Jefferies downgrades Sports Direct to 'underperform', sees it as overvalued

However, Jefferies did increase the company’s 12-month target price to 290p, having previously put it at 265p.

The analysts said that Ashley’s attempted shift from discount sporting goods in the UK to more fashion-led operations will require major changes which have not yet been accounted for, while competition is likely to increase.

"SPD’s ability to shift from a discount offering in UK sports retailing to a more fashion-led positioning will require a major change in the brand’s standing with UK consumers, at a time when French giant Decathlon is expanding more aggressively at the value end of the UK market," the research note said.

What’s more, the analysts asserted that uncertainty remains about Sports Direct’s entry into the US market and how much capital it requires to fulfil its objectives.

"The financial needs stemming from SPD’s entry into US sports retailing remain unclear; we also lack the ability to dialogue with SPD on its multitude of strategic initiatives."

On Wednesday, shareholders in the company rejected a proposed payout of £11m to founder Ashley's brother for his work as an IT expert.

Jefferies also cited Ashley’s 'unorthodox leadership style' as providing further downside risk to SPD’s shares.

As of 16:47 GMT, Sports Direct’s share price was trading 1.44% lower.