Lovisa Ltd (ASX: LOV) shares jumped sharply earlier this week after the jewellery retailer announced a solid uplift in profit and revenue.
But the shares remain about a third lower over the past 12 months, and the question remains: where to from here for the share price?
I've had a look at two brokers' reports issued following the release of Lovisa's results, and the good news is that both rate the shares highly, with bullish share price targets from each.
I'll get to that shortly. Firstly, let's look at the results in more depth.
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Strong uplift in profits
Lovisa this week reported revenue of $938.8 million, up 17.6%, while net profit was up 10.7% to $95.6 million.
The company also bolstered its final dividend by 22.2% to 33 cents per share, 50% franked.
Chief Executive Officer John Cheston said:
Lovisa has once again been able to deliver strong global sales and profit growth, with the highlights being continued growth in the Americas and Europe and another exceptional Gross Margin performance. I would like to share my appreciation to the global team for their hard work in delivering these outstanding results and continuing the global momentum of the business.
The company's gross profit was 18.4% higher in FY26, while gross margin was up 60 basis points to 82.6%, "representing a 270 basis point improvement on FY23 following multiple years of gross margin expansion''.
In terms of the start of the current financial year, Lovisa said total sales for the first eight weeks were up 16.4% while comparable same-store sales were up 3%.
The company added:
We continue to focus on opportunities for expanding both our physical and digital store network, with structures in place to drive this growth in existing and new markets and formats, with a long new store runway supporting continued store rollout momentum. Our balance sheet remains strong with available cash and debt facilities supporting continued investment in growth.
Lovisa shares looking cheap according to brokers
Morgans said the results were strong, with net profit coming in ahead of consensus estimates.
The broker added:
Lovisa has ambitious expansion plans, with significant white space opportunity for continued network expansion. Ongoing investment will be needed to expand Lovisa's multinational network, but the company has the capacity to fund this, and we expect strong returns. We have an accumulate rating and $31.00 target price.
Morgan Stanley is even more bullish on the stock, with a $33.50 target price, compared to the price of $26.98 at the time of writing.
They said they saw a compelling bull case for the stock based on expansion in the total addressable market, extended store roll-outs, and an increasingly diversified business.
Lovisa is valued at $3.06 billion.
