Unfortunately for its shareholders, the Mantra Group Ltd (ASX: MTR) share price has been one of the worst performers on the market today.
At lunch the leading accommodation provider's shares are down 6% to $2.77.
What happened?
With no news out of the company today, it appears as though a couple of broker notes out of Citi and Morgan Stanley have been the catalyst for today's decline.
According to the note out of Morgan Stanley, its analysts have downgraded Mantra's shares to a neutral rating and reduced their target price to $3.20.
The broker appears to be concerned over the impact that the strong Australian dollar will have on inbound tourism and subsequently demand for accommodation.
The note out of Citi reveals that its analysts have also downgraded Mantra from a buy rating to neutral and cut its price target to $3.15.
As well as facing a significant headwind due to the strong local currency, Citi doesn't appear to believe the company will deliver on market expectations.
Should you buy the dip?
Whilst I agree that a strong Australian dollar would be a big negative for inbound tourism, Mantra, and peers Event Hospitality and Entertainment Ltd (ASX: EVT) and Crown Resorts Ltd (ASX: CWN), I'm not convinced that the local currency will stay at this level for much longer.
In fact, at the time of writing the Australian dollar is on the slide and is fetching 79.2 U.S. cents. This is over a cent lower than where it was last week and may only be the start of even greater declines.
The most recent Westpac Banking Corp (ASX: WBC) Weekly reveals that its economists are still forecasting the Australian dollar to tumble to as low as 65 U.S. cents by the end of next year.
I agree with Westpac on this one and believe rate rises in the U.S. and weaker commodity prices will put significant pressure on our dollar.
As a result, I think this sell-off has been a big overreaction and now could be an opportune time to snap up shares in Mantra on the cheap.
