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 they are bearish on them:
Australian Pharmaceutical Industries Ltd (ASX: API)
According to a note out of Morgan Stanley, its analysts have retained their sell rating but lifted their price target slightly to $1.35. Australian Pharmaceutical Industries’ recent full year result fell short of the broker’s expectations. It notes that price deflation and higher costs continue to weigh on its Pharmacy profits. Morgan Stanley appears concerned that FY 2020 could be equally soft and retains its bearish rating. The Australian Pharmaceutical Industries share price is trading at $1.41 on Tuesday.
REA Group Limited (ASX: REA)
Analysts at Credit Suisse have downgraded this property listings company’s shares to an underperform rating and cut the price target on them to $90.00. According to the note, the broker feels REA Group’s shares are overvalued at the current level. Especially given its first quarter update, which saw the company post a 9% decline in revenue. And while it expects the second half to be stronger, it isn’t enough for a more positive rating. Credit Suisse also has concerns over its depth penetration. The REA Group share price is down 1% to $100.50 this afternoon.
Xero Limited (ASX: XRO)
A note out UBS reveals that its analysts have retained their sell rating but lifted the price target on this online accounting software provider’s shares to $59.00. According to the note, Xero’s first half result was largely in line with its expectations. It was particularly impressed with the growth in subscribers in the Australian market. It expects this trend to continue thanks to the Single Touch Payroll ATO compliance regulation. However, it holds firm with its sell rating on valuation grounds. The Xero share price is up at $76.44 this afternoon.
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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 Xero. The Motley Fool Australia has recommended REA Group 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.