Lovisa Holdings Ltd (ASX: LOV) shares are a popular choice for ASX investors.
The fast fashion jeweller has a remarkable growth story.
Lovisa currently operates 943 stores across Asia, Europe, and the US. It plans to add around 600 stores over the next five years and expand its online presence.
However, the past year has been especially volatile for Lovisa shares.
The retailer reached a 52-week low of $20.23 in April following US President Trump's 'Liberation Day' tariff announcements.
China was initially handed a reciprocal tariff of 34%. Given that Lovisa manufactures its products in China and sells around 25% of its products in the US, this was bad news for Lovisa.
However, since then, Lovisa shares have rebounded strongly. They sit around 50% higher, with shares changing hands for $30.69 at the time of writing.
Investors may be asking, have Lovisa shares become overvalued?
The elephant in the room: tariffs
Despite market sentiment surrounding tariffs clearly improving, a lot of uncertainty remains.
This week, investors will gain more clarity on trade deals with the US as Trump's 9 July deadline approaches.
Over the weekend, Trump indicated that letters would be sent to several trading partners indicating their tariff rate, which will take effect on 1 August. However, US Treasury Secretary Scott Bessent has also implied that the deadline might be extended by a few weeks, giving certain countries the chance to further negotiate.
Bloomberg recently described the state of play between China and the US as follows:
Matched the US tariff hike, then agreed with US to temporarily reduce tariffs by 115 ppts and remove export controls on critical minerals; London agreement signed – Agreed to remove export controls and deescalate tensions.
Evidently, with Lovisa impacted by tariffs, this could shape up to be a big week for Lovisa shares.
What are Lovisa shares worth?
Lovisa shares are currently trading at their peak in 2025 despite uncertainty remaining.
Back in February, after Lovisa released its half-year result and before Trump's tariff policy was unveiled, JP Morgan Chase & Co (NYSE: JPM) provided its take on Lovisa's valuation.
The leading broker set a price target of $26.50, which it believed Lovisa would reach in December 2025.
Given that Lovisa shares are trading above $30, this suggests they are overvalued today (even if the tariff situation proved immaterial to Lovisa's profitability).
The broker said:
LOV has demonstrated leading store economics and a highly efficient store rollout with a long international pipeline. However, we believe the store rollout is well-priced in at these levels, which drives our Neutral rating.
Our earnings are lower on a reduction in sales growth assumptions reflecting a softer than expected H1, and with CODB expansion to continue into H2, partially offset by a step-up in gross margin assumption, which drives EBIT -6/-8% in FY25/26.
JP Morgan also flagged that momentum in the US had slowed, with 2 net openings in the most recent half. The broker attributed this to the strong position of US landlords and elevated retail rents and noted that these conditions were likely to continue.
What are other brokers saying?
On 2 July, The Motley Fool's James Mickleboro revealed that broker Bell Potter had recently downgraded Lovisa shares from buy to hold. The broker places a price target of $31 on Lovisa shares, suggesting they are likely to remain flat over the next 12 months from here.
