Buy, hold, sell: Fortescue, Guzman Y Gomez, and Megaport shares

If you are in the market for some new portfolio additions, it could be worth seeing what the team at Morgans is saying about the three ASX shares in this article.

Does the broker rate them as buys, holds, or sells? Let's find out:

Fortescue Ltd (ASX: FMG)

Morgans was disappointed with this iron ore giant's recent update, which revealed weak shipments and higher net debt.

In response, the broker has downgraded Fortescue shares to a trim rating with a reduced price target of $15.40. It said:

We have long argued that investing material capital in near-term loss-making projects (magnetite and new energy) has not diversified Fortescue, and has instead left group earnings more exposed to the iron ore price. Magnetite adds more iron ore exposure but at a higher cost, while new energy investment, and US$0.9-1.3bn of FY27 decarbonisation spend, are funded from hematite cash flow. 

This dynamic is starting to show in the numbers. Fortescue flagged that net debt rose US$1.9bn in 1Q27, equal to the final dividend (US$1.0bn) plus quarterly capex (US$0.9bn), implying negative FCF for the quarter. We attribute this mainly to weaker hematite cash flow after the central buying group China Mineral Resources Group (CMRG) reportedly halted purchases of two of Fortescue's products during the quarter, leaving shipments 6% and actual sales 14% below Visible Alpha (VA) consensus in 1Q27. On updated estimates we lower our rating to TRIM (from HOLD) with an A$15.40 target price (was A$18.70).

Guzman Y Gomez Ltd (ASX: GYG)

Another ASX share that has been downgraded by Morgans is quick service restaurant operator Guzman Y Gomez.

While it has been pleased with its resilient performance, the broker cut its rating in response to recent share price strength. 

Morgans has downgraded Guzman Y Gomez shares to an accumulate rating with an improved price target of $31.30. It said:

We view GYG's 1Q27 trading update as evidence that its sales are resilient. Backing out the high-single digit first seven weeks already disclosed (we estimate ~8.5%, supported by the Uber Eats deal), comps ran at ~5.5% in weeks 8-13, transaction-led and in line with the mid-single digit FY27 guidance. 

GYG remains our key pick in the QSR sector and the highest-quality operator in our coverage. We lift our FY27 same-store sales (SSS) growth forecast by 50bps to 5.5% and refine our margin mix, which raises FY27 underlying EPS by 1.9% and our price target to A$31.30 (from A$31.00). We move to ACCUMULATE (from BUY) given recent share price appreciation and would be buyers on any weakness.

Megaport Ltd (ASX: MP1)

One ASX share that Morgans is recommending to clients is cloud infrastructure provider Megaport.

It was impressed with its recent update, which revealed a significantly stronger earnings outlook.

In response, the broker has retained its buy rating on Megaport shares with an improved price target of $27.00. It said:

MP1 recently raised its FY27 EBITDA guidance by 25%. The compute and network businesses continue to deliver above expectations and MP1 announced three new AI infrastructure contracts with a Total Contract Value of ~A$1bn. Collectively these set a glide path for annualised EBITDA in excess of $850m. >We upgrade our EPS forecasts materially. Our Target Price lifts to A$27 per share and we retain our BUY recommendation.

The post Buy, hold, sell: Fortescue, Guzman Y Gomez, and Megaport shares appeared first on The Motley Fool Australia.

Motley Fool contributor James Mickleboro has positions in Megaport. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2026