Temple & Webster Group Ltd (ASX: TPW) shares have been hammered this week.
Investors have been selling the online homewares retailer's shares after its strong growth so far in FY 2026 wasn't quite as strong as the market was expecting.
One leading broker thinks the selloff has been an overreaction and believes it has created a buying opportunity for investors.
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What is the broker saying?
Bell Potter notes that while Temple & Webster's sales growth has slowed since the end of August, management has reaffirmed its growth targets for FY 2026. It said:
Temple & Webster (TPW) provided a trading update for the first ~20 weeks of FY26 (1- Jul to 20-Nov) at their AGM, with check-out revenue +18% on pcp easing off from +28% in Jul-Aug. Trading reflects some cyclical impacts after two consecutive years of 20-26% revenue growth, however the company's growth targets unchanged at >20% growth.
FY26 EBITDA margins of 3-5% were reaffirmed, including ~4% post the entry investment into New Zealand. Key metrics, average orders values and repeat rates (~60%) have performed well, in addition to a strong cash position in excess of $150m.
And while Bell Potter believes its sales growth will be a touch short of target this year, it remains very bullish on Temple & Webster and its shares. It adds:
While we see some tailwinds related to the most recent Consumer Sentiment print, lag effects from concluded interest rate cuts to the household goods category and TPW's increased focus into brand marketing ROI, we factor in a level of cautiousness considering the longer discounting cycle and sit slightly below TPW's +20% expectations.
Temple & Webster shares tipped to rebound
According to the note, the broker has responded to the update by retaining its buy rating with a reduced price target of $19.50 (from $28.00). Based on its current share price of $14.06, this implies potential upside of almost 40% for investors over the next 12 months.
Commenting on its buy recommendation, the broker said:
Our PT decreases by 30% to A$19.50 (prev. A$28.00). Along with our earnings revisions, we reduce our target multiples by 25% to ~27x EV/EBITDA (prev. ~36x) on FY27e EBITDA and ~3x EV/Sales (prev. ~4x) on FY27e Sales (25:75 blend).
Our views are unchanged of TPW's ability to outperform over the long term as market share capture in an expanded TAM is expedited with range, pricing/scale advantages, backed by a strong balance sheet (+$150m cash). Trading at ~2x EV/Sales post the ~40% correction in the share price from the recent peak, we see risk-reward heading into the Feb 1H result and continue to see a buying opportunity. Maintain BUY.
