Insights

These are the latest ASX shares to be downgraded by brokers today

Our market may have bouncing from yesterday’s sell-off, but there are some ASX shares that are left behind after getting downgraded by leading brokers.
The post These are the latest ASX shares to be downgraded by brokers today appeared first on The Motley Fool Australia. –

broker downgrade ASX shares A woman holds her face and recoils in horror, indicating a share price drop

Our market may have bouncing from yesterday’s sell-off, but there are some ASX shares that are left behind after getting downgraded by leading brokers.

The S&P/ASX 200 Index (Index:^AXJO) jumped 0.5% in after lunch trade with most sectors apart from Energy gaining ground.

But the optimism failed to reach the A2 Milk Company Ltd (ASX: A2M) share price after Morgans cut its rating on its shares.

Left on the shelf

The broker did a channel check and doesn’t believe the milk products company’s sales have improved materially.

“E-commerce platform pricing in China doesn’t appear to be materially improving,” said Morgans.

“And in Australia we have noticed that the retailers and pharmacies are discounting stock to clear aging inventory.”

No use crying over spilt milk

The company’s other nutritional products that traditionally have strong appeal to Chinese consumers are also being discounted.

Worsening relations between Australia and China after the federal government revoked Victoria’s Belt and Road agreement with the Asian giant is fanning the flames of animosity.

Such tensions will only hurt ASX shares like A2 Milk who have an overdependence on the Chinese consumer.

Another profit downgrade could be on the cards

“We can’t rule out the possibility of a fourth downgrade from A2M,” added Morgans.

“To us, the fact that stock is being discounted, is slow to sell and is aging, would suggest that A2M has potentially a larger inventory issue than it has previously estimated.”

The broker downgraded the A2 Milk share price to “hold” from “add” with a 12-month price target of $8.34 a share.

The A2 Milk share price fell 1.2% to $7.62 at the time of writing.

Broker downgraded due to lack of upside

Another ASX share that lost favour with investors today is the Amcor CDI (ASX: AMC) share price.

The analysts at Macquarie Group Ltd (ASX: MQG) cut their recommendation on the packaging giant to “neutral” from “outperform” ahead of its quarterly result on 5 May.

“Raw materials are a key focus and have continued to push higher,” said the broker.

“AMC has baked some raw mat inflation into FY21 guidance, however costs have increased further, exacerbated by the US freeze in Feb.”

When good isn’t good enough

The good news is that rising costs shouldn’t be enough to stop Amcor from achieving its 10% to 14% earnings per share growth guidance.

However, Macquarie noted that inflation removes any chance of the group achieving a better-than-expected result.

No post-COVID kick

What’s more, the COVID-19 recovery trade isn’t expected to have any positive impact on the Amcor share price either.

Macquarie prefers backing stocks with greater cyclical recovery prospects.

The Amcor share price fell 0.4% to $15.18 in the last hour of trade. The broker’s 12-month price target on Amcor is $16.09 a share.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Motley Fool contributor Brendon Lau owns shares of Amcor CDI  and Macquarie Group Limited. The Motley Fool Australia owns shares of and has recommended A2 Milk, Amcor Limited, and Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post These are the latest ASX shares to be downgraded by brokers today appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!