The Lovisa Share Price is up 66% in a Year. Is Now the Time Buy?

ASX LOV - Lovisa Stocks on ASX

Well, that was a pretty quick turn of events.

I wrote to you about Lovisa Holdings Ltd [ASX:LOV] on 5 February.

That was before COVID-19 decimated financial markets.

The Lovisa share price fell 80% from then. And today it’s up 60%.

I can understand that with a move like this…

You may be wondering is now the time to buy Lovisa?

Well, let’s take a look. But first…

Who is Lovisa Holdings Ltd [ASX:LOV]?

Lovisa sell fashion jewellery and accessories.

They operate in Australia and internationally.

The company began in 2010. Today, they have around 449 stores around the world.

Right now, Lovisa has 25 stores closed in the US. And more across Europe and Asia. This is due to the coronavirus.

The company targets women aged 25–45 with products that the company develops, designs and sources.

Lovisa reported earnings on 19 February.

Earnings are up 10% and net profit after tax is up $2.3 million.

To put that into context, total sales revenue across the stores rose 22%.

The company did say that gross margins have been impacted due to a weakening Aussie dollar.

Though, Lovisa has increased prices to offset this decline.

In the investor update, Lovisa did say that they expected declines in sales over the coming months.

This was because Lovisa rely on China in their supply chain. With the majority of products coming from Chinese factories.

As we know, Chinese factories were locked down due to the coronavirus…

This may leave a medium-term impact on the company’s bottom line.

We’ll see how this plays out over the next few months…

Anyway, let’s take a look at the company chart.

Take a look at it below…

What’s next for the Lovisa share price?

Lovisa Share Price - ASX LOV

Source: TradingView

[Click to open in a new window]

What you’re looking at above is the daily chart of Lovisa.

I marked three areas on the chart.

First is that company share price high. This was in October 2019.

Second, where I first brought Lovisa to your attention.

And third, the current low from yesterday.

It’s pretty evident that right now, the share price has been smashed.

It was down 80% from the last time I wrote to you.

So, it makes sense that investors are running in today. They’re trying to pick up a bargain.

But I’ll say, hold up!

There’s no telling just yet if Lovisa will continue to be impacted by the Chinese virus.

So, for now, it’s probably too speculative to be confident. But it may be worth putting this back on your watchlist. And then watching to see how this plays out.

As always, this is not a recommendation to buy or sell LOV. It is an update only. I hope you found it useful.

Until next time,

Jonathan Evans Signature

Jonathan Evans,
Analyst, Profit Watch

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