Yesterday I looked at a few shares that had been given buy ratings by leading brokers this week.
Today I thought I would look at the shares that have fallen out of favour with brokers and been given the dreaded sell rating.
Three that caught my eye are listed below. Here’s why they have been given sell ratings:
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)
According to a note out of Credit Suisse, its analysts have retained their underperform rating and NZ$12.00 (A$11.05) price target on the sleep treatment company’s shares. Although the company’s full-year result was in line with its expectations, the broker believes it shares are overvalued after positive share price gains this year. I would have to agree with Credit Suisse on this one. I think that Fisher & Paykel Healthcare’s shares are overly expensive given its current growth profile and believe there are better alternatives in the space.
REA Group Limited (ASX: REA)
A note out of the Macquarie equities desk reveals that its analysts have downgraded the real estate listings company’s shares to an underperform rating with an improved price target of $86.00. As with Fisher & Paykel Healthcare, this has been done largely on valuation grounds. According to the note, Macquarie thinks that REA Group’s valuation has become stretched and I would have to agree. Whilst I am a big fan of the company and wouldn’t sell its shares if I owned them already, I wouldn’t be a buyer unless I could pick up shares around 5% to 10% lower than where they trade today.
Stockland Corporation Ltd (ASX: SGP)
Analysts at UBS have downgraded this property group’s shares to a sell rating from neutral and cut their price target down to $4.08. According to the note, the broker believes that Stockland could be negatively impacted by falling house prices in 2019. UBS has forecast a 5% decline in house price next year, which it believes could lead to lower residential settlements for Stockland. With house prices starting to retreat, I think investors would be better off avoiding shares with significant exposure to the housing market. Stockland would be one of them.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group 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.