JB Hi-Fi (ASX:JBH) share price sinks lower on broker downgrade

The JB Hi-Fi Limited (ASX:JBH) share price is sinking lower on Wednesday after being downgraded by a leading broker…

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The JB Hi-Fi Limited (ASX: JBH) share price is out of form again on Wednesday and is sinking lower.

In afternoon trade the retailer’s shares are down 5% to $44.20.

This means the JB Hi-Fi share price is now down almost 17% from the all-time high it reached just three weeks ago.

Why is the JB Hi-Fi share price sinking lower?

Investors have been selling the retailer’s shares this week amid news that there could soon be an effective COVID-19 vaccine rolled out globally.

As backwards as it might sound, this is being seen as bad news for companies like JB Hi-Fi.

This is because it has been a big winner during the pandemic as investors redirect their spending away from travelling onto entertainment and homewares.

It was for this reason this morning that equity analysts at Macquarie Group Ltd (ASX: MQG) downgraded the company’s shares to a neutral rating and cut the price target on them by almost 10% to $49.50.

According to the note, if the vaccine is a success, the broker expects that consumer behaviour will return to normal in 2021. This is likely to result in a slowdown in its growth as consumers start traveling again.

What about other retailers?

Analysts at Morgans also expect this to be the case and have been adjusting their recommendations today.

It has reduced the multiples for shares that it believes are likely to be impacted by a redirection in spending as the world returns to normal.

Two retailers that have been impacted are Accent Group Ltd (ASX: AX1) and Super Retail Group Ltd (ASX: SUL).

The broker has downgraded Accent’s shares to a hold rating with a reduced price target of $1.67. As for Super Retail, its shares have been downgraded by Morgans to a hold rating with a reduced price target of $11.78.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Super Retail Group Limited. The Motley Fool Australia has recommended Accent Group. 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.

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