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:
Fortescue Metals Group Limited (ASX: FMG)
According to a note out of UBS, its analysts have downgraded this mining giant’s shares to a sell rating and cut the price target on them to $15.00. The broker made the move on the belief that iron ore prices will continue to fall in the coming months. UBS suspects that prices could fall to between US$70 and US$80 a tonne. This would weigh on Fortescue’s free cash flow and dividends. The Fortescue share price ended the week at $15.27.
Magellan Financial Group Ltd (ASX: MFG)
Another note out of UBS reveals that its analysts have downgraded this fund manager’s shares to a sell rating and cut the price target on them materially to $35.00. UBS notes that Fortescue is experiencing fund outflows at a time when its investment performance is lagging and pressure on its higher than average fees is growing. The Magellan share price was fetching $15.27 at Friday’s close.
Xero Limited (ASX: XRO)
Analysts at Macquarie have retained their underperform rating and $130.00 price target on this cloud accounting company’s shares. This follows news that rival Intuit is acquiring email marketing company Mailchimp. Macquarie is concerned that Intuit could remove Mailchimp from Xero’s ecosystem. If it does, it suspects that some subscribers may switch to Intuit’s Quickbooks in order to retain access to the app. In addition, it believes the acquisition strengthens Intuit’s offering and could support its global expansion. The Xero share price ended the week at $153.34.