S&P/ASX 200 Index (ASX: XJO) shares are 0.8% lower at 8,968.4 points on Thursday.
Brokers have reduced their ratings on several ASX 200 shares this week.
Let's take a look at some of them.
Wesfarmers Ltd (ASX: WES)
The Wesfarmers share price is $88.88, down 1.9% today and up 5% over 12 months.
Jefferies downgraded Wesfarmers shares to a hold rating after the conglomerate said it and joint-venture partner SQM would expand their Mt Holland lithium mine.
Wesfarmers said it expected to chip in between A$645 million and A$715 million in capex funded from existing cash and debt.
Jefferies analyst Michael Simotas said:
With significant uncertainty and volatility in lithium prices, it is unclear whether Wesfarmers will generate an acceptable return on its circa A$3 billion total project investment.
But the expansion plan carries less operating risk given it won't expand refinery capacity and the first concentrator has been successful.
The broker has a 12-month price target of $73, implying an 18% downside from here.
Challenger Ltd (ASX: CGF)
The Challenger share price is $9.74, down 3.6% today and up 19% over 12 months.
UBS downgraded the ASX 200 financial share to a hold rating yesterday.
The broker raised its price target slightly to $11.30.
This implies a potential 16% upside ahead.
Nick Scali Ltd (ASX: NCK)
The Nick Scali share price is $16.14, down 1.3% today and down 16% over 12 months.
Ord Minnett downgraded the ASX 200 consumer discretionary share from hold to lighten.
The broker said:
In its dominant Australian market, changes to negative gearing and the taxation of capital gains in the May federal budget drove a slump in auction clearance rates and caused housing prices to stumble.
These factors point to reduced housing turnover, a key factor in discretionary purchases of goods such as furniture.
The broker lowered its target price on Nick Scali shares to $14 from $15.
This suggests a potential 13% downside over the next year.
Xero Ltd (ASX: XRO)
The Xero share price is $70.92, up 0.6% today and down 61% over 12 months.
RBC Capital downgraded the market's biggest ASX 200 tech share to a hold rating on Monday.
The broker slashed its 12-month price target from $130 to $85.
This still implies a healthy potential 20% upside ahead.
Karoon Energy Ltd (ASX: KAR)
The Karoon Energy share price is $1.75, down 0.6% today and down 8% over 12 months.
Morgans downgraded the ASX 200 energy share from a buy to a hold call this week.
The broker shaved its price target from $1.77 to $1.75, implying the stock is already fully valued.
Morgans said:
KAR's June quarter delivered what we argued for when we upgraded a month ago.
Bauna is repaired and running at ~22,000 bopd, the heavy intervention spend is sunk, and we have 2H26 swinging to ~US$100m of free cash flow, a ~US$220m turnaround on the first half.
The problem is the share price got there first. KAR has added 20% since we wrote on 29 June, closing almost all of the gap to our valuation, while the portfolio risk has migrated from Brazil to the Gulf of Mexico.
At a price of A$1.71, vs a A$1.75 target, we see the value opportunity as having largely closed.
Sandfire Resources Ltd (ASX: SFR)
The Sandfire Resources share price is $18.81, up 1% today and up 69% over 12 months.
JP Morgan downgraded the ASX 200 copper share to a hold rating this week.
The broker has a 12-month price target of $19.
This indicates a potential rise of only 1% over the next year.
The post Downgrade alert! 6 ASX 200 shares marked down by experts this week appeared first on The Motley Fool Australia.
JPMorgan Chase is an advertising partner of Motley Fool Money. Motley Fool contributor Bronwyn Allen 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 JPMorgan Chase, Jefferies Financial Group, Wesfarmers, and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended Challenger, Nick Scali, and Wesfarmers. 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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