Top advisor has named these two S&P/ASX 200 shares a sell

Investors looking for some sell options this week may be interested in these sell recommendations out of wealth management company Ord Minnett, by leading advisor Tony Paterno.

Qantas Airways Limited (ASX: QAN)

Shares in Australian airline stalwart Qantas Airways Limited are down 2.2% to $5.70 at the time of writing after a relatively volatile 12-months of share prices from a low of just $3.92 this time last year.

Ord Minnett lead advisor Tony Paterno has slapped a sell rating on Qantas off the back of “persistent headwinds” from a weaker domestic air travel market and “challenging international conditions” presenting an opportunity for investors to take some profit.

But news this week that Qantas will be dragged into court due to a dispute over the name of its insurance arm may knock investor sentiment and push prices down further.

The launch of Qantas Assure – health, life and income insurance – in 2016 has been challenged by Australian company Ingeus, which has used the Assure brand on its mental health and wellbeing support services since 2002.

Ingeus has lodged action against Qantas in the Federal Court of NSW for compensation over the use of the Assure name.

Qantas delivered record first-half profit results in February with the company’s highest ever underlying NPAT up 15% to $976 million for the six months to December 31, 2017 and a 7c per share unfranked dividend plus an on-market buyback of up to $378 million.

Investors looking to take profit should do their own due diligence before making the call.

Medibank Private Ltd (ASX: MPL)

Shares in health insurance giant Medibank Private were down almost 1.3% at the time of writing to $2.86 as the share continues to slide from a February post-results high of $3.27.

Investor sentiment will no doubt be on the nose for Medibank Private this week after news has broken that private health insurance bosses will once again pocket healthy pay packet rises while households are slapped with higher insurance premiums.

Medibank Private CEO Craig Drummond received a $600,000 bonus last year on top of his $1.5 million salary as the health fund’s premiums were hiked by 3.8% as of April 1.

Ord Minnett’s Tony Paterno has placed a sell recommendation on Medibank Private this week as “industry volume growth has turned negative”.

Paterno says there is “considerable political pressure” for lower premium rates and lower profits that would lead to a trend downward for the health insurance stock, especially as the federal opposition has called for a 2% rate increase cap for health insurers as part of its election promises.

Medibank Private reported a first-half net profit of $245.6 million in February, up 5.9% from the previous corresponding period with an interim fully-franked dividend of 5.5c per share up 4.8% from the previous corresponding period.

Investors looking to take Paterno’s advice should weigh up whether Medibank’s planned Priority program to reward loyal customers could help to bolster the stock in the next six months, with the company pitching a $20 million loyalty bonus to customers set to kick off in June.

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Motley Fool contributor Carin Pickworth 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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