Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were quite bearish.
Three sells ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:
ASX Ltd (ASX: ASX)
According to a note out of Citi, its analysts have retained their sell rating but lifted the price target on this stock exchange operator’s shares to $67.00 following the release of its full year results. Whilst the broker was pleased with aspects of its result, such as its interest income and the announcement of a special dividend, it isn’t enough to make it change its mind on its sell rating. Citi continues to believe that ASX Ltd’s shares are overvalued at the current level. On Friday ASX Ltd’s shares closed the day 0.5% lower at $84.79, which means they are changing hands at a reasonably lofty 33x full year earnings.
Blackmores Limited (ASX: BKL)
Another note out of Citi reveals that its analysts have retained their sell rating and slashed the price target on this health supplements company’s shares by almost a quarter to $63.00 following the release of its full year results. According to the note, Blackmores’ result fell well short of Citi’s expectations. This was almost entirely down to its sales weakness in the China market, which has the broker worried. Citi expects further sales weakness in the first half of FY 2020 and appears to believe this will continue to weigh on its shares. Blackmores’ shares fell heavily last week, ending it at $66.91.
Newcrest Mining Limited (ASX: NCM)
Analysts at Goldman Sachs have a sell rating and $31.00 price target on this gold miner’s shares. According to the note, Newcrest fell 4% and 11% short of Goldman’s EBITDA and net profit after tax forecasts in FY 2019. And while its free cash flow was strong and above its estimates, it notes that this was due largely to favourable working capital movements. Finally, although Newcrest’s production guidance of 2,350-2,500koz was in line with its expectations, it isn’t enough for the broker to change its sell rating. It believes its shares are overvalued and better options are available to investors wanting exposure to gold. Newcrest’s shares last traded at $36.26.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. 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.
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