ~62 rigs, this represents a significant increase in activity levels and supports our view that earnings leverage will become increasingly evident through FY27. We upgrade our recommendation to SPECULATIVE BUY (previously ACCUMULATE) with an increased price target of A$0.80ps (previously A$0.60ps).
New Hope Corporation Ltd (ASX: NHC)
Another ASX share that has been upgraded by Morgans is coal miner New Hope.
In response to news of a deal to acquire Malabar Resources, the broker has upgraded New Hope shares to an accumulate rating with a $6.30 price target. It explains:
NHC has announced an agreement to acquire the remaining ~74% of privately held Malabar Resources via a scrip scheme of arrangement, bringing the Maxwell Mine fully into the NHC portfolio. NHC is effectively consolidating a tier-one Hunter Valley asset with significant infrastructure already in place, substantial resource optionality, and multiple synergies with its nearby Bengalla mine.
We upgrade our recommendation to ACCUMULATE (previously HOLD) with an increased target price of A$6.30ps (previously A$6.05ps).
PWR Holdings Ltd (ASX: PWH)
Lastly, this automotive cooling products company's shares have been upgraded to an accumulate rating with an improved price target of $12.55.
Morgans made the move following the release of a positive trading update from PWR at its annual general meeting. The broker commented:
PWH provided a positive trading update at its AGM with FY27 guidance upgraded. The upgraded guidance was driven by an increase in Aerospace & Defence (A&D) revenue growth expectations from ~30% to ~50%, largely reflecting a recently secured US$4.6m order. Guidance for the remaining segments (Motorsports, OEM and Aftermarket) was broadly unchanged, with management continuing to target a ~200bp improvement in FY27 NPAT margin to ~12.5%. We increase FY27F revenue by 4% and NPAT by 3% following the upgrade to A&D guidance.
However, we make minimal changes to FY28 and FY29 forecasts as we await further contract wins to provide greater confidence in the medium-term pipeline. Our target price increases to A$12.55 (from A$12.40) following updates to earnings forecasts. With a 12-month forecast TSR of 14%, we upgrade our rating on PWH to ACCUMULATE (from HOLD).
The post A leading broker just upgraded these 3 ASX shares appeared first on The Motley Fool Australia.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended PWR Holdings. The Motley Fool Australia has positions in and has recommended PWR Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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