On The Beach Group PLC (LON:OTB) dropped on Monday after house broker Peel Hunt slashed its target price to 400p from 550p.
The travel agent warned last week that full-year profits will be below expectations amid coronavirus disruption.
READ: On The Beach warns of “significant” drop in European holiday demand
Holiday demand has slowed down in February, especially after tourists were quarantined in Tenerife.
Analysts, which kept the ‘buy’ recommendation, see potential for a “swift recovery” although it may be hindered by travel bans imposed by governments.
According to Peel Hunt, underlying earnings (EBITDA) for 2020 could be 39% lower than previously forecast, at £26mln, or halving to £19mln in a worst-case scenario.
I’ve never seen a better tan line in my life. What a picture.
Coronavirus mask tantastic. pic.twitter.com/4RKxXEmTRl
— Dean Cornish (@DeanCornish1966) February 28, 2020
Analysts pointed out a series of variables that make the valuation "uncertain", such as the impact of cancelled or low-deposit bookings as well as heightened competition.
However, if the outbreak is short-lived, the summer season could still pick up.
“We believe that, after the crisis, On the Beach will be able to exploit its strong brand and technology in a less competitive environment,” analysts commented.
Shares slid 9% to 293.2p on Monday after lunch.