Top brokers name 3 ASX shares to sell

With earnings season now well and truly in full swing, brokers across Australia have no doubt been working overtime on their discounted cash flow models and adjusting recommendations accordingly.

Three shares which haven’t fared well and have been given sell ratings this week are listed below. Here’s why they have been tipped as sells:

Myer Holdings Ltd (ASX: MYR)

According to a note out of Deutsche Bank, its analysts have downgraded the retailer to a sell rating and cut its price target to just 45 cents following its recent trading update. The broker believes that Myer is underperforming its retail peers and is concerned that there is no immediate solution to stopping the decline. Further to this, Deutsche has pointed to a balance sheet under significant pressure as another reason to be concerned and believes that any potential future takeover offer would be at a discount to its current share price. I agree with Deutsche on this one and think Myer should be avoided by investors.

Primary Health Care Limited (ASX: PRY)

A note out of the equities desk of Macquarie reveals that its analysts have initiated coverage on the healthcare company with an underperform rating and $3.75 price target. The broker believes that the risk/reward on offer from an investment in Primary Healthcare is skewed to the downside due partly to changes in its general practitioner contracts. These have led to the company gaining a lower share of gross billing and ultimately lower revenue growth. I would have to agree with Macquarie as well. With the current arrangement it has with GPs, I think Primary Health Care will struggle for growth.

REA Group Limited (ASX: REA)

Analysts at UBS have retained their sell rating and $68.00 price target on the property listings company’s shares. Although the company’s first-half result was in-line with its expectations, the broker suspects an earlier Easter and elections in Malaysia will lead to a weak third-quarter result. Furthermore, the broker’s research indicates that price increases in FY 2019 will be lower than in FY 2018. While I wouldn’t be a seller of its shares if I owned them, I wouldn’t be a buyer unless they came down to a more attractive entry point.

While the shares above may be classed as sells, I think brokers will have buy ratings on these popular shares.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group 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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