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Leading brokers name 3 ASX shares to sell

James Mickleboro

Earlier this morning I revealed that Goldman Sachs had placed buy ratings on mining giants BHP Billiton Limited (ASX: BHP) and South32 Ltd (ASX: S32).

This afternoon I thought I would take a look at shares that have fallen out of favour with brokers and been given sell ratings.

Three which caught my eye are listed below. Here’s why they are tipped to sink lower by brokers:

Ansell Limited (ASX: ANN)

According to a note out of Credit Suisse, its analysts have retained their underperform rating on the personal care products company’s shares. Its analysts have, however, raised their price target from $21.75 to $23.60. The broker has made the move after positive trends suggest that Ansell may have been successful at passing on price increases to offset higher raw material costs. However, it isn’t enough for a change of rating and Credit Suisse believes its shares are still overvalued. I would agree with Credit Suisse on Ansell and think there are better options in the sector.

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

A note out of UBS reveals that its analysts have retained their sell rating on the medical device company’s shares despite them falling significantly from their 52-week high. The broker has a price target of NZ$11.65 (A$11.02) on its shares. Its analysts have pointed to the premium that its shares trade at over its peers, potential U.S. import tariffs, and a lack of new sleep apnoea products out of the company for reasons why it could underperform. I think UBS is spot on with this one and would suggest investors consider rival RedMed Inc (ASX: RMD) instead.

Wesfarmers Ltd (ASX: WES)

Analysts at Morgan Stanley have retained their underweight rating and $39.00 price target on the conglomerate in response to speculation that it has acquired a stake in Fletcher Building Limited (ASX: FBU) with a view to acquiring it. The broker does see positives from a potential deal as there are overlaps between its Bunnings business and Fletcher Building in the New Zealand home improvement market. However, no change has been made to its rating as it is only speculation at this stage. While I don’t think Wesfarmers is necessarily a buy at this point, I am a little more bullish on it than Morgan Stanley and would consider it to be a hold.

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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 and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Ansell Ltd. and ResMed Inc. 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.