Top brokers name 3 ASX shares to sell

On Thursday I had a look at three shares that were given buy ratings by brokers this week.

This morning I thought I would look at the shares that have fallen out of favour with brokers and been given sell ratings.

Three that caught my eye are listed below. Here’s why they have been tipped as shares to avoid:

Greencross Limited (ASX: GXL)

According to a note out of Deutsche Bank, its analysts have downgraded this integrated pet care company’s shares to a sell rating from hold with a price target of $3.70. Deutsche made the move after Greencross released a trading update earlier this week which revealed that a surprising and sudden deterioration in its performance had led to an earnings guidance downgrade. Given how competitive the industry is, the broker doesn’t appear overly optimistic on FY 2019 being much better. While I don’t think I would be a seller of its shares at this price if I owned them, I wouldn’t be a buyer until I saw signs of improvement in its performance.

TPG Telecom Ltd (ASX: TPM)

A note out of UBS reveals that its analysts have retained their sell rating and $5.30 price target on the telco company’s shares after it released details on its mobile plans. While TPG Telecom has announced aggressive plans that could win market share, the broker appears to believe that the plans are too aggressive and are unlikely to result in a positive return on investment for its mobile roll-out. I would have to agree with UBS on this one and think there are better options elsewhere for investors.

Treasury Wine Estates Ltd (ASX: TWE)

Analysts at Credit Suisse have retained their underperform rating but increased the price target on the wine company’s shares to $15.65. According to the note, the broker’s underperform rating is based on valuation concerns. Credit Suisse has forecast Treasury Wine Estates to deliver earnings per share of 51.7 cents in FY 2018, pricing its shares at 37x forward earnings today. While this is a significant premium to the market average, I do think it has the potential to live up to the market’s lofty expectations.

While those shares may have been tipped as sells, I think these top shares are strong buys.

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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 Greencross Limited and TPG Telecom Limited. The Motley Fool Australia has recommended Treasury Wine Estates 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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