2 ASX 200 shares I'm avoiding this week

I'm looking elsewhere instead.

| More on:
Three business people look stressed as they contemplate stacks of extra paperwork.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Magellan Financial Group (ASX: MFG): Recently posted a 31% drop in net profit after tax; divided analyst sentiment and target price swings create uncertainty, making it a cautious choice for investors.
  • Santos Ltd (ASX: STO): Facing pressures from an energy transition and recent FY25 guidance downgrade; the withdrawal of a takeover bid and CFO resignation add to concerns over stability and growth prospects.
  • Both stocks illustrate heightened risk amid recent ASX 200 downturn post-inflation data, with uncertain future performance making them less attractive in the current environment.

The S&P/ASX 200 (ASX: XJO) index closed 0.96% lower on Wednesday, at 8,926.20 points, after the latest inflation data spooked the market.

The slump will likely be just temporary for some companies on the index. But for others with lower growth prospects, it could spark a share price downturn.

Here are 2 ASX 200 shares I'm avoiding this week.

Magellan Financial Group Ltd (ASX: MFG)

Magellan Financial shares closed the day in the red on Wednesday, down 1.39% at $9.94 per share. The issue is that after recovering 54.11% from an 18-month low in April this year, I'm not sure there is much more room for the stock to run. The shares are now 8.72% lower than this time last year.

The Australian-based funds manager revealed its group earnings earlier this month. It announced an increase in total assets under management (AUM) to $40.2 billion. But the recent increase in AUM isn't enough to convince investors and analysts that the share price might start climbing higher.

This comes after the fund manager's fiscal year results. It showed operating profit was 5% higher, but its net profit after tax was down a significant 31%. 

TradingView data shows that analysts are completely divided about the stock too. 

Out of 9 analysts, 6 have a hold rating on the stock and 2 have a sell rating. The maximum target price is $12.20 but the minimum is $7.85. This represents anything from a potential upside of 22.74% to a potential downside of 21.03%. That's a significant swing and enough to make me stay clear for now.

Santos Ltd (ASX: STO)

Santos shares closed 0.16% higher at $6.33 per share, at the close of the ASX on Wednesday. The ASX 200 share price has recovered 15.1% from an all-time low in April but it is still 7.86% lower than this time last year.

As an oil and gas producer, Santos is heavily exposed to risks around the transition to cleaner energy, tariffs and regulatory issues. The company released its quarterly update in mid-October which revealed a FY25 guidance downgrade. 

Meanwhile, a XRG consortium takeover bid was withdrawn in September, just days before the expected decision date. This has raised concerns about Santos' prospects as a standalone business. 

MPC Markets' Jonathan Tacadena (courtesy of The Bull) recently called time on the shares too. He said that the announced resignation of the company's Chief Financial Officer in mid-October adds to instability. He added that in the absence of another takeover bid amid potentially weaker energy prices, the company's shares could remain under pressure.

TradingView data shows that analysts are divided about the stock too. Out of 16 analysts, 2 have a sell rating, 3 have a hold rating, 5 have a buy rating and 6 have a strong buy rating. Like with Magellan shares, the ranges of target prices also makes me unconfirmable here too. 

Analysts expect the share price to be anything between $8.87 and $6.10 over the next 12 months. This represents anything from a 40.12% upside to a 3.69% downside. 

Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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 Scott Phillips.

More on Opinions

St Barbara share price Minder underground looks excited a he holds a nugget of gold he has discovered.
Gold

ASX gold shares: One I'd buy and one I'd avoid

These are the gold miners I have my eye on right now.

Read more »

Three happy office workers cheer as they read about good financial news on a laptop.
Opinions

3 ASX stocks every Aussie investor should consider in 2026

These are my top picks!

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

3 top ASX dividend share buys for passive income in February

Looking for passive income? These look like good buys right now.

Read more »

Woman with an amazed expression has her hands and arms out with a laptop in front of her.
Opinions

VAS and IVV: 3 reasons these two ASX ETFs belong in a long-term portfolio

Here's why I think these shares are a no-brainer.

Read more »

A young girl looks up and balances a pencil on her nose, while thinking about a decision she has to make.
Opinions

Should I sell my CBA shares in 2026?

What's next for the banking giant this year?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Opinions

Here's my buy list if the stock market crashes in 2026

If stocks go down this year, I'll be ready.

Read more »

Five happy young friends on the coast, dabbing and raising their arms in the air.
Opinions

Top Australian shares to buy right now with $2,000

Here are my five favourites.

Read more »

Hand of a woman carrying a bag of money, representing the concept of saving money or earning dividends.
Dividend Investing

3 wonderful ASX dividend shares I'd buy with $3,000 right now

I’d call these stocks wonderful buys for passive income.

Read more »