Quarterly reporting season is drawing tough comparisons for ASX e-commerce shares following supercharged COVID-19 earnings in 2020. This has dragged the JB Hi-Fi Ltd (ASX: JBH) share price down 10% in the last five trading sessions.
There appears to be a diverging performance between e-commerce shares such as Redbubble Ltd (ASX: RBL) and Kogan.com Ltd (ASX: KGN) that have suffered sharp declines in recent weeks. And more traditional brick and mortar businesses such as Adairs Ltd (ASX: ADH) and Dusk Group Ltd (ASX: DSK) have soared to record territory.
So where does JB Hi-Fi stand amidst this volatility and could this be a buying opportunity for discounted shares?
Brokers mixed on what’s next for the JB Hi-Fi share price
Brokers are divided as to whether or not a recent weakness in the JB Hi-Fi share price is a buying opportunity.
On the bullish side, Credit Suisse upgraded its JB Hi-Fi share price target to $57.39 with an outperform rating. The broker was surprised by the strong March quarter results and believes the CEO transition will be smooth as could be.
Credit Suisse believes the market is underestimating the momentum that still exists in the household goods market. Rather than seeing more volatility and downside risk ahead, the broker says that risks are now sufficiently to the upside.
Conversely, Morgan Stanley is cautious on the business’ margins following Kogan’s update that flagged excess inventory and increased marketing costs. Despite meeting expectations, the broker was underweight on JB Hi-Fi shares with a $46 target price.
Macquarie meets the bulls and bears in the middle with a neutral rating with a $50.40 target price. The broker observes strong momentum within home electronics but suspects a slowdown might take shape as consumer behaviour normalises. The broker expects flat like-for-like sales growth in the second half as the company cycles the peak panic buying from mid-March.
It’s a tough call on the JB Hi-Fi share price as the business cycles through sky-high sales from last year. The market is clearly aware that a slowdown in sales is approaching in the near term. The million-dollar question is whether or not today’s prices reflect the slow-down, or is there more pain for the JB Hi-Fi share price in the coming months?