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 sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:
A2 Milk Company Ltd (ASX: A2M)
According to a note out of Citi, its analysts have downgraded this infant formula and fresh milk company’s shares to a sell rating and slashed the price target on them to $12.20. The broker made the move due to concerns that margin pressures will weigh on its earnings growth. Citi fears that a2 Milk Company’s future growth will require increased investment due to growing competition. It also has concerns over the daigou channel and doesn’t see this as being a key growth driver anymore. The a2 Milk Company share price ended the week at $12.16.
Newcrest Mining Limited (ASX: NCM)
A note out of the Macquarie equites desk reveals that its analysts have downgraded this gold miner’s shares to an underperform rating from neutral with a $35.00 price target. According to the note, the broker made the move on valuation grounds after a strong share price gain in recent months. Based on the broker’s forecast for FY 2020, Newcrest’s shares are currently changing hands at 28x forward earnings. Newcrest shares are currently trading at $35.08.
Premier Investments Limited (ASX: PMV)
Another note out of Citi reveals that its analysts have downgraded this retail company’s shares to a sell rating from neutral but lifted the price target on them slightly to $16.80. According to the note, the broker notes that the company’s shares are trading at a notable premium to other discretionary retailers and appears to believe they are overvalued. Especially given its view that sales momentum will start to slow during the latter part of FY 2020. The Premier Investments share price last traded at $19.60.
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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 Premier Investments Limited. The Motley Fool Australia owns shares of A2 Milk. 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.