Shore Capital has highlighted a "buying opportunity" for investors of JD Sports Fashion Plc following the sharp contraction in the share price over the past week.
The stock, which at the end of October had topped its 200-day moving average at close to 100p, has dropped 15% to just 85p since the start of November, with no obvious triggers.
"This recent weakness has us somewhat scratching our heads looking for a catalyst but in truth it is likely a combination of more macro-events," the broker said, noting the negative impact of hawkish comments from the Federal Reserve on US consumer stocks, and fears about potential UK tax rises.
"When you combine this environment with the fact that share JD shares went ex-dividend five days ago at which point shares were up c.20% in the past six months, we understand that investors may have taken the opportunity to reduce positions," Shore Capital said.
Nevertheless, the broker still thinks the business is set up well for the short term, despite some recent weakness in underlying sales, with a strong balance sheet, strong margins and high cash generation.
"While the macro environment is a challenging one, we maintain our view that JD remains well-placed to succeed in the medium-term and thus see this recent weakness as a buying opportunity," the broker said.
JD shares were down 0.4% at 85.48p by 1455 GMT.