Top brokers name 3 ASX shares to sell next week

Top brokers have named Zip Co Ltd (ASX:Z1P) and these ASX shares as sells for next week. Here’s why they are bearish…

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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:

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

According to a note out of UBS, its analysts have retained their sell rating and trimmed their price target on this medical device company’s shares to NZ$22.65 (A$21.34). This follows the release of the company’s full year results last week. Although the company delivered very strong profit growth, it still fell short of the broker’s expectations. In addition to this, although management has not provided guidance for FY 2022, UBS is expecting a sharp decline in earnings due to COVID-19 tailwinds ending. Overall, it feels this makes the company’s shares overvalued. The Fisher & Paykel Healthcare share price ended the week at A$27.47.

Magellan Financial Group Ltd (ASX: MFG)

A note out of Morgan Stanley reveals that its analysts have retained their underweight rating and $39.60 price target on this fund manager’s shares. Morgan Stanley has been looking at the company’s new retirement income product. While it believes the FuturePay product has a lot of potential and could support fund inflows, it will be capital intensive. In addition, it notes that the company’s active ETFs are experiencing fund outflows. The Magellan share price was fetching $48.30 at the end of the week.

Zip Co Ltd (ASX: Z1P)

Analysts at UBS have retained their sell rating and cut their price target on this buy now pay later provider’s shares to $5.60. According to the note, the broker has made its move on the belief that Zip’s margins are under threat from increasing competition in the United States. This would be a disappointment given the higher margins its QuadPay business enjoys. It also suspects that a major US bank could enter the market in the future like Commonwealth Bank of Australia (ASX: CBA) has in Australia. The Zip share price ended the week at $7.19.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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