Earlier in the week I had a look at a few shares which brokers had recently given buy ratings to.
Today I thought I would look at the shares they think investors should be selling. Here are three that caught my eye:
Netwealth Group Ltd (ASX: NWL)
According to a note out of UBS, it has retained its sell rating and $5.55 price target on the fintech company’s shares. Although Netwealth’s first-half results came in slightly ahead of expectations and the company increased its full-year earnings guidance, it wasn’t enough to make UBS change its rating. The broker appears to believe that the market has got a little ahead of itself and its shares are overvalued. UBS’ analysts make a good point. Based on its estimates for FY 2018, Netwealth’s shares are changing hands at approximately 57x forward earnings.
Retail Food Group Limited (ASX: RFG)
Another note out of UBS reveals that its analysts have downgraded the embattled food and beverage company’s shares to a sell rating from neutral. The broker has also reduced the price target on Retail Food Group’s shares all the way down to 90 cents from $2.15. According to the note, the company’s half-year results were weaker than it expected and the broker has concerns that its new banking covenants will be difficult to comply with. I would have to agree with UBS on this one. I think the outlook for Retail Food Group is rather bleak.
SEEK Limited (ASX: SEK)
Analysts at Citi have retained their sell rating and lifted the price target on the job listings company’s shares slightly to $15.10. According to the note, despite its investment in Asia, the broker believes that the Australian business remains the driver of its earnings growth. Which is a concern considering its prediction that Australian job ads may be close to reaching their peak. While I wouldn’t be a seller of SEEK’s shares, I wouldn’t necessarily be a buyer of its shares unless they came down 10%-15% from here.
While those shares may be classed as sells, I think brokers would almost certainly have buy ratings on these top shares.
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Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia owns shares of and has recommended Retail Food Group Limited. The Motley Fool Australia has recommended SEEK 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 Scott Phillips.