Why the Domain share price sank 8% lower today

The Domain Holdings Australia Ltd (ASX:DHG) share price sank 8% lower on Tuesday after being downgraded by a leading broker…

| More on:
a woman

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

The worst performer on the S&P/ASX 200 index on Tuesday has been the Domain Holdings Australia Ltd (ASX: DHG) share price.

The property listings company's shares are down over 6% to $2.87 in afternoon trade, but were down as much as 8% to $2.82 at one stage.

Whilst this is disappointing, it is worth noting that the Domain share price is still up 29% since the start of the year.

Why is the Domain share price sinking lower today?

Investors have been hitting the sell button on Tuesday after the company was the subject of a bearish broker note out of UBS this morning.

According to the note, the broker has downgraded Domain's shares to a sell rating from neutral and held firm with its $2.75 price target.

This price target implies potential downside of around 4% for its shares over the next 12 months following today's decline.

Why is UBS bearish on Domain?

UBS made the move largely on valuation grounds after its aforementioned strong gain in 2019.

Investors have been buying the shares of Domain and REA Group Limited (ASX: REA) this year after the housing market showed signs that a recovery could be on the cards in the near term.

However, UBS isn't a bullish on Domain's prospects. As well as believing that its shares are overvalued, the broker also notes that listings continue to be weak.

So much so, its analysts have forecast a further decline in Domain's revenue during the first half of FY 2020.

Incidentally, the broker has a neutral rating and $89.00 price target on the shares of REA Group at present. This compares to its current share price of $95.92.

Other declines.

Domain isn't the only company sinking lower on Tuesday.

Elsewhere on the S&P/ASX 200 index today, the Regis Resources Limited (ASX: RRL) share price and the Computershare Limited (ASX: CPU) share price have tumbled 3% lower.

Regis dropped lower following the release of its quarterly update and Computershare has come under pressure after announcing a CFO transition.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Computershare and REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Fallers

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A worried man holds his head and look at his computer.
Share Fallers

Why 29Metals, Brainchip, Platinum, and Premier Investments shares are falling today

These ASX shares are having a tough time on hump day.

Read more »

Man with his head in his head because of falling share price.
Share Fallers

Why 29Metals, Atlas Arteria, IDP Education, and Mineral Resources shares are falling

These ASX shares are having a tough time on Tuesday. But why?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why ALS, EOS, NRW, and Patriot Battery Metals are dropping today

These ASX shares are starting the week in the red.

Read more »

A man looking at his laptop and thinking.
Technology Shares

Why are these ASX tech shares getting smashed today?

Owners of these two stocks are missing out today.

Read more »

a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.
Share Fallers

Why AGL, Brickworks, IGO, and New Hope shares are dropping today

These ASX shares are having a poor session. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why Amcor, Arafura, Brainchip, and South32 shares are tumbling today

These ASX shares are having a tough time on hump day. But why?

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Share Fallers

Why Aussie Broadband, Liontown, Metals Acquisition, and Seek shares are falling

These ASX shares are having a poor session. But why?

Read more »