Lovisa Holdings' FY20 earnings are below Morgan Stanley's expectations. However, the balance sheet looks well-positioned for an eventual recovery, comments the broker. The company has guided to FY20 sales of $237m, implying a -3% miss.

Australia and New Zealand have been the strongest markets but overall, trading has been less as compared to other retailers. The company has decided to not re-open its stores in Spain.

Morgan Stanley expects the company to lag the rest of the retail sector and rates the stock as Equal-weight with a target price of $6.50. Industry view: In-line.

Sector: Retailing.

Target price is $6.50.Current Price is $6.11. Difference: $0.39 - (brackets indicate current price is over target). If LOV meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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