On Monday I looked at three ASX shares that brokers have given buy ratings to this week.
Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below.
Here’s why these brokers are bearish on these ASX shares:
Afterpay Ltd (ASX: APT)
According to a note out of UBS, its analysts have retained their sell rating but lifted their price target on this payments company’s shares to $27.00. This follows the announcement of its expansion into mainland Europe through the acquisition of Spanish buy now pay later provider Pagantis. It notes that this is consistent with its strategy and gives it the regulatory structure required for operating in the European Union. Nevertheless, UBS remains bearish on Afterpay and continues to believe it is vastly overvalued. It feels it should be valued on much lower multiples as an unsecured consumer lending business. Clearly the market doesn’t agree with UBS. Earlier today the Afterpay share price climbed to a new record high of $89.27.
ASX Ltd (ASX: ASX)
Analysts at Morgans have retained their reduce rating but increased the price target on this stock exchange operator’s shares to $77.08. According to the note, ASX Ltd delivered a full year profit that fell a touch short of the broker’s expectations. This was driven largely by higher than expected expense growth because of the pandemic. In light of this, it sees no reason to change its rating any time soon. It continues to believe its shares are expensive relative to its earnings growth profile. The ASX share price is trading at $89.34 this afternoon.
Fortescue Metals Group Limited (ASX: FMG)
A note out of Credit Suisse reveals that its analysts have downgraded this iron ore producer’s shares to an underperform rating with an improved price target of $15.00. According to the note, the broker was pleased with Fortescue’s performance in FY 2020 and particularly its final dividend. However, it isn’t enough to stop the broker downgrading its shares on valuation grounds. It feels the iron ore price could be close to its top and suspects Fortescue’s earnings could soon peak. The Fortescue share price is changing hands for $18.58 on Tuesday afternoon.
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More reading
- This rising sentiment is spurring the share market’s bull run
- Why Afterpay, BINGO, Scentre, & Westpac shares are charging higher
- Why the Xero share price can crack $100 per share in 2020
- 3 ASX shares that could give investors a stock split in 2020
- ASX 200 rises 0.3%, Afterpay up on European plans
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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