On Wednesday I looked at three shares that are currently in favour with brokers and been given the much-coveted buy rating.
Today I thought I would look at the unfortunate shares which are out of favour and been given sell ratings by brokers. Two that caught my eye are listed below:
National Australia Bank Ltd (ASX: NAB)
According to a note out of Morgan Stanley, it has retained its underweight rating and $26.40 price target on the banking giant's shares after it introduced a new and simplified executive remuneration framework. Morgan Stanley believes that this new framework is a sign that the banks will need to focus a lot of their energy on culture and conduct. As a result, it suspects that National Australia Bank could have to accept a reduction in its profitability in exchange for winning over customers. The broker continues to expect a 10% dividend cut to 178 cents per share by the bank in FY 2019. I think that Morgan Stanley makes some fair points here. And while I agree with its view on National Australia Bank, I think other banks are better placed and good investment options.
Synlait Milk Ltd (ASX: SM1)
A note out of Credit Suisse reveals that it has retained its underperform rating but raised the price target on the dairy processor's shares slightly to NZ$7.65 (A$7.00) following the release of its full year results on Wednesday. Synlait Milk posted an impressive 89% year-on-year increase in profit to NZ$74.6 million thanks to the strong demand for infant formula products it supplies for the likes of A2 Milk Company Ltd (ASX: A2M) and Akara. While the broker found a lot to like in its results release, it doesn't appear keen on its valuation given the expected slowdown in sales volume growth. I would have to agree with Credit Suisse on Synlait Milk. I thought its result was top notch, but I wouldn't be a buyer of its shares unless there was a meaningful pullback.
