Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were 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:
Ampol Ltd (ASX: ALD)
A note out of Goldman Sachs reveals that its analysts have retained their sell rating and $23.30 price target on this fuel retailer's shares. According to the note, the broker was surprised to see Ampol, formerly known as Caltex, announce a $300 million share buyback. Given the tough operating environment and its Lynton refinery closure, Goldman was expecting the company to delay any capital returns. While this is a positive for shareholders, it feels its shares are overvalued at the current level. Particularly given the growing capital intensity of the business, which it sees as a risk to capital return expectations in the future. The Ampol share price ended the week at $30.63.
Mesoblast limited (ASX: MSB)
According to a note out of Canaccord Genuity, its analysts have retained their sell rating but increased the price target on this biotechnology company's shares slightly to $1.68. This follows the announcement of a deal with global pharma giant Novartis which could be worth upwards of US$1.25 billion to Mesoblast in milestone payments. The broker appears to believe the company's shares are materially overvalued at the current level. The Mesoblast share price was fetching $4.07 at Friday's close.
Xero Limited (ASX: XRO)
Analysts at UBS have retained their sell rating and lowly $77.00 price target on this cloud-based business and accounting software platform provider's shares. According to the note, the broker was surprised with Xero's announcement of a US$700 million convertible notes offering last week. It believes this could be a sign that management is readying a major acquisition. Although this has the potential to be a positive, it continues to see its shares as expensive. The Xero share price ended the week at $133.76.
