Broker Bell Potter has just upgraded this ASX consumer discretionary stock to a buy recommendation.
Adore Beauty Group Ltd (ASX: ABY) is an Australian online beauty, cosmetics, and personal care retailer.
Its online platform currently sells more than 260 leading beauty brands, including Clarins, Estee Lauder, The Ordinary, Dermalogica, and ghd. In late 2022, the company launched its own private-label, AB Labs sunscreen range.
The small-cap stock has seen some volatility in its stock price this year, but remains up almost 7% in 2025.
Bell Potter released fresh guidance on the consumer discretionary stock yesterday.
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Earnings remain intact
The broker has made no changes to its earnings forecasts.
The broker said in FY26 it continues to forecast revenue of $225.4m (~13% growth) and EBITDA of $12.1m (~50% growth).
It views the recent store rollout momentum as extremely positive and sees the mix of the 10 store contribution and positive web traffic data as catalysts for a positive 1Q FY26 trading update at the November AGM.
Bell Potter said the store rollout was progressing well with +5 Adore banners and +1 iKOU banner opened in 1H26, approaching the 15 store network guidance (13-to-date) outlined in ABY's FY25 results.
Its price target has remained unchanged at $1.25. However, it now lists the stock as a buy due to its recent stock price fall of almost 17% over the last month.
Upgraded recommendation from Bell Potter
The broker said given the solid FY26e earnings growth profile (+50%) and future margin accretion, and the new strategy performing to plan, it remains positive.
We upgrade to a Buy recommendation following ABY trading at a far more attractive FY26e EV/EBIT multiple (~15x BPe numbers), with the stock having pulled back ~17% since initiating at 17-Sep, as well as the expectation of a positive trading update at the AGM on 21-Nov.
Its price target remains unchanged at $1.25.
Based on the broker's price target of $1.25, it expects an upside of 23.76% from yesterday's closing price of $1.01.
Key risks to the investment thesis include reliance on third-party brands whose performance directly affects the company's success. Additionally, increasing competitive pressures from pricing and product range as the online market matures, which could impact sales and margins.
