The Temple & Webster Group Ltd (ASX:TPW) share price has fallen 30% from its high. Is this a buying opportunity for investors?
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The Temple & Webster Group Ltd (ASX: TPW) share price has been a poor performer in recent months and particularly last week.
During the five days, the online furniture and homewares retailer’s shares tumbled 12%.
And while the Temple & Webster share price is pushing higher today, it is still down 31% from its 52-week high.
Why did the Temple & Webster share price crash lower?
Investors were selling the company’s shares last week after the release of its third quarter update.
Although Temple & Webster is still performing positively and growing its sales strongly, it warned that it would now be focusing on growing its market share at the expense of margins.
This includes increasing its marketing spend to build strong brand awareness and achieve a national brand status and using “tactical” pricing and promotions to increase conversion.
Temple & Webster’s CEO & Co-Founder, Mark Coulter, explained: “You only need to look at the US to see how the e-commerce market is playing out, and why we remain bullish about the shift from offline to online. We are at the start of this once in a generation shift, and now is the time to put our foot down to secure market leadership and ensure we are the brand for the next generation of furniture shopper.”
Is this a buying opportunity for investors?
According to a note out of Bell Potter, its analysts have retained their hold rating and put an $11.30 price target on its shares.
Based on the latest Temple & Webster share price, this implies potential upside of 16.5%. So while the broker only rates its shares as a hold, the returns on offer are still above-average.
Elsewhere, analysts at Morgan Stanley are a lot more positive on the Temple & Webster share price.
According to a note from last week, the broker has retained its overweight rating and lifted its price target to $15.00. Morgan Stanley believes its reinvestment plan makes strategic sense and expects it to widen its moat.
Its price target implies potential upside of greater than 50% over the next 12 months.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.