On Thursday I looked at three ASX shares that brokers have given buy ratings to this week.
Unfortunately, not all shares have found favour with brokers and been given the coveted buy rating.
The three shares listed below have all been given the unwanted sell rating this week. Here's why:
A2 Milk Company Ltd (ASX: A2M)
According to a note out of Morgan Stanley, it has initiated coverage on this infant formula and dairy company's shares with an underweight rating and $9.60 price target. The broker believes that the market has been too bullish on a2 Milk's growth prospects. Its analysts estimate that the current share price implies a 9% share of the Chinese market in the next four years. Morgan Stanley doubts that this will be achieved given how competitive the Chinese infant formula market is.
Independence Group NL (ASX: IGO)
Analysts at Macquarie have downgraded this gold miner's shares to an underperform rating with a $3.80 price target following its recent update. According to the note, although Independence Group's production was better than it expected during the December quarter, the broker was disappointed with its profit result. Underlying EBITDA declined 2% during the first half to $130.5 million due to the absence of revenue from the Jaguar and Long Operations. And profit after tax fell 72% on the prior corresponding period to just $0.9 million, due to the lower EBITDA and higher depreciation and amortisation charges.
Westpac Banking Corp (ASX: WBC)
Another note out of Morgan Stanley reveals that its analysts have downgraded this banking giant's shares to an underweight rating with a $24.30 price target. According to the note, the broker is bearish on Westpac due to concerns about lower returns, heightened risk in the retail banking market, and its exposure to the end of the mortgage bull market. All in all, its analysts feel there is a real risk that the bank may have to cut its dividend in the near future.
