On Monday I looked at a few shares that had been given buy ratings by 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 this week.
Three that caught my eye are listed below. Here’s why they have been tipped as sells:
Altura Mining Ltd (ASX: AJM)
According to a note out of the Macquarie equities desk, its analysts have retained their underperform rating and 25 cents price target on this lithium miner’s shares following its recent update. That update revealed that a vessel should be ready for the delivery of its first concentrate in between July and mid-August. While this is a positive, Macquarie notes that its funding structure means that it will need to finance stage 2 of its activities, which could put pressure on its share price. I think there are better options for investors in the industry and would suggest investors heed Macquarie’s advice.
Computershare Limited (ASX: CPU)
Analysts at Morgan Stanley have retained their underweight rating and lowly $13.50 price target on Computershare’s shares. According to the note, the broker thinks that investors have overlooked the potential drag on its performance that its core registry business could have amid falling prices and market share losses in the United States. In addition to this, the broker expects a weak performance from its UK business. Overall, the broker appears to believe this means the risk/reward on offer here is unattractive and justifies a sell rating. While I’m not as bearish as Morgan Stanley in respect to its price target, I wouldn’t be a buyer of its shares unless they were trading below $15.00.
Retail Food Group Limited (ASX: RFG)
A note out of UBS reveals that its analysts have retained their sell rating and slashed the price target on the embattled food and beverage company’s shares to just 50 cents. After working through its recent trading update the broker has reduced its forecasts by almost a third. It currently expects earnings per share of 19 cents in FY 2018 and approximately 14 cents in FY 2019. While this means Retail Food Group’s shares are trading at just 4x FY 2019 earnings, I wouldn’t suggest investors snap up shares. With the company possibly going to breach its debt covenants, there are a lot of dark clouds hovering above it.
While those shares may be tipped as sells, I think these four shares ought to be classed as strong buys.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Computershare. 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.