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Leading brokers name 3 ASX shares to sell

Earlier today I had a look at a few shares that brokers had named as buys this week. This afternoon I thought I would look at the shares they think investors ought to avoid.

Three that have been given sell ratings are listed below. Here’s why they are out of favour:

Healthscope Ltd (ASX: HSO)

According to a note out of Morgan Stanley, it has retained its underweight rating and $1.67 price target on the private hospital operator’s shares. The broker believes that the weak trading update from iSelect Ltd (ASX: ISU) on Monday signals the acceleration of a negative trend in health insurance leads. Morgan Stanley is concerned that this could pose a risk to the recovery in private hospital volumes. I would agree with the broker on Healthscope and think investors may want to avoid both it and industry rival Ramsay Health Care Limited (ASX: RHC).

Newcrest Mining Limited (ASX: NCM)

A note out of Credit Suisse reveals that its analysts have retained their underperform rating and $18.50 price target on the gold mining giant’s shares. The broker has held firm on its rating despite Newcrest receiving approval from the NSW Department of Planning and Environment to use the first 200 metres of the old Cadia Hill open pit as a tailings storage facility. This should mean full production recommences next month at Cadia, two months ahead of Credit Suisse’s expectations. While this has led to the broker boosting its earnings estimates for FY 2018, the broker has downgraded its FY 2019 estimates due to material remediation costs at Cadia. As I’m bearish on the gold price I would have to agree with Credit Suisse.

Vocus Group Ltd (ASX: VOC)

Analysts at Macquarie have retained their underperform rating and $2.50 price target on the telco company’s shares after its revealed that it was unable to find a buyer for its New Zealand business. However, the company advised that it has been able to amend its debt covenants and has no plans to raise funds through an equity raising. While the latter part is seen as a positive, the broker appears to believe it is too soon to make any changes to its rating. Especially given its track record, tough market conditions, and balance sheet uncertainty. I would have to agree with Macquarie as well and think investors would be better off looking elsewhere in the telco industry.

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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 Vocus Communications Limited. The Motley Fool Australia has recommended Ramsay Health Care 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.

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