Lovisa shares jump on Morgan Stanley upgrade
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The news: Lovisa shares advanced in early trading after Morgan Stanley upgraded the jewellery retailer and added the stock to its 'key ideas' list.
The numbers: Lovisa shares were up 7.2% to $29.13 by 10:40am AEDT.
Morgan Stanley upgraded its rating from 'equal weight' to 'overweight', and increased its price target from $28.50 to $32.
The context: Morgan Stanley's analysts see upside risk to Lovisa's store growth across FY25 and FY26, given a reported acceleration this month. If the run-rate is sustained, this should be positively received by the market given strong store growth is the key share price driver, they said.
They noted that the balance between risk and reward on the stock also looks increasingly attractive following a de-rating of around 20% over the last six months.
Morgan Stanley's 'key ideas' highlight key small-cap and mid-cap investment ideas, where it holds a strong earnings conviction. Life360, Corporate Travel Management, Data#3, Fleetpartners and Tuas have also been added to the list this week.
The source: Morgan Stanley research
