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:
Afterpay Ltd (ASX: APT)
According to a note out of UBS, its analysts have retained their sell rating and $36.00 price target on this payments company’s shares. The broker notes that Commonwealth Bank of Australia (ASX: CBA) will soon be entering the buy now pay later market with its own offering. While the service is largely the same for consumers, it has a few key differences for merchants. One of those is that CBA won’t be charging any additional fees (outside standard merchant fees), whereas Afterpay takes a small cut from of each transaction. Furthermore, the bank will allow merchants to put a surcharge to cover the costs, but Afterpay does not allow this. UBS fears regulators could eventually remove the no surcharge rule. Outside this, UBS believes its shares are vastly overvalued. The Afterpay share price ended the week at $108.30.
Flight Centre Travel Group Ltd (ASX: FLT)
A note out of Morgan Stanley reveals that its analysts have downgraded this travel company’s shares to an underweight rating with a $17.50 price target. The broker made the move on valuation grounds after a strong run for its shares. And while it believes its earnings will improve materially once the pandemic passes, it isn’t enough for a more positive rating. Especially given how its shares are now trading at a higher level than before COVID, when adjusting for its capital raising. The Flight Centre share price was fetching $19.35 at Friday’s close.
Southern Cross Media Group Ltd (ASX: SXL)
Analysts at Morgan Stanley also have an underweight rating and $1.40 price target on this media company’s shares. According to the note, the broker suspects that its negotiations with Channel Ten over a new deal will not be as favourable and could put pressure on its earnings. In light of this, it appears to believe investors should stay away from the company until a deal is announced and understood. The Southern Cross Media share price ended the week at $1.99.
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More reading
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- How the Commonwealth Bank (ASX:CBA) share price moved this week
- Has CBA found its Afterpay-killer?
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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 AFTERPAY T FPO. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. 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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