On Thursday I looked at three shares that brokers had given buy ratings to this week.
Today I thought I would look at the other side of the coin at the shares that brokers think you should avoid.
Here’s why they have been rated as sells:
Bank of Queensland Limited (ASX: BOQ)
According to a note out of Morgan Stanley, its analysts have retained their underweight rating and $9.50 price target on the shares of this regional bank. While the broker has noted the repricing of some mortgages and the positive impact this could have on net interest margins, it continues to believe that Bank of Queensland faces serious earnings headwinds that will offset the move. While I wouldn’t be a seller of its shares, I wouldn’t be a buyer unless it came down ~10% from here to a more attractive valuation.
Independence Group NL (ASX: IGO)
Analysts on the equities desk at Macquarie have retained their underperform rating but increased the price target on this miner’s shares to $5.10 after it agreed to sell its Jaguar operation for $73 million. While this is seen as a positive and the price is higher than its valuation, Macquarie appears concerned by the company’s upcoming fourth-quarter production report. While I like the nickel space right now, I would prefer to gain exposure to it through one of its rivals.
ResMed Inc. (ASX: RMD)
Another note out of Macquarie reveals that its analysts have retained their underperform rating and $12.10 price target on this sleep treatment specialist’s shares. The broker has held firm with its bearish view after the U.S. Department of Health released a report relating to Medicare claims for replacement positive airways pressure (PAP) supplies. That report found that Medicare made overpayments of almost US$631.3 million for replacement PAP device supply claims that did not meet Medicare requirements. This could be a sign that much of the resupply going on is not reasonable or necessary. I think this is an interesting development and would class ResMed as a hold until more details are known.
While they may be the shares to sell, these are certainly the shares 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 has recommended ResMed Inc. 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.