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Leading brokers name 3 ASX blue chips to sell today

Whilst it feels like many investors are indiscriminately hitting the sell button on everything today, there are a few shares that had been tipped as sells prior to today’s meltdown.

Below you will find three shares that have been given sell ratings by leading brokers. Here’s why they think they ought to be sold:

AGL Energy Ltd (ASX: AGL)

According to a note out of Citi, the broker has downgraded the energy company to a sell rating with a reduced price target of $20.54. Its analysts appear concerned by the 4% drop in customer numbers in Queensland over the last six months and expect the company to only generate low single-digit earnings growth for the next few years. Whilst I wouldn’t necessarily be a seller of its shares, nor would I be a buyer at the moment. I think it is a hold at the current share price.

Commonwealth Bank of Australia (ASX: CBA)

A note out of Morgan Stanley reveals that it has retained its underweight rating on Australia’s largest bank following its half-year results release. The broker has, however, lifted its price target on the bank’s shares slightly to $72.00. According to the note, its analysts have retained their underweight rating in light of CommBank’s modest earnings growth outlook and its falling return on equity. Furthermore, at the current price it feels the bank’s shares are fully valued. Once again, if I were a shareholder I wouldn’t be in a rush to sell, but as a non-shareholder I wouldn’t be in a rush to buy either. I think there are better options available in banking sector.

TPG Telecom Ltd (ASX: TPM)

Analysts at UBS have downgraded the telco company to a sell rating with a $6.00 price target. According to the note, the broker has made the move largely on valuation grounds. Whilst its does not necessarily believe that the company’s foray into the mobile market will be a failure, it has stressed that it is not without risk. In light of this, its analysts would prefer a share price that reflects this and provides investors with a more sufficient risk/reward pay-off. I think UBS makes a great point here and I can’t say I’m too surprised to see its shares drift notably lower today.

While the shares above may be classed as sells, I think these blue chip shares are strong buys.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended TPG Telecom Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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