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:
AGL Energy Limited (ASX: AGL)
According to a note out of UBS, its analysts have downgraded this energy retailer’s shares to a sell rating and cut the price target on them to $12.25. The broker believes that AGL is going to experience a sustained reduction in its earnings over the coming years. This is due to margin pressure from softening wholesale electricity prices and the push towards renewable energy. UBS notes that the majority of AGL’s electricity generation is powered by coal. The AGL share price ended the week at $13.22.
Commonwealth Bank of Australia (ASX: CBA)
A note out of Morgans reveals that its analysts have retained their reduce rating but lifted the price target on this banking giant’s shares to $64.00. According to the note, following the removal of dividend restrictions by APRA, the broker believes that Commonwealth Bank could increase its payout ratio to upwards of 75% over the coming years. While this would be a positive for dividend seekers, it isn’t enough for a change of rating. Morgans continues to believe its shares are overvalued and notes that other banks offer better value for money currently. The Commonwealth Bank share price was fetching $83.16 at Friday’s close.
Transurban Group (ASX: TCL)
Analysts at Citi have retained their sell rating and $12.83 price target on this toll road operator’s shares following an update last week. That update revealed that the company has sold a 50% stake in its Greater Washington assets to AustralianSuper and two other funds. While Citi sees positives in the move and expects it to reduce its leverage, it believes the reduction in earnings could put pressure on dividends until the funds are redeployed elsewhere. The Transurban share price ended the week at $14.15.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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