Top brokers name 3 ASX shares to sell today

On Tuesday I looked at a few shares that had found favour with brokers this week and been given buy ratings.

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

Three that caught my eye are summarised below:

Caltex Australia Limited (ASX: CTX)

According to a note out of Morgan Stanley, it has retained its underweight rating and $26.00 price target on the fuel retailer’s shares following the release of its first-half profit guidance. Although Caltex provided guidance ahead of the broker’s expectations, it wasn’t a fan of the changes the company made to its reporting structure. This has made it harder to compare its performance against prior periods. While I wouldn’t be a seller of its shares if I owned them, I wouldn’t be a buyer unless they came down 10% or so.

Challenger Ltd (ASX: CGF)

Another note out of Morgan Stanley reveals that its analysts have retained their underweight rating and $11.00 price target on this annuities company’s shares following its investor day. The broker expects that Challenger’s decision to move its life investment portfolio away from property and into fixed income will result in softer margins. I would have to agree with Morgan Stanley on this one. Whilst I am a big fan of Challenger, I’m not a fan of its current valuation. I don’t expect it to deliver earnings growth in the medium term that warrants its shares trading at a reasonable premium to the market average.

Suncorp Group Ltd (ASX: SUN)

Analysts at Macquarie have retained their underperform rating but lifted the price target on the insurance giant’s shares slightly to $13.35. This note was released in response to a report by the Australian Competition and Consumer Commission (ACCC) into insurance rates in Northern Australia. Macquarie is concerned that the ACCC review could put pressure on margins in the insurance sector. I agree with Macquarie on Suncorp and think investors would be best staying clear of the company and its insurance peers.

While those shares may be the ones to sell, these shares are certainly the ones to 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 Challenger 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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