CVS Group (AIM:CVSG), the veterinary service provider, has been downgraded to "sector perform" by analysts at RBC following the CMA's review of the industry.
The group's price target has also been reduced from 2,100p to 1,200p, with the new price representing around a 15% premium to its current market value.
RBC said: "The CMA's proposal to conduct a Market Investigation casts a pall over the industry that is unlikely to be resolved for 18-21 months."
Analysts at the Canadian bank believe the market is "significantly over-discounting the risk... but we doubt this valuation discrepancy will attract new investors until closer to a final CMA outcome".
It comes after the CMA revealed pet owners are often uninformed of pricing and could be left overpaying for medicines due to failures in the veterinary sector.
Following a call for information in September, the CMA said that it is launching a formal market investigation over concerns that consumers are not being given enough information on pricing for both medicines and treatment.
Weak competition was also a concern, the watchdog added.