Yesterday I wrote about a few shares which have been given buy ratings by leading Australian brokers this week.
Today I thought I would look at the other side of the coin at the unfortunate shares which have been given sell ratings.
Here are two shares which brokers think you should avoid:
Bendigo and Adelaide Bank Ltd (ASX: BEN)
According to a research note out of Morgan Stanley, its analysts have downgraded this regional bank to an underweight rating and cut its price target to $10.00. The investment bank appears to believe that recently announced changes by APRA to the CET1 are a negative for Bendigo and Adelaide Bank, which most recently posted a CET1 of approximately 8%.
While I have been a fan of the bank in the past, I would agree with Morgan Stanley that reaching the new CET1 target of 10.5% by 2020 will put a lot of strain on the business. I would suggest investors gain exposure to the banking sector through Westpac Banking Corp (ASX: WBC) instead.
Cochlear Limited (ASX: COH)
A note out of Credit Suisse yesterday reveals that its analysts have reiterated their underperform rating and reduced their target price on the implantable hearing solutions provider's shares to $129.00. The investment bank has taken this action after making a revision to its FX forecasts.
As Cochlear generates a significant portion of its revenue internationally, the stronger Australian dollar will no doubt be a headwind for the company should it remain at current levels in the medium term. Furthermore, although I think Cochlear is one of the highest quality businesses on the ASX, I feel its shares are a little expensive at 39x annualised earnings. Because of this I plan to hold out in the hope of getting in at a fairer price in the future.
