9 ASX stocks where brokers see opportunity - and 3 facing headwinds

New year, new beginnings - and renewed pressure on management teams to lift shareholder returns or demonstrate they can outperform peers.

In the opening weeks of the year, major brokers including Macquarie, Citi and Bell Potter have published a steady stream of updates as fresh information, trading conditions and sector trends come into focus.

We scoured broker reports released so far in January to identify ASX stocks tipped to deliver outsized gains, spanning micro caps through to large caps. Several names also offer attractive, fully franked dividend yields alongside the prospect of capital growth this year.

But some stocks face a tougher 2026, as brokers grow more cautious on their outlook or due to lingering issues.

Here’s what stood out. (Note: expected upside and other metrics may have changed due to share price movements since the reports were published.)

Macquarie Research

#1 - PEXA Group (ASX: PXA)

• Forecast upside: ~43% to Macquarie’s A$19.10 target
• PE ratio: 167x FY26e
• Dividend yield: Nil (dividends forecast from FY28)

Macquarie reiterated its OUTPERFORM rating on PEXA, naming it its key pick in the real estate sector, as improving settlement activity feeds through to earnings upgrades. 

The broker also pointed to multiple catalysts ahead, including PEXA onboarding more big lenders and strategic progress in the UK business, which it believes could accelerate market share gains over time.

“Formal commitment from additional Tier-1 lenders is likely to incentivise the other four Tier-1 lenders to onboard with PXA quickly, driving rapid market share gains," Macquarie says.

#2 - Amcor (ASX: AMC)

• Forecast upside: ~40% to Macquarie’s A$87.10 target
• PE ratio: 10.7x FY26e
• Dividend yield: 6.0% (0% franked)

Macquarie reiterated its OUTPERFORM rating on Amcor, arguing the market is underestimating the earnings leverage from cost-out initiatives and merger synergies. 

While near-term volumes remain challenged, the broker expects margin expansion to continue, supported by productivity gains and accelerating synergies from the Berry acquisition. Amcor’s defensive end markets and free cash flow profile underpin its view that the stock offers compelling value at current multiples.

“AMC has a strong track record on synergies & delivery of these is the key driver of our fct 10% 3y EPS CAGR. In our view, AMC offers good value on FY26/27e PE of 10.7x/9.6x & FY26/27e FCF yield of 10% on our fcts," Macquarie says.

Canaccord Genuity

#3 - Lovisa (ASX: LOV)

• Forecast upside: ~25% to Canaccord’s A$36.00 target
• PE ratio: ~31x FY26e
• Dividend yield: ~3.1% (0% franked)

Canaccord upgraded Lovisa to BUY despite trimming its target price, arguing the recent share price pullback has improved the risk-reward.

The broker highlighted confidence in FY27 earnings, supported by an accelerated store rollout and the potential to leverage a cost base built during a heavy investment phase. While near-term cost pressures remain a watch point, Canaccord believes these are outweighed by longer-term growth opportunities.

“We note that, historically, LOV has tended to bounce after short periods spent at or below 25x P/E with LOV trading between 30x and 40x P/E for much of the past six years. Our updated valuation methodology considers FY26E/27E EPS and applies a 35x P/E multiple," Canaccord says.

#4 - Codan (ASX: CDA)

• Expected upside: ~10% to Canaccord’s A$40.28 target
• PE ratio: 45x FY6e
• Dividend yield: 1.1% (100% franked)

Canaccord reiterated its BUY rating on what it described as the “golden monster” in Codan, pointing to accelerating earnings momentum across metal detection and defence. 

The broker highlighted gold detector demand continuing to track the gold price closely, while also flagging defence as a growing structural tailwind amid rising global military budgets. Importantly, Canaccord noted its valuation does not factor in potential M&A, which could provide additional upside beyond its current target.

“If we assumed a $400m acquisition priced on 10x EBITDA, it would be low double-digit EPS accretive to CDA's FY26 pro-forma earnings, would leave ND/EBITDA manageable at 1.4x, and if it translated to being valued by the market at half CDA's current PE multiple, it could add over $2 per share to the share price," Canaccord says.

Morgan Stanley

#5 - Suncorp Group (ASX: SUN)

• Expected upside: ~27% to Morgan Stanley’s A$22.25 target
• PE ratio: 15.53x FY26e
• Dividend yield: 4.5% FY26e (100% franked)

Morgan Stanley named Suncorp a Top Pick, arguing the market is underestimating the quality of its reinsurance protections and capital optionality.

The broker said recent reinsurance “dropdown” activation materially reduces catastrophe exposure, addressing a key investor concern. It also highlighted multiple self-help levers - including reinsurance restructuring, capital management and margin expansion - that could lift earnings quality and drive a valuation re-rating relative to peers.

“An aggregate cover could lift earnings quality and drive a 2–3x P/E point re-rating, more than offsetting additional costs," Morgan Stanley says.

Citi

#6 - AMP (ASX: AMP)

• Expected upside: ~18% to Citi’s A$2.10 target
• PE ratio: 14.5x FY26e
• Dividend yield: 2.8% FY26e (50% franked)

Citi upgraded AMP to BUY, arguing capital return initiatives are likely to re-emerge alongside the FY25 result following insurance recoveries and the settlement of major class actions. The broker pointed to strong momentum in AMP’s North platform, improving adviser sentiment and disciplined cost control, alongside stabilising bank earnings.

With the share price well below October levels, Citi sees scope for AMP’s implied platform multiple to expand, even if bank returns remain modest in the near term.

“AMP recently received insurance recoveries from historical remediation programs of A$68m. Further it has recently settled two significant class actions materially reducing near term downside risks. This likely reduces the capital and/or group cash buffer that AMP needs to hold and we expect this to also free up the path to more capital returns either via a higher dividend, an on market share buyback or a combination of the two," Citi says.

#7 Nick Scali (ASX: NCK)

• Expected upside: ~13% (base case) to as much as ~43% (bull case), pending execution
• PE ratio: ~24x FY26e
• Dividend yield: ~2.47% (100% franked)

Citi sees minimal risk heading into Nick Scali’s 1H26 result, with earnings guidance already provided in December and consensus still adjusting. The broker expects focus to centre on January trading, the UK sales trajectory and progress toward breakeven. 

Citi is constructive on the UK outlook, forecasting stronger written sales orders as refurbishments are completed, marketing ramps up and underperforming sales staff are addressed, with potential upside to gross margins as store conversions progress.

“We see the company starting to benefit in ANZ from a sales turnaround, underpinned by an improving housing cycle which should also drive strong operating leverage, potentially helping fund the company’s UK expansion in the near term until breakeven is achieved," Citi says.

Bell Potter

#8 - Regal Partners (ASX: RPL)   

• Expected upside: ~32% to Bell Potter’s A$4.70 target
• PE ratio: ~12.3x FY26e
• Dividend yield: ~6.3% (100% franked)

Bell Potter reiterated its BUY rating on Regal Partners after the company flagged a sharp acceleration in performance fees, with H2 CY25 performance fees expected to reach around $130m - well above prior forecasts. The broker lifted earnings estimates and its price target, arguing the shares remain de-rated despite a material improvement in operational performance.

“Currently the shares trade on 12.3x next year’s earnings or 5.3x EV/EBITDA. We do not believe the improvement in operational performance is reflected in the current share price," Bell Potter says.

#9 - Delta Lithium (ASX: DLI)

• Expected upside: ~74% to Bell Potter’s A$0.41 valuation
• PE ratio: N/A (pre-earnings, development stage)
• Dividend yield: 0%

Bell Potter reiterated its SPECULATIVE BUY on Delta Lithium after materially upgrading its lithium price outlook, citing signs that inventories across the supply chain have normalised.

The broker lifted its valuation following a sharp rebound in spodumene and lithium carbonate prices and highlighted Delta’s exposure to multiple critical minerals, alongside additional gold leverage via its 41% stake in Ballard Mining. Delta is fully funded to advance Mt Ida and Yinnetharra, with exploration results, metallurgical test work and early-stage studies identified as key medium-term catalysts.

“Key medium-term catalysts include exploration results, met test work and early-stage studies," Bell Potter says.

3 stocks Facing headwinds

Macquarie Research

#1 - Fortescue (ASX: FMG)

• Expected downside: ~4% to Macquarie’s A$21.00 target
• PE ratio: ~12.3x FY26e
• Dividend yield: ~4.9% FY26e (100% franked)

Macquarie maintained its UNDERPERFORM rating on Fortescue, lifting its target price modestly to reflect stronger iron ore spot pricing but remaining cautious on valuation. 

While the broker acknowledged Fortescue’s ability to lead on costs, it said the iron ore business continues to screen as expensive relative to longer-term price assumptions. Macquarie also flagged elevated capex and earnings volatility as ongoing constraints, with upside skewed more toward commodities like copper rather than iron ore.

“Whilst we remain cautious on FMG's iron ore business valuation due to price… we see the recent copper asset acquisition as a key catalyst in FMG striking to grow into commodities that have better longer term outlooks," Macquarie says.

Morgan Stanley

#2 - ASX Limited (ASX: ASX)

• Expected downside: ~14% to Morgan Stanley’s A$45.15 target
• PE ratio: ~21x FY26e
• Dividend yield: ~3.6% FY26e (100% franked)

Morgan Stanley maintained its UNDERWEIGHT rating on ASX, arguing the stock remains expensive relative to its growth outlook and faces rising regulatory and cost pressures. 

While capital markets activity is improving, the broker said this is unlikely to translate into near-term earnings growth, with revenue growth expected to fall short of cost growth through FY28. Morgan Stanley also flagged ongoing risks from the ASIC review, elevated opex and capex, and limited flexibility for ASX to defend returns given its monopoly-like position.

"Domestic capital markets activity is improving, supporting revenue growth outlook. But we see more cost pressures to come in FY27 (7.5% total cost growth), leading to almost no EPS growth into FY28E. Alongside risks to ASX’s return profile from ASIC review, we think ASX is too dear on 21x FY27E P/E," Morgan Stanley says.

Citi

#3 - Bendigo and Adelaide Bank (ASX: BEN)

• Expected downside: ~6% to Citi’s A$10.25 target
• PE ratio: 12.2x FY26e
• Dividend yield: 5.8% FY26e (100% franked)

Citi downgraded Bendigo and Adelaide Bank to SELL, citing elevated execution risk following the stock’s recent re-rating.

While management remains confident in productivity initiatives and the rollout of digital deposits to lower funding costs, Citi flagged the unresolved AML issue with AUSTRAC as a key overhang. With the RACQ acquisition and APRA overlay already absorbing around 50bps of CET1, Citi believes the balance sheet is now less able to absorb any further remediation or restructuring costs, creating asymmetric downside risk until the AML issue is resolved.

“Our valuation incorporates a 10% discount for the AML overhang, and we believe this presents asymmetric risk for investors until resolved," Citi says.