7 ASX broker calls as investors weigh the RBA and “sell in May”

Note: This article was updated to reflect this week's RBA decision.

Markets have done a remarkable job of shaking off what looked like a genuine macro shock.

Oil spiked, geopolitical tensions flared, and volatility surged - yet equity markets have pushed back toward their highs as if little has changed. It’s the kind of resilience that keeps bulls in control, but it also raises an uncomfortable question: are markets underestimating what comes next?

Because May isn’t just another month. It brings two of the most consequential policy catalysts of the year: Kevin Warsh’s potential appointment to lead the Federal Reserve, and the Reserve Bank of Australia's rate hike which occurred on Tuesday.

And at least one major global house thinks the market is far too relaxed about what comes next.

Morgan Stanley: The slowdown we have to have

The market correctly predicted Tuesday's 0.25% rate hike to 4.35%.

Morgan Stanley, which tipped a hike, points out that higher rates and fiscal consolidation in the Federal Budget will compound into an overall tightening of conditions and signal that policymakers are now aligned in slowing the economy to contain inflation.

The pressure point is consumption. With energy prices surging and supply risks tied to the Middle East, the policy response is increasingly focused on cooling household spending, housing and labour conditions — not stimulating growth.

Morgan Stanley frames it as “the slowdown we have to have.”

That shift is already feeding into forecasts. The broker has cut GDP growth to 1.2% for 2026, down sharply from 2.6% last year and below the current 1.6% consensus, warning that Australia is feeling the energy shock more acutely than peers.

"A return of inflation pressures is driving policy reaction to firmly target the housing and consumption piece of the economy to slow as a solve for current risks," the broker says.

“Sell in May”? Not so fast

With macro uncertainty building, and a potential shake-up at the Federal Reserve, it’s tempting to fall back on the old playbook: “sell in May and go away.”

Not so fast.

The data tells a different story - at least when it comes to the index that sets the tone for global equities: the S&P 500.

According to Bloomberg Intelligence, the index has delivered positive returns in 25 of the past 33 May–October periods, with just one negative year in the past decade. That’s hardly a compelling case for heading to the sidelines.

As Bloomberg’s Athanasios Psarofagis notes, the trade made sense in 19th-century London when investors literally left for summer. Today’s markets — driven by global flows, ETFs and algorithms — simply don’t work that way.

A quieter month for broker moves

It’s been a tough backdrop for broker calls.

With uncertainty around the Iran conflict and its impact on oil, inflation and margins, conviction has been limited. As Morgan Stanley notes, “Current consensus earnings for many affected industries have been in wait and see mode - a function of hoping the energy "price" shock can quickly correct and also linked to prior experience in 2022 when prices rose, policy protected and consumers happily paid more."

Instead of major upgrades or downgrades, the month has been defined by reiterations and modest price target tweaks. Still, a handful of calls stand out.

#1 - ResMed: Growth intact, margins resilient

ResMed (ASX: RMD) remains a standout in healthcare for Macquarie, which reiterated its Outperform rating and set a $46.50 price target, implying ~63% upside.

The broker highlights a solid result, with earnings beating expectations and strong “Rest of World” performance offsetting softer Americas trends. Growth is being supported by the AirSense 11 rollout and improving patient adherence - key drivers of recurring revenue.

Margins are also holding up despite cost pressures, with guidance maintained and incremental improvements expected over time.

“We maintain Outperform with solid EPS growth over the forecast period and a favourable balance sheet position. RMD remains our preferred sector exposure," the broker says.

#2 - James Hardie: Structural growth meets cyclical upside

James Hardie (ASX: JHX) continues to screen as a high-quality industrial, with Morgan Stanley reiterating its Overweight rating and a $44.00 price target, implying ~43% upside.

The call is underpinned by improving US contractor demand and strong brand positioning, pointing to both market share gains and early signs of a cyclical recovery.

There’s also an underappreciated lever in play: synergies from the Azek acquisition, with cross-selling and distribution benefits still in their early innings.

“Volume improvement from a housing recovery now appears to be delayed, but we think there is scope for Azek synergies to exceed market expectations. The next catalyst is the JHX FY26 result in mid/late May," Morgan Stanley says.

#3 - GenusPlus: Riding the electrification boom

GenusPlus (ASX: GNP) is emerging as a key beneficiary of Australia’s energy transition, with Bell Potter Securities maintaining a Buy rating and lifting its price target to $10.50, implying ~15% upside.

The upgrade is driven by a stronger revenue outlook, supported by a $2.5 billion order book and a $2.6 billion tender pipeline, setting up strong medium-term growth.

In particular, GNP is tendering on three large-scale transmission projects: the Hunter Transmission Project, the Gippsland Offshore Wind Transmission Project, and the New England REZ Transmission Project (Stage 1). 

"Announcement of preferred contractors for each project is expected in CY26, representing significant catalysts," Bell Potter says.

#4 - Bega Cheese: Strategy reset lays the groundwork for growth

Bega Cheese (ASX: BGA) used its recent strategy day to outline a clearer path forward, with Macquarie Group maintaining an Outperform rating and a $6.60 price target, implying ~21% upside.

The “S31” strategy marks a shift from cost-cutting to growth after a multi-year operational reset. With a leaner cost base now in place, the focus is turning to higher-margin products, international expansion and foodservice growth.

“BGA has right-sized its cost base, which supports initiatives to pursue growth opportunities across higher-margin products and markets," Macquarie says.

#5 - Westgold: Short-term pain, long-term upside intact

Westgold Resources (ASX: WGX) remains a leveraged play on gold, with UBS reiterating its Buy rating and a $8.50 price target, implying ~44% upside.

The latest result was mixed, with higher-than-expected costs weighing on earnings. But UBS is focused on what comes next.

Key catalysts include asset divestments (Peak Hill and Chalice) that could unlock $70–100 million in value, alongside growth from Higginsville and the Beta Hunt project.

“These catalysts keep us positive on the name, with the stock trading well below our valuation despite our conservative assumptions," the investment bank says.

#6 - Fortescue: Iron ore strong, capital allocation the concern

Fortescue (ASX: FMG) has been downgraded to Sell by Bell Potter Securities, with a $18.15 price target, implying ~10% downside.

While the core iron ore business remains solid, the concern lies in capital allocation - calling out the approval of a US$680m investment to develop the Pilbara Green Energy Project, a 200MW capacity, firmed green energy grid comprising solar and wind.

"A remote, hot, cyclone-prone region with limited existing digital infrastructure, fibre connectivity, water for cooling, skilled labour and high logistics costs does not appear a competitive setting for a data centre," Bell Potter says.

“We see a high risk of future writedowns, as with past FMG energy projects.”

#7 - Boss Energy: Weak quarter raises bigger questions

Boss Energy (ASX: BOE) is facing growing execution risk, with Macquarie maintaining an Underperform rating and a $1.30 price target, implying ~9% downside.

The downgrade follows a disappointing quarter, with weaker production and higher costs compounding concerns around delivery.

More importantly, the broker is questioning the outlook beyond the near term — particularly whether Honeymoon can deliver sustainable economics as it scales.

"Soft quarter at Alta Mesa compounds FY26 weakness, and FY27 at Honeymoon remains in doubt," Macquarie says.

Key events to watch in May

If April was about volatility, May is about catalysts.

• RBA rate decision (5 May): Which increased the cash rate by 0.25%.
• Strait of Hormuz: Any resolution - or escalation - will drive oil and inflation expectations
• NVIDIA earnings (21 May AEST): A key test for the AI trade
• Kevin Warsh (potential Fed Chair, 15 May): Could spark debate around the direction — and independence — of the world's most influential central bank