S&P/ASX 200 Index (ASX: XJO) stocks are up 0.27% to 8,827.1 points on Wednesday.
The ASX 200 has slipped 1.6% since the start of what is traditionally a weaker month for the market.
On The Bull this week, experts have identified four ASX stocks that they say have overshot their fundamental value.
They are recommending selling these shares now.
Let's take a look.
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4 ASX stocks that have overshot: Experts
Wesfarmers Ltd (ASX: WES)
The Wesfarmers share price is $92.55 at the time of writing, up 0.28%.
The diversified conglomerate was among a small group of companies that announced special dividends last month.
Wesfarmers announced a final dividend of $1.11 and a special dividend of $1.50 per share alongside its FY25 results.
Christopher Watt from Bell Potter Securities has a sell rating on Wesfarmers shares due to the valuation.
He explains:
Despite owning strong brands, such as Bunnings and Kmart, the company was recently trading on a forward earnings multiple well in excess of its five-year average of about 26 times.
Analyst consensus has turned cautious, with a target price of $73.10.
The stock has enjoyed a stellar run, but, in our view, the earnings outlook doesn't justify the current valuation.
The market's largest ASX consumer discretionary stock hit an all-time high of $95.18 last month.
Droneshield Ltd (ASX: DRO)
The Droneshield share price is $3.13 at the time of writing, up 0.81%.
Droneshield is one of 9 stocks set to join the ASX 200 Index in the next rebalance, effective 22 September.
John Athanasiou of Red Leaf Securities has a sell rating on this ASX defence stock.
The expert says:
… DroneShield recently announced it wasn't selected as a systems integration partner (SIP) for the Australian Department of Defence LAND 156 contract, which we see as a significant setback.
The SIP contract, reported to be worth about $45 million, represented a key near term growth opportunity within the broader $1.3 billion program.
In our view, the SIP miss increases uncertainty over near-term revenue, compounded by valuation concerns and reliance on government programs.
DroneShield had previously won two contracts under the initial phase of the LAND 156 program.
Droneshield shares reached a record high of $4.39 apiece last month.
Sigma Healthcare Ltd (ASX: SIG)
The Sigma Healthcare share price is $3, down 0.83%.
A recent report showed that this ASX healthcare stock is among the most popular shares with self-managed superannuation investors.
Dylan Evans from Catapult Wealth has a sell rating on Sigma Healthcare shares following the company's FY25 results.
Evans comments:
The underlying Sigma business is solid, with a strong brand in Chemist Warehouse.
However, we struggle to justify the company's valuation.
Sigma trades at a significant premium to peers, despite operating in a highly competitive market.
Also, there may be near term pressure on the stock as escrow periods for the founders expire, allowing them to begin selling down…
Chemist Warehouse co-founder Jack Gance sold $480 million worth of Sigma Healthcare shares at the end of August.
The market's second-largest ASX healthcare stock has ascended 137% over the past year.
ASX Ltd (ASX: ASX)
The ASX share price is $61.03, down 0.29% on Wednesday.
The share market operator reported a 7.5% boost to underlying net profit after tax (NPAT) to $510 million for FY25.
Bell Potter's Christopher Watt has a sell rating on this ASX financial stock.
Watt explains:
The ASX faces rising cost pressures, with operating expenses forecast to increase between 14 per cent and 19 per cent in fiscal year 2026, partly due to ongoing investigations by the Australian Securities and Investments Commission (ASIC).
With limited catalysts, the stock appears expensive at this point, in our view.
