With many brokers taking a well-deserved break after a busy year, last week was a quiet one for broker notes.
To fill the void, I have picked out three broker sell recommendations that have caught my eye this month.
Here's why leading brokers think investors should be selling these ASX shares when the market reopens:
A2 Milk Company Ltd (ASX: A2M)
According to a note out of Morgan Stanley, its analysts have retained their underweight rating and $10.80 price target on this infant formula and fresh milk company's shares. Although the broker acknowledges that recent industry data is pointing towards strong infant formula sales in September and October, it remains cautious on the second half of FY 2020. In fact, the broker is forecasting a sharp slowdown in Chinese label sales during the half. The a2 Milk Company share price last traded at $14.65.
Coca-Cola Amatil Ltd (ASX: CCL)
A note out of Citi reveals that its analysts have retained their sell rating and $9.70 price target on this beverage company's shares. According to the note, Citi believes there is downside risk to the company's earnings in FY 2021 from the possible introduction of a container deposit scheme in the Victorian market. It notes that the scheme had a negative impact on volumes in NSW and Queensland when it was introduced in those markets. The Coca-Cola Amatil share price closed the week at $11.28.
Magellan Financial Group Ltd (ASX: MFG)
Analysts at Goldman Sachs have retained their sell rating and $40.69 price target on this fund manager's shares. According to the note, although Magellan's FUM in November were tracking ahead of its estimates for the first half, it believes there is a risk to its performance fees. This follows a mildly negative relative performance for most key global equities products. In addition to this, Goldman believes its shares are expensive at 24x estimated full year earnings. Magellan's shares were changing hands at $59.47 on Friday.
