The S&P/ASX 200 Index (ASX: XJO) is down around 0.2% at the time of writing on Tuesday afternoon as investors digest the latest interest rate hold decision by the Reserve Bank.
But when market sentiment looks rocky, it's important to know which ASX 200 shares could drag down the index further.
Here are 4 ASX 200 shares that brokers rate as sells, and some are tipped to fall by up to 44% over the next 12 months.
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Commonwealth Bank of Australia (ASX: CBA)
CBA shares are down around 0.5% on Tuesday afternoon, to $160.99 a piece. The ASX 200 banking giant's shares dropped 14% in mid-May after it posted a disappointing third-quarter capital update, and investor sentiment has been volatile ever since. Even despite the lower-than-expected financial result, the banking giant still seems to be supported by a flight to quality. But brokers aren't convinced. With ongoing earnings pressures and expectations of single-digit growth going forward, the experts still see CBA shares as significantly overvalued at the current price. TradingView data shows that the majority of analysts have a sell or strong sell rating (14 out of 16). They tip a potential 44% downside to a minimum target price of $90, at the time of writing.
Westpac Banking Corp (ASX: WBC)
Westpac is another ASX 200 bank stock in the spotlight this week. Its shares are also down around 0.3% at the time of writing, to $35.22 each. Westpac posted a solid first-half result in early May, but sentiment remains low, and broad bank-sector weakness has pulled the shares lower. The bank's shares came under even more selling pressure last month after a court ruling weighed on sentiment. Brokers now consider Westpac shares as overvalued. The majority (nine out of 16) have a sell or strong sell rating on the shares. The minimum $29.41 target price implies the shares have the potential to fall another 16% over the next 12 months, at the time of writing.
Wesfarmers Ltd (ASX: WES)
Wesfarmers shares are down around 2% at the time of writing on Tuesday, to $84.86 a piece. The dip follows a huge 21% rally over the past month. But it looks like many think the shares are now above fair price. The Bunnings and Kmart owner held a strategy day last week, but there was no clear trading update. Analysts are concerned that there are no near-term catalysts that could see the stock charge higher. TradingView data shows analysts are divided about the outlook for Wesfarmers shares. The majority still have a hold rating, but several (four out of 14) now rate Wesfarmers a strong sell. What they do agree on, however, is that there is a downside ahead. The minimum $65.10 target price implies Wesfarmers shares could fall around 23% over the next 12 months, at the time of writing.
Fortescue Ltd (ASX: FMG)
Fortescue shares are slightly lower on Tuesday afternoon, down around 0.1% to $20.79 each. The ASX 200 iron ore miner has had a volatile run this year. Its shares have fluctuated between $18.96 and $22.99 each. The issue is that the company is heavily exposed to the price of iron ore, which has also swung wildly over the past 12 months. Iron ore has also faced margin pressure from tightening Chinese steel mill profitability standards. It looks like analysts are concerned that the outlook for Fortescue is just as uncertain as the past 12 months. TradingView data shows the experts are split between a hold and a sell/strong sell rating. Unsurprisingly, the target prices also vary wildly. The minimum $16.16 target price implies a potential downside of up to 22%, at the time of writing.
