On Wednesday I looked through countless broker notes to find three buy ratings that I felt stood out.
Today I thought I would do the same for sell ratings. Here are three shares tipped as sells by broker this week:
A2 Milk Company Ltd (ASX: A2M)
Analysts at Citi have retained their sell rating but lifted the price target on the infant formula and dairy company's shares to $9.65 despite its strong full-year results. According to the note, the broker has concerns over excess inventory in the daigou channels and believes this will become apparent when the company reports its first-half results next year. Citi expects this inventory build-up to lead to slowing sales. If Citi is correct with the inventory build-up then I believe investors should be concerned. However, I'm giving the company the benefit of the doubt for now until the potential build-up is visible.
Altium Limited (ASX: ALU)
According to a note out of Ord Minnett, it has retained its sell rating but increased the price target on this tech star's shares to $17.70 following the release of its results late on Tuesday. Although Altium's results came in ahead of the broker's expectations and management has confirmed that it expects to hit its 2020 targets, the broker isn't a fan of its valuation. Ord Minnett expects Altium to deliver earnings per share of 37.3 cents in FY 2019, meaning its shares are priced at 78x forward earnings. This isn't a good enough risk/reward for the broker. I think that its analysts make a valid point and taking a little bit of profit off the table might be prudent after such an incredible gain this week. But I would be very surprised if its shares fell as low as the broker's price target.
Asaleo Care Ltd (ASX: AHY)
A note out of Citi reveals that its analysts have retained their sell rating and reduced the price target on the personal care products company's shares to 65 cents. The broker didn't appear to be overly impressed with Asaleo Care's first half results and fears higher pulp prices could weigh on its performance. The market doesn't seem to agree with this view, though, Asaleo Care's shares are up significantly since the release of its results. I'd class it as a hold for now.
