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Leading brokers name 3 ASX shares to sell

On Monday I had a look at a few shares that had been given buy ratings this week by leading brokers.

Today I thought I would look at the unfortunate shares that have received the dreaded sell rating.

Here are three shares that brokers think you should avoid:

Ainsworth Game Technology Limited (ASX: AGI)

According to a note out of UBS, its analysts have retained their sell rating but slashed the price target on the gaming technology company’s shares from $1.75 to just $1.09. The broker made the move after Ainsworth Game Technology made a surprisingly severe downgrade to its full-year earnings guidance. Although the company has blamed delays on the decline, UBS appears concerned that it could actually be the result of lower demand and market share for its products. I would agree with UBS on this one and think investors ought to give it a wide berth.

AMP Limited (ASX: AMP)

Another note out of UBS reveals that its analysts have downgraded AMP’s shares from a neutral rating to a sell rating. The broker has also made a cut to its price target, reducing it to $3.80 from $5.40. According to the note, the broker feels it could take upwards of three years for the company to rebuild its business following recent developments. Once again, I agree with UBS on AMP. While there may come a time when its shares offer a compelling risk/reward, I think they would need to fall notably lower from here to reach that level.

Medibank Private Ltd (ASX: MPL)

Analysts at Morgan Stanley have retained their underweight rating and reduced the price target on the health insurance company’s shares to $2.35. The broker believes that we may be on the verge of going through a period of low premium increases that could put significant pressure on health insurer margins. Morgan Stanley also has an underweight rating on industry peer NIB Holdings Limited (ASX: NHF). Considering how unaffordable health insurance is becoming for many people, I think the broker is spot on with its assessment.

Instead of buying the sell-rated shares above, I would buy these buy-rated star 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 NIB Holdings 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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