On Monday I looked at three lucky shares that had found favour with brokers and been given buy ratings.
Today I thought I would look at the other side of the coin, at the shares that have fallen out of favour with brokers and been given the unwanted sell rating.
Three that caught my eye are listed below:
Medibank Private Ltd (ASX: MPL)
Analysts at Goldman Sachs have retained their sell rating and price target of $2.70 on the shares of this private health insurer. As well as expecting revenue growth to be hard to come by, the broker expects a tough gross margin outlook for Medibank. This is due to rate renegotiations in 2019 and an upcoming election which could put pressure on the industry. Goldman feels that a 2% rate hike cap could be on the horizon. I would suggest investors stay clear of Medibank until industry conditions improve.
Northern Star Resources Ltd (ASX: NST)
According to a note out of Deutsche Bank, its analysts have retained their sell rating but lifted the price target on the gold miner’s shares to $6.40. While the broker believes that its US$260 million acquisition of the Pogo gold mine in Alaska will be accretive to earnings, it hasn’t been enough to make it change its recommendation. While I think Northern Star is a top gold miner, as I’m bearish on the gold price I wouldn’t be a buyer at these levels.
TPG Telecom Ltd (ASX: TPM)
A note out of UBS reveals that its analysts have retained their sell rating but increased the price target on the telco company’s shares to $7.50. According to the note, while the broker expects its merger with Vodafone Australia to be highly accretive, it suspects that the market has got a little ahead of itself and has been pricing in excessive synergies. I agree with UBS on TPG Telecom. I think the merger is a great move, but the share price response has been overdone.
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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 TPG Telecom 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.