On Wednesday I looked at three ASX shares that are in favour with brokers and have been given buy ratings this week.
Unfortunately, not all shares are in favour with brokers right now.
The three shares listed below are all out of favour and have 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, its analysts have retained their underweight rating but increased the price target on this infant formula and dairy company's shares to $10.50. While a2 Milk's first half result came in ahead of the broker's expectations on Wednesday, its analysts have pointed out that daigou sellers were a significant driver of this growth. But it doesn't expect this to be sustainable and thus appears concerned by the quality of its earnings. The a2 Milk share price is currently trading notably higher at $14.21.
Domino's Pizza Enterprises Ltd (ASX: DMP)
Analysts at Deutsche Bank have retained their sell rating and cut the price target on this pizza chain operator's shares to $35.00 following the release of its disappointing half year result. According to the note, the broker is concerned that Domino's operational margin fell for the first time in almost a decade and appears worried that this may not be a one off. In addition to this, Deutsche believes that its current valuation does not offer a compelling enough risk/reward considering the risks facing its business. The Domino's share price is currently trading at $43.79.
Fortescue Metals Group Limited (ASX: FMG)
A note out of Morgans reveals that its analysts have held firm with their reduce rating but increased the price target on the iron ore producer's shares ever so slightly to $5.50 after the release of a strong half year result. According to the note, Fortescue outperformed the broker's expectations in the first half and expects more of the same in the second half thanks to favourable iron ore prices. However, it believes this has already been priced in and has decided to hold firm with its reduce rating. The Fortescue share price is currently trading at $6.54.
