Following the release of numerous trading updates in the last few weeks, brokers up and down Australia have been revisiting their discounted cash flow models and updating them appropriately.
Unfortunately not all shares have fared so well and some have even found themselves downgraded. Here's why these shares were downgraded to sell ratings recently:
Bellamy's Australia Ltd (ASX: BAL)
According to a research note out of Bell Potter, its analysts have downgraded the infant formula company to a sell rating. Bell Potter appears to believe that Bellamy's shares are changing hands at a sky-high premium considering its full-year outlook. I would have to agree with the broker on this one. Given its many problems, I wouldn't be a buyer of Bellamy's right now.
JB Hi-Fi Limited (ASX: JBH)
A research note of Citi reveals that its analysts have downgraded the retailer to a sell rating with a $18.50 price target. According to the note Citi has analysed how Amazon and its Amazon Prime service has impacted U.S. and European retailers following its launch. This led to the broker cutting JB Hi-Fi's long-term earnings growth forecast sharply. Considering the weak retail environment and the looming Amazon launch, I wouldn't be in a rush to invest in JB Hi-Fi any time soon.
REA Group Limited (ASX: REA)
Analysts at UBS have downgraded the real estate listings company to a sell rating with a $60.00 price target. According to the note, the broker acknowledges its recent strong quarterly result, but expects increasing costs to weigh on its results moving forward. Furthermore, its analysts have pointed to weaker building approvals in March as a cause for concern. Whilst I do think its shares are a little on the expensive side and increasing costs would be a concern, I wouldn't be in a rush to sell. In my opinion REA Group is a hold at the moment.
