Adairs is simply following the discretionary retail sector down as funds pivot to "recovery stocks" hurt most during covid with the hope they will rebound the most once a vaccine is rolled out. It is worth noting that Morgan's downgraded many consumer discretionary stocks from Add to Hold rating after Pfizer announced vaccine effectiveness. However, they maintained their Add rating for ADH, stating "at no stage did ADH attract the premium valuation of peers and following today’s sell-off, is trading on sub 10x [earnings]". This was published on 11-Nov so there is even greater value on offer at the current stock price. It's hard to predict how the consumer discretionary sector will trade in the short-term and to what extent Adairs will follow this, but I feel confident that ADH stock price will eventually reflect the fundamental value.
Not intended as financial advice. Do your own research.
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