On Monday I looked at three ASX shares that have been given buy ratings by leading brokers this week.
Unfortunately, not all shares are in favour with brokers right now. The three shares listed below have all just been given sell ratings. Here’s why:
Cochlear Limited (ASX: COH)
According to a note out of the Macquarie equities desk, its analysts have retained their underperform rating and reduced the price target on this hearing solutions company’s shares to $166.00. Macquarie remains bearish on Cochlear due to the premium that its shares are currently trading at and the risk to its earnings from increased competition. Based on Macquarie’s forecasts, Cochlear’s shares are currently changing hands at ~43x full year earnings and ~39x FY 2020 earnings. Its analysts don’t believe its current growth profile justifies this premium. The Cochlear share price is up slightly to $197.88 today.
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)
A note out of Credit Suisse reveals that its analysts have retained their underperform rating and NZ$13.15 (A$12.44) price target on this medical device company’s shares following the release of its full year results. According to the note, Fisher & Paykel Healthcare’s results were in line with its expectations, but this wasn’t enough for the broker to change its recommendation. Credit Suisse has previously suggested that its shares are expensive after a strong share price rally. The Fisher & Paykel Healthcare share price is currently trading almost 5% lower at $14.57.
Reject Shop Ltd (ASX: TRS)
Analysts at Goldman Sachs have downgraded this discount retailer’s shares to a sell rating and slashed the price target on them by 34% to a lowly $1.55. According to the note, the broker made the move in response to last week’s guidance downgrade. Goldman believes that earnings visibility remains weak and has concerns over the competitive landscape due to much larger-scale retailers continuing to pressure its gross margins. Unfortunately, the broker doesn’t expect these headwinds to ease over the near term. The Reject Shop share price is trading flat at $2.08.
James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. 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.