Dixons Carphone's share price fell as much as 5.6 per cent in early afternoon trade today, making it the biggest faller on the FTSE 100, after a broker downgrade.
Morgan Stanley slashed the stock's rating to "underweight" from "equal weight," saying the shares were significantly overvalued and that it was "not a growth business."
"While we anticipate strong earnings per share growth over the next couple of years, we do not think Dixons Carphone merits its current growth multiple," it said in a note.
They said that Dixons Carphone continued to suffer from "structural pressures" on independent handset retailers, which were highlighted by the demise of Phones 4U.
At the time Phones 4U had blamed its demise of the decision of its suppliers - or mobile network operators such as EE and Vodafone - not to renew their contracts.
The downgrade comes after the company raised its profit forecast in a trading update just days ago, citing a stellar trading during the Christmas period.
However, they recognised that Carphone management have a knack for reinventing the company, and previously it had beefed up value through mergers and acquisitions activity.
"Whilst we believe that the current Dixons Carphone investment case does not merit the current share price, we cannot rule out further value-creating deals transforming the investment case, yet again, in the future," the note said.
Dixons Carphone's share price was trading down 4.2 per cent at £4.13 at pixel time in London.