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The latest ASX stocks to be downgraded by top brokers today

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The S&P/ASX 200 Index (Index:^AXJO) running out of puff with the big banks like the National Australia Bank Ltd. (ASX: NAB) share price giving up their morning gains.

But there are others that could be facing some pressure after these leading brokers downgraded their recommendations on these ASX stocks today.

Weakening platforms

The Hub24 Ltd (ASX: HUB) share price and Netwealth Group Ltd (ASX: NWL) share price took a hit today after Credit Suisse cut its rating on both.

The HUB share price tumbled 1.3% to $18.66 while the NWL share price slumped 7% to $8.82 at the time of writing.

The broker was reviewing the latest industry data for ASX-listed wealth platforms, which saw the industry record its second consecutive quarter of capital inflows in the three months to March.

Good times can’t last

“We expect the inflows to be short-lived with the impact of COVID-19 to result in outflows in the typically seasonally stronger June quarter due to superannuation withdrawals and lower contributions,” said Credit Suisse.

“NWL/HUB remained leaders on net flows, capturing an outsized share from the major institutional platforms who generally remained in outflow.

“While NWL/HUB are benefiting from switching, we expect switching to temporarily slow in the June quarter as COVID-19 diverts advisers’ attention to servicing clients.”

Both stocks have also outperformed in recent months and the broker believes consensus expectations may be too lofty.

Credit Suisse lowered its recommendation on HUB24 to “neutral” from “outperform” and Netwealth to “underperform” from “neutral”.

Singing out of key

Meanwhile, UBS cut its rating on the Chorus Ltd (ASX: CNU) share price to “sell” from “neutral”. The NZ and ASX-listed telco outperformed through the coronavirus pandemic as investors sheltered under its relatively defensive earnings and dividends.

But there’s too much optimism priced into the stock and the broker warns that the company could be cutting its dividend.

Bad news-flow

“CNU benefits from being a COVID-19 defensive but share price assumes ‘more for more’ with implied cumulative over-recovery of ~$2bn and implied retail prices over $100 which most consumers can’t afford,” said UBS.

“Our catalyst tracker expects neutral/negative news over the next 12 months (regulation, dividend policy & 5G launches).”

The broker is forecasting around a 10% drop in Chorus’ long run dividend to NZ55 cents a share from NZ60 cents a share.

UBS’ 12-month price target on the NZ stock is NZ$6.75 a share.

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Brendon Lau owns shares of National Australia Bank Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia owns shares of Netwealth. The Motley Fool Australia has recommended Hub24 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.

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