The latest ASX shares to be hit by a broker downgrade

We might be emerging from one of the best reporting seasons in history, but this hasn't brokers from downgrading ASX …

| More on:
ASX shares downgrade A young woman with tattoos puts both thumbs down and scrunches her face with the bad news.

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

We might be emerging from one of the best reporting seasons in history, but this hasn't brokers from downgrading ASX shares.

The S&P/ASX 200 Index (Index:^AXJO) gained 0.5% over the past month as several ASX shares posted record earnings and dividends.

But it isn't all good news for the Healius Ltd (ASX: HLS) share price. Even after the medical services group posted strong growth for FY21, Goldman Sachs downgraded the Healius share price to "neutral" from "buy".

ASX shares downgraded for lack of new surprises

This is largely because the broker reckons management has run out of rabbits to pull out its hat! Delivering positive surprises is key to driving outperformance for the Healius share price.

"Commentary that the base pathology business remains 'slightly up' in FY22 to date is encouraging, but is likely no longer sufficient to generate positive surprise," said Goldman.

"Meanwhile, the Imaging business is currently held back by ongoing lockdowns but also continues to lag peers."

How much is the Healius share price worth?

Sure, increased PCR testing for COVID-19 will bolster the company's bottom line, but that's arguably priced into the Healius share price, which is up around 65% since the start of the pandemic.

What's more, management has ruled out further corporate restructure in the near-term.

Goldman's 12-month price target on the Healius share price is $4.90 a share.

Too much of a good thing

Another to suffer a broker downgrade is the Mincor Resources NL (ASX: MCR) share price. The analysts at Macquarie Group Ltd (ASX: MQG) lowered its rating on the Mincor share price to "neutral" from "outperform".

The move comes even after the nickel miner announced two impressive exploration results at Golden Mile and Location 1.

"We believe Golden Mile has the potential to add tonnes to our five-year production scenario with Location 1 requiring more drilling to better define its potential," said Macquarie.

"MCR's share price is up ~40% since the beginning of July [vs index ASX 200 up 3%], equivalent to an increase in market capitalisation of +$170m.

"We believe this move largely captures the potential of the discoveries at this stage."

Downgraded ASX shares despite positive nickel outlook

Mincor's production ramp-up and costs assumptions are the key risks to the broker's forecasts for the miner.

Macquarie's 12-month price target on the Mincor share price is $1.40 a share.

But this doesn't mean the broker is turning bearish on nickel. If anything, the supply of the metal remained tight with only 273,000 tonnes of ferronickel imported to China in July.

This is against the backdrop of the global deficit and ramp-up of Indonesian stainless output.

Motley Fool contributor Brendon Lau owns shares of Macquarie Group Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

Male building supervisor wearing high vis vest and hard hat stands and smiles with his arms crossed at a building site
Broker Notes

1 ASX 300 stock just upgraded by brokers (and 2 downgraded)

Here's the latest ratings changes.

Read more »

a man in a business suite throws his arms open wide above his head and raises his face with his mouth open in celebration in front of a background of an illuminated board tracking stock market movements.
Broker Notes

Bell Potter names the best ASX 200 stocks to buy in November

These quality stocks are top picks in November according to the broker.

Read more »

A man sees some good news on his phone and gives a little cheer.
Broker Notes

2 ASX 300 shares to buy now for 50% to 80% returns

These shares could have big return potential according to brokers. Let's see what they are saying.

Read more »

Broker looking at the share price.
Broker Notes

3 ASX All Ords shares just got BIG upgrades from top brokers

Leading brokers believe these ASX All Ords stocks could fly higher into 2025.

Read more »

A financial expert or broker looks worried as he checks out a graph showing market volatility.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

A young man wearing a black and white striped t-shirt looks surprised.
Broker Notes

Up 45% in 2024! Can ResMed shares keep rising?

Is this high-flying stock destined to keep soaring? Let's see what one broker is saying.

Read more »

A miner stands in front oh an excavator at a mine site
Broker Notes

Broker says buy the dip on ASX 200 uranium share with 69% upside

Shaw and Partners says this ASX uranium stock is trading at an attractive price point right now.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Broker Notes

Bell Potter says these ASX stocks are top buys

Let's see why the broker is feeling so bullish on these names.

Read more »