Why Harvey Norman Holdings Ltd Shares Tanked Today

What happened to the Harvey Norman Share Price?

Shares of Harvey Norman Holdings Ltd [ASX:HVN] tanked by almost 6% today as several brokerage and research firms cut target prices for the stock.

Why did HVN shares dive?

Brokerage and research firms Macquarie, JPMorgan, and Evans & Partners all cut their price targets for Harvey Norman Holdings Ltd today.

The biggest price target cut came from JPMorgan, which cut its target price to $4.60, below the now current price of $4.85.

As a major retailer of household goods, such as televisions, washing machines, ovens, and more, Harvey Norman is influenced by the housing cycle and the demand for new homes. When people move home, they’re more likely to buy at least some new furniture.

But according to Goldman Sachs analyst Adam Alexander, ‘softening in the housing market will slow the sales momentum’ for Harvey Norman.

Goldman Sachs was already bearish on the stock, with a ‘sell’ rating. It has, however, raised its price target from $4 to $4.20 — well below today’s closing price of $4.85.

What now for Harvey Norman Holdings?

Despite the ongoing calls for the Aussie housing boom to end, house prices continue to rise. As Bloomberg reported today, ‘Dwelling values in Australia’s largest city rose at the fastest annual pace in 14-years in February…

If this really is the top of the market, it could spell trouble for Harvey Norman. But, if, as has been the case for the last nine years, Aussie house prices continue to climb, you could see a quick rebound in the Harvey Norman share price.

It’s no exaggeration to say that the fortunes of the Aussie housing market and Harvey Norman’s stock price are closely aligned.

Kris Sayce

Kris Sayce, dubbed the ‘Jeremy Clarkson of Australian finance’, began as a London finance broker specialising in small-cap stock analysis on London’s Alternative Investment Market (AIM). Kris then spent several years at one of Australia's leading wealth management firms. A fully accredited advisor in shares, options, warrants and foreign-exchange investments, Kris was instrumental in helping to establish the Australian version of the Markets and Money e-newsletter in 2005. He is the Publisher, Investment Director and Editor in Chief of Australia's most outspoken financial news service, Markets & Money.

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