On Thursday I looked at three top shares that had been given buy ratings by brokers.
Today I thought I would look at the shares that have fallen out of favour with brokers and been given sell ratings. Here are three that caught my eye:
Automotive Holdings Group Ltd (ASX: AHG)
According to a note out of the Macquarie equities desk, its analysts have downgraded this automotive company’s shares to an underperform rating from neutral and slashed the price target on them to $2.00 from $2.50. The broker has made the move after data showed a reasonably sharp drop in the sale of new vehicles in Australia during the last quarter. Weakening demand from the private sector has caught the eye of its analysts and has been blamed on tighter credit conditions. As a result of this weakness, it fears Automotive Holdings could potentially fall short of expectations in FY 2019. I completely agree with Macquarie and think investors ought to stay well clear of its shares.
Bank of Queensland Limited (ASX: BOQ)
A note out of Goldman Sachs reveals that its analysts have downgraded the regional bank’s shares to a sell rating from neutral with a price target of $10.66 following the release of its full year results. Although the bank delivered a stronger than expected profit, the broker is concerned by the limited signs of a pick-up in mortgage momentum, non-interest income trending lower, and expense headwinds. In addition to this, the broker feels the bank’s payout ratio is becoming stretched. While I agree with a lot of what Goldman is saying, I wouldn’t be a seller of its shares if I already owned them.
SEEK Limited (ASX: SEK)
Analysts at Citi have retained their sell rating but lifted the price target on the job listings company’s shares to $16.90. According to the note, the broker believes that SEEK’s depth advertisement revenue growth will accelerate, but not enough to offset slower volume growth in its core business. Overall, Citi believes SEEK’s shares are expensive given its current growth prospects. Although I think Citi makes a great point, I remain confident that the company’s long-term growth potential justifies its shares trading at these levels. Though, it may be best to wait in hope of a pullback to pick up shares.
While those shares may have been named as sells, here is a top share that has been tipped as a buy.
Discover why this legendary Australian stock-picker just issued a “Double Down” buy alert to his exclusive group of insiders… and why he’s convinced this might be the single most attractive entry point for years to come.
Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended Automotive Holdings Group Limited and SEEK 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.