Yesterday I looked at a few shares that had found favour with brokers this week and been given buy ratings.
Not all shares on the market have been so fortunate and some have been given the dreaded sell rating.
Three shares that have been given sell ratings are listed below. Here’s why these leading brokers think you should sell them:
Coca-Cola Amatil Ltd (ASX: CCL)
According to a note out of the Macquarie equities desk, its analysts have downgraded the beverage giant’s shares to an underperform rating from outperform with a reduced price target of $8.87. The broker has made the move partly on valuation grounds after a solid share price gain, but also due to concerns over the volume growth of its Australian business and general short-term weakness in its Indonesian businesses. I would agree with Macquarie on this one and believe investors ought to hold out to pick up shares at a more attractive level.
Nufarm Limited (ASX: NUF)
A note out of Deutsche Bank reveals that its analysts have retained their sell rating and $6.75 price target on the crop protection company’s shares. On Monday Nufarm downgraded its profit guidance significantly following extended dry weather conditions in Australia. Despite the sharp share price decline, Deutsche still doesn’t appear to believe it is cheap enough to warrant an investment. Nor do I. I would suggest investors stay clear of Nufarm until there’s a big improvement in its performance.
Wesfarmers Ltd (ASX: WES)
Analysts at Citi have retained their sell rating and $43.50 price target on the conglomerate’s shares following yesterday’s update on the Coles demerger. Given its proposed payout ratio of between 90% and 90%, Citi believes that the Coles business may have to take on debt in order to fund dividends and capital expenditures including store refurbishments. The broker does, however, believe that Coles could operate a profitable online food shopping business if it is able to partner with Ocado. But that isn’t enough to make a change to its recommendation. While I’m not as negative on Wesfarmers as Citi is, I wouldn’t be a buyer unless there was a sizeable pullback in its share price.
While those three shares may be the ones to sell, these are the four shares tipped as buys right now.
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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. The Motley Fool Australia has recommended Coca-Cola Amatil 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.