Leading brokers name 3 ASX shares to sell today

On Monday I looked at a few shares that had found favour with brokers and were given buy ratings.

Today I thought I would look at the unfortunate shares that have fallen out of favour with brokers and be given the unwanted sell rating.

Three that caught my eye are listed below. Here’s why they have been given sell ratings:

Commonwealth Bank of Australia (ASX: CBA)

According to a note out of Morgan Stanley, it has retained its underweight rating and $70.00 price target on the banking giant’s shares after it was slapped with a $700 million penalty by AUSTRAC. Although the broker sees the settlement as a slight positive, it hasn’t been enough to justify a change to its rating. I agree that the settlement is a positive and believe it removes an element of uncertainty surrounding the bank. But I don’t agree that Commonwealth Bank is a sell. Although it wouldn’t be my first pick in the sector, I do see a lot of value in its shares at these levels.

Regis Healthcare Ltd (ASX: REG)

A note out of the Macquarie equities desk reveals that the broker has downgraded this aged care operator’s shares to an underperform rating and cut the price target on its shares from $4.25 to $3.50 following a change of analyst covering the company. The new analyst expects refundable accommodation deposit (RAD) inflows from its new facilities to be put towards new developments and not used to reduce debt next year. This could ultimately lead to the company having to reduce its distributions accordingly. Based on Macquarie’s earnings per share forecast for Regis of 17.9 cents in FY 2018, its shares are changing hands at almost 20x earnings. I wouldn’t be a buyer at that level so would have to agree with Macquarie that this is a sell.

Wesfarmers Ltd (ASX: WES)

Analysts at Citi have retained their sell rating and cut the price target on the conglomerate’s shares slightly to $41.40. According to the note, the broker has made the move after judging that up to 40% of its earnings are exposed to the housing market. This could put its earnings growth at risk if house prices continue to slide. Further, the proportion of its sales linked to the housing market will increase even further in the future if the Coles demerger goes ahead as planned. While I wouldn’t be a seller of its shares if I owned them, I wouldn’t be a buyer unless they came down to around the $40.00 mark.

While those shares may be classed as sells, this top dividend share is certainly a strong buy in my opinion.

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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 Wesfarmers 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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