On Monday I looked at three shares that had found favour with brokers and been given buy ratings this week.
But not all shares are in favour right now. For example, the three shares listed below have been given sell ratings by brokers this week.
Here's why they are bearish on them:
Automotive Holdings Group Ltd (ASX: AHG)
According to a note out of Morgan Stanley, it has downgraded this automotive retailer to an underweight rating and slashed the price target on its shares to $1.55. The broker has made the move after reducing its earnings forecasts for the company on the back of lower growth expectations due to falling vehicle sales. Morgan Stanley believes that a decline in house prices will also lead to a meaningful decline in vehicle sales. I would agree with the broker on this one and think that investors ought to avoid Automotive Holdings.
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)
Analysts at UBS have retained their sell rating but lifted the price target on this medical device company's shares to NZ$12.40 (A$11.44). According to the note, the broker believes that there are downside risks for its shares that the market is ignoring. These include a weak U.S. flu season and legal issues. In addition to this, the broker sees the upcoming IPO of Vapotherm in the United States as a potential competitive threat. I would agree with UBS on Fisher & Paykel Healthcare and believe there are better options elsewhere in the sector.
ResMed Inc. (ASX: RMD)
A note out of the Macquarie equities desk reveals that it has retained its underperform rating but increased the price target on the sleep treatment company's shares to $13.50 following the release of its first quarter results. Although its results came in ahead of the broker's expectations, it is waiting for evidence that its growth trends are sustainable before making any changes to its long-term forecasts. While I think Macquarie makes a fair point, I'm confident in its long-term growth prospects and see ResMed as a buy.
