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Warehouse shares plummeted yesterday on news that suitors Woolworths and Foodstuffs had been knocked back in their bid to take over the country's largest listed retailer.
Shares in the Red Sheds plunged yesterday by as much as 81c, or 21 per cent, on news of the Court of Appeal's decision before recovering slightly to close at $3.22, down 60c or 15.7 per cent.
In contrast, the NZX was up by 1.5 per cent.
The Warehouse's share price is now back at June 2005 trading levels - a long way off a $7.32 asking price achieved in the middle of last year.
Deutsche Bank analyst Kristan Walker said weak market sentiment meant most major stocks were trading at levels lower than their discounted cash flow rate, but the market appears to have overshot the mark this time.
"Today's reaction could have been a little bit overdone.
"It looks as though the market's not considering any potential for a privatisation plan from Stephen Tindall."
The Bank maintains a fundamental valuation of $4.40 on the retailer.
ABN Amro Craigs head of research Mark Lister said many investors were already steering clear of the retail sector in the current environment, so the possible takeover bid was helping prop up The Warehouse's share price.
But most analysts have a long term value that was much higher than yesterday's close, said Lister.
He said the share price movement was likely a knee-jerk short term reaction.
"I'd say the intrinsic value of The Warehouse is above where you see the share price, but the sentiment's so negative that anything other than a positive announcement, you get punished for [it].
"A lot of people might move on and see better opportunities elsewhere."
