Lovisa shares fall as Citi reiterates 'sell' rating, slashes price target
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The news: Shares in Lovisa slipped in morning trade after Citi reiterated its 'sell' rating on the jewellery retailer and cut its target price 11% to $22.98.
The numbers: Lovisa shares were down 1.6% to $32.99 at 11:50am AEST.
The context: Citi analysts said there is "increasingly [a] risk" that Lovisa could beat rollout expectations when posting its upcoming full-year results. Citi's latest analysts showed there were 1,039 stores at the end of the 12-month period compared to consensus estimates of 1,004.
However, while this could support the share price near term, the analysts said they "remain comfortable" with a 'sell' rating due to risks to long-term rollout expectations given potential operational issues in newer growth markets.
They noted that the launch of Lovisa's new 'Jewells' format, with larger stores and a higher-price product range, suggests the retailer's core format could be more mature than previously thought.
The analysts also said emerging competition remains a key risk, with rival brand Harli + Harper now at 34 stores, while "a level of strategic uncertainty" remains after new CEO John Cheston commenced last month.
Citi has revised down its profit forecasts on Lovisa by 14% in FY26 and 25% in FY27.
The source: Citi research
