Plumbing and industrial supplies specialist Reece Ltd (ASX: REH) has endured a difficult year in 2025.
Shares in the ASX 200 stock have tumbled from $22.87 per share in early January to $11.01 each at the time of writing.
This equates to a 51% drop in less than eight months.
By comparison, the All Ordinaries Index (ASX: XAO) has climbed by about 9% since the start of the year.
The latest blow came on Monday when Reece's FY25 results triggered a sharp selloff.
The company's shares sunk to a 52-week low during the session after dipping by 16% from Friday's close.
But is there a turnaround story in the making for this ASX 200 stock?
Leading Aussie investment firm Macquarie Group Ltd (ASX: MQG) has now delivered its views.
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Macquarie shares its viewpoint
Firstly, Macquarie noted that the FY25 results landed broadly in line with expectations, albeit at the lower end of management's guidance.
Here, revenue of $8.98 billion fell by 1% from the previous year with operating earnings (EBITDA) of $901 million sliding by 11%.
Net profit after tax (NPAT) of $317 million also tumbled by 24%.
That said, the broker highlighted strong expansion in FY25 across the company's two operating regions.
Reece added 24 net new branches in the US and another 15 across Australia and New Zealand (ANZ). It ended the year with 943 branches in total.
On the bottom line, Macquarie recognised Reece's solid balance sheet despite net debt coming in $120 million higher than expected.
However, it expressed concern over management's assessment of market conditions across both operating regions.
Reece pointed to ongoing headwinds, including a sluggish housing market recovery and intensifying competition in the US.
Macquarie described this outlook as surprisingly weak, suggesting that potential structural challenges may be emerging for the ASX 200 stock.
It warned that cost and pricing pressures across both regions are unlikely to ease any time soon.
As such, Macquarie sees limited prospects for a near-term share price recovery.
Macquarie's final verdict
Macquarie believes that growing competitive pressures could continue to weigh on the company's performance.
As a result, it projects further downside for Reece's share price over the next 12 months.
The broker has set an 'underperform' rating the ASX 200 stock with a target price of $10.10 per share.
This implies 8% downside potential from $11.01 per share at the time of writing.
That said, Macquarie highlighted that easing interest rates, a housing market recovery, and a more favourable competitive backdrop could act as catalysts for a rebound in Reece's shares.
