On Monday I looked at three top shares that brokers had named as buys this week.
Unfortunately, not all shares are in favour with brokers right now. Three that have been given sell ratings this week are listed below.
Here’s why they are out of favour with brokers:
Ainsworth Game Technology Limited (ASX: AGI)
A note out of the Macquarie equities desk reveals that its analysts have downgraded this gaming technology company’s shares to an underperform rating from neutral and reduced the price target on them to a lowly 75 cents. According to the note, the guidance that the company provided last week was significantly lower than what the broker had been expecting. This was especially disappointing as the broker’s estimate was already notably lower than the consensus estimate. And while its analysts believe that the company’s increasing R&D spend is a positive, it suspects that it will take some time before it makes a positive impact on its financial performance.
Auckland International Airport Limited (ASX: AIA)
According to a note out of Goldman Sachs, it has retained its sell rating and NZ$6.58 (A$6.18) price target on this airport operator’s shares. The broker made the move after Auckland International Airport revealed passenger numbers that are trending below its expectations. And while Goldman expects volumes to remain positive over the long-term due to increasing tourism from Asia, the broker is wary of the constraints on the group’s cash flows under its current investment plan. This is because the “proposed development pipeline remains exposed to rising construction inflation and timing delays, due to the tight availability of sub-contractors in New Zealand.”
Coles Group Limited (ASX: COL)
A note out of UBS reveals that its analysts have initiated coverage on the newly listed supermarket giant with a sell rating and $11.90 price target. Although UBS thinks Coles is a good business, it believes it is facing headwinds in the short term. These include slowing sales growth following the Little Shop promotion, increasing costs from wage inflation, and tough market conditions in the convenience segment. The broker is a little more positive on its longer term outlook, but not enough to justify a positive recommendation at this point.
While those may be the shares to sell, here are shares that have just been rated as buys.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.