This ASX 200 stock just plunged 8%! Here's why

Investors are selling en masse today.

| More on:
A young woman holds onto her crown as another moves to take it, indicating rival ASX shares

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ASX 200 stock Lovisa Holdings Ltd (ASX: LOV) has sold off sharply in early trade on Thursday. Lovisa shares are currently down 7% at $27.78 after opening in the red and hitting an intraday low of $27.46, down 8.3%.

Zooming out, shares in the fashion jewellery retailer are down almost 9% in the past month of trade.

Whilst there's been nothing price-sensitive posted from Lovisa this morning, several brokers have downgraded the stock, and reports have surfaced about a lawsuit involving its former CEO.

Here's a closer look at the details.

Created with Highcharts 11.4.3Lovisa PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

Brokers downgrade ASX 200 stock

While Lovisa shares have been trending lower this past month, several brokers have changed their sentiment on the ASX 200 stock this week.

According to reports by The Australian, investment bank and broker UBS downgraded its rating on Lovisa to sell this week.

Fellow broker Jefferies has followed suit, shifting its recommendation from buy to hold.

As a result, the consensus of analyst estimates now rates the stock a hold as well, down from an average buy rating last week.

It's not all bad news for the fashion jewellery retailer, though. Shares are still up 19% in the past year, and some brokers are bullish.

As my colleague James reported today, broker Morgans is bullish on the stock, and rates it a buy with a $36.50 price target.

Morgans says the ASX 200 stock can "successfully build out its unique brand in many diverse territories" as it becomes a "global brand".

Competitor's CEO faces lawsuit

Reporting has also surfaced today outlining a lawsuit involving former Lovisa and now competing CEO Shane Fallscheer.

Fallscheer now runs rival jewellery chain Harli + Harpa. As reported by The Australian, former Harli + Harpa CEO Cass Fuller has started proceedings against Fallscheer over allegations of wrongful dismissal.

Naturally, the internal rumblings of one company should hardly affect the operations of another.

However, according to analysts at Citi, Harli + Harpa is a meaningful competitor to Lovisa, having opened 18 stores since November last year. As reported by The Aus:

Given Lovisa has 178 stores in Australia (end of FY24) the impact on Lovisa's earnings to date is likely immaterial, however, the rapid pace of openings for Harli + Harpa makes us incrementally more concerned that Lovisa's sales and margins would increasingly be impacted over CY25 and potentially sooner over the remainder of 1H FY25.

ASX 200 stock takeout

This ASX 200 stock has taken a beating today and is down 7% since the opening bell. Some brokers have turned less positive on the company, which might be behind some of the selling.

But zooming out, the stock is in a broader downtrend, having slipped from mid-October's high of $36.19.

Motley Fool contributor Zach Bristow 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 Lovisa. The Motley Fool Australia has recommended Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

person with large headphones looking puzzled holding their hand to their chin.
Broker Notes

Does Macquarie prefer Harvey Norman or JB Hi-Fi shares?

Both companies have market-beating long-term track records.

Read more »

Person taking out a slice of pizza from a pizza box.
Consumer Staples & Discretionary Shares

Why now is the time to buy the big dip on Domino's shares

Down 46% in a year, a leading expert forecasts brighter days ahead for Domino’s shares.

Read more »

Three people sit on safe cheering with pizza on table
Consumer Staples & Discretionary Shares

Food fight! Have Guzman Y Gomez shares outperformed Domino's since ASX debut?

Lets find out who’s topping the menu for investors

Read more »

Woman chooses vegetables for dinner, smiling and looking at camera.
Consumer Staples & Discretionary Shares

Here's the Coles dividend forecast from top analysts through to 2029

Can this defensive business provide pleasing payouts? Let’s take a look…

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Consumer Staples & Discretionary Shares

Guess which $14 billion ASX 200 stock is tumbling on big leadership news

The $14 billion ASX 200 stock is taking a tumble today. Here’s why.

Read more »

Couple look at a bottle of wine while trying to decide what to buy.
Consumer Staples & Discretionary Shares

Oversupply concerns to hit wine shares, report warns

Australia’s wine producers face more challenges.

Read more »

A young woman sits with her hand to her chin staring off to the side thinking about her investments.
Share Market News

Does this broker prefer Treasury Wine or A2 Milk shares?

These consumer staples companies are comparable in size but not in upside according to this broker. 

Read more »

Happy friends at a party enjoying pizza, symbolising the Domino's share price.
Broker Notes

Buy, hold, or sell Domino's Pizza shares after shock CEO exit? Here's what the experts say

The Domino's share price has been recovering after losing a quarter of its value last Wednesday.

Read more »