As the market continues its shakeup in 2022, shares in Lovisa Holdings Ltd (ASX: LOV) fell hard on Monday and finished 9.79% in the red at $17.70 apiece.
Shares in the $1.9 billion company by market cap have taken a downward turn in 2022, now 12% lower since trading recommenced on January 4.
Lovisa share price is struggling amid sector weakness
The fashion jewellery retailer is feeling the squeeze on retail shares that set in as soon as trade restarted in January.
The S&P/ASX 300 Retailing index (AXRTKD) has fallen 17% from its former highs on 4 January and has shown no signs of reversal, even with a small bounce last month.
It is now trading at its lowest levels in more than a year. At the same time, many ASX retail shares in the consumer cyclical and consumer discretionary sectors are taking similar hits in 2022.
Lovisa isn't immune to the headwinds and investors have sold off their positions after the stock jumped to its previous closing high of $20.43 on 1 March.
It seems not even an 85% jump in the company's dividend to 37 cents a share, announced in its earnings results last month, was enough to keep investors on board today.
Lovisa is now trading on a respectable 1.94% trailing dividend yield following the sharp pullback in its share price.
Don't worry, it's not all downbeat
Yet it seems not everyone is worried about the downturn in the short term. Analysts at Citi reckon Lovisa is one for the future, noting huge growth potential if the company expands globally.
The broker updated its rating to buy from neutral in a recent note to clients
It identified the Chinese market as a key catalyst for Lovisa's growth, stating this "could represent a $108 million sales opportunity for Lovisa".
Citi reckons investors need to hold a long-term view with Lovisa, especially seeing as the company is yet to fully expand internationally.
"The long-term earnings opportunity could be even more significant should Lovisa be able to expand beyond key cities," analysts said.
It values the costume jewellery player at $21.45 per share after increasing its targets by roughly 4% recently.
Meanwhile, Bell Potter and UBS also raised their valuations on Lovisa to $21.70 and $21 per share respectively. Both brokers are urging their clients to buy Lovisa shares at the current prices.
In fact, the number of analysts advocating to buy Lovisa shares has crept up from 43% this time last year to 73%, according to Bloomberg Intelligence.
This represents a consensus price target of $21.27 per share, an upside potential of 20% at the time of writing.
Lovisa share price snapshot
In the last 12 months, the Lovisa share price has surged more than 25%, however, it has collapsed 12% this year to date.
In the past month of trading, the company's shares have struggled to remain flat. During the past week alone, they have fallen 11%.
