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Top brokers name 3 ASX shares to sell

On Thursday I had a look at a few shares that brokers had named as buys this week.

Today I thought I would look at the shares that have fallen out of favour with brokers and have been given sell ratings. Three that caught my eye are listed below:

Bank of Queensland Limited (ASX: BOQ)

According to a note out of Morgan Stanley, its analysts have retained their underweight rating and reduced the price target on the regional bank’s shares to $11.00 from $11.40. Its analysts believe Bank of Queensland’s margins are peaking and expects it to reveal slowing earnings growth when its reports its earnings next month. While I wouldn’t necessarily be a seller of its shares if I owned them, I wouldn’t be a buyer either. I think the big four banks are far more attractive right now.

Sigma Healthcare Ltd (ASX: SIG)

Following the release of its half-year results yesterday, analysts at Citi have retained their sell rating and cut the price target on Sigma Healthcare’s shares to 70 cents from 74 cents. According to the note, Citi believes that its shares are overvalued relative to its peers and expects the company to progressively lose Chemist Warehouse as a customer when its current supply contract ends in June 2019. I completely agree with Citi on this one and think investors should stay well clear of Sigma.

Synlait Milk Ltd (ASX: SM1)

A note out of the equities desk at Macquarie reveals that its analysts have downgraded the dairy processor to an underperform rating from neutral. The broker has, however, lifted the price target on Synlait Milk’s shares to NZ$7.00 (A$6.55). According to the note, although the first-half results came in ahead of the broker’s expectations, it has made the downgrade on valuation grounds. While its shares are not cheap, I think infant formula demand could generate strong enough growth to justify the premium. I would class them as a hold.

While those shares may be classed as sells, these top stocks are certainly strong buys in my opinion.

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

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