Yesterday I took a look at a few shares which had been given buy ratings by some of Australia's leading brokers.
Today I thought I would look at a couple of unfortunate shares which have fallen out of favour with brokers and been given sell ratings. Here they are:
Australian Pharmaceutical Industries Ltd (ASX: API)
According to a note out of Morgan Stanley, the broker has retained its underweight rating and $1.65 price target on the company following the release of its full-year results yesterday. Analysts at Morgan Stanley appear to be concerned that weak retail conditions will be a challenge for its Priceline pharmacy chain.
While I agree that retail conditions will be a challenge, I don't think this warrants a sell rating. However, following its solid post-results run, it is reaching what I would deem to be fair value.
Domino's Pizza Enterprises Ltd. (ASX: DMP)
After announcing plans to buy its next largest rival in Germany, analysts at Citi have retained their sell rating and given the pizza chain operator's shares a $40.95 price target. While Citi does see positives from the acquisition, it does feel there are execution risks. Furthermore, it has concerns over margins in its Australian business.
As I said yesterday, I believe that the Hallo Pizza acquisition will be a big positive for the company and believe that once conversions are complete it will make a big contribution to the earnings of its European business. In light of this, I think this is another reason to consider buying Domino's shares, not sell them.