Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.
Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:
Pilbara Minerals Ltd (ASX: PLS)
According to a note out of Citi, its analysts have retained their sell rating and 32 cents price target on this lithium miner’s shares. Pilbara Minerals’ full year result fell a touch short of Citi’s expectations in FY 2020. Unfortunately, it doesn’t think that there will be a meaningful improvement in its performance in the near term due to soft market conditions which are weighing on lithium prices. The Pilbara Minerals share price ended the week at 34 cents.
Pointsbet Holdings Ltd (ASX: PBH)
Analysts at Credit Suisse have downgraded this sports betting company’s shares to an underperform rating with a $6.50 price target. This follows the announcement of a major deal with NBC Universal. The broker appears concerned that the committed marketing spend involved with the deal will mean it takes some time for the company to generate earnings in the United States. In addition to this, with its shares notably higher than the broker’s valuation following some very strong gains in recent months, a downgrade to its rating was inevitable. The PointsBet share price was changing hands for $13.69 on Friday.
Zip Co Ltd (ASX: Z1P)
Another note out of Citi reveals that its analysts have downgraded this buy now pay later provider’s shares to a sell rating with a $6.70 price target. It made the move partly on valuation grounds and also on concerns over the entry of PayPal into the U.S. buy now pay later market with its Pay in 4 offering. It appears to believe that Zip’s QuadPay business could have a battle on its hands in the lucrative market due to the increasing competition. The Zip share price ended the week at $6.76.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd and ZIPCOLTD FPO. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. 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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