On Monday I looked at a few shares that leading brokers had declared as buys this week.
Today I thought I would look at the shares that are out of favour with brokers and been given sell ratings.
Three that caught my eye are listed below. Here’s why they have been tipped as sells:
Bendigo and Adelaide Bank Ltd (ASX: BEN)
According to a note out of Morgan Stanley, it has held firm with its underweight rating and $10.10 price target on this regional bank’s shares following yesterday’s results release. Although the broker acknowledges that its result was strong and ahead of its expectations, it isn’t overly confident on its growth prospects due to strong competition in mortgages and pressure on its fee income. Furthermore, with no cost program in place, the broker doesn’t expect to see improvements in its costs. While I wouldn’t be a seller if I owned shares, I wouldn’t be a buyer unless there was a pullback in its share price.
Domino’s Pizza Enterprises Ltd (ASX: DMP)
A note out of Citi reveals that it has maintained its sell rating and $46.30 price target on the pizza chain operator’s shares following today’s results release. Although Domino’s missed on its bottom line growth, this was largely expected by the broker and the market. The real disappointment for Citi was its soft guidance and trading update for FY 2019. While I agree that the result was a disappointment, I am far more likely to be a buyer of its shares than a seller after today’s decline. Though, I would suggest only doing so if you are prepared to hold on for the long-term.
JB Hi-Fi Limited (ASX: JBH)
Another note out of Citi reveals that its analysts have retained their sell rating but increased the price target on this retailer’s shares to $21.30 after its FY 2018 results were in line with its expectations. While the broker appears impressed with the solid performance of the JB Hi-Fi Australia business in FY 2018, it doesn’t seem convinced that this will last. Furthermore, the broker has concerns over margin pressures for its The Good Guys business and expects this to result in overall margin weakness in the first-half of FY 2019. I would have to agree with Citi on this one and think investors ought to stay clear of JB Hi-Fi.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Domino's Pizza Enterprises 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.