Yesterday we looked at three ASX shares brokers have given buy ratings to this week.
Unfortunately, not all shares are in favour with brokers right now. Three that have just been given sell ratings are listed below. Here’s why these brokers are bearish on these ASX shares:
Fortescue Metals Group Limited (ASX: FMG)
According to a note out of Goldman Sachs, its analysts have retained their sell rating and trimmed their price target on this mining giant’s shares to $14.90. Although Fortescue outperformed Goldman’s estimates with its record third quarter shipments, it wasn’t enough for a change of rating. The broker continues to have issues with its valuation and believes its premium to fellow large cap miners is unwarranted considering the lack of diversification and risks around future capital spend and returns. The Fortescue share price was trading at $20.61 on Tuesday.
Kogan.com Ltd (ASX: KGN)
A note out of Credit Suisse reveals that its analysts have downgraded this ecommerce company’s shares to an underperform rating and slashed the price target on them to $3.75. Credit Suisse was disappointed with Kogan’s quarterly update and notes that its sales fell well short of its expectations during the period. And with inventory and costs high, the broker has concerns over its profits and also its cash flows. The Kogan share price has now dropped below this price target to $3.73.
Zip Co Ltd (ASX: ZIP)
Analysts at UBS have retained their sell rating and cut their price target on this buy now pay later provider’s shares to a lowly 90 cents. This follows the release of Zip’s third quarter update. While that update revealed solid growth in absolute terms, it was still well short of UBS’ second half growth forecasts. In addition, the broker highlights Zip’s softening transaction frequency and suspects that its active customers includes inactive customers that will soon drop off. The Zip share price was trading at $1.16 on Tuesday afternoon.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Kogan.com ltd and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Kogan.com ltd. 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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