Netwealth Group Ltd (ASX: NWL) shares have been having a tough time in recent months.
So much so, since hitting a record high of $38.30 in August, the ASX 200 stock has lost 30% of its value.
While this is disappointing for shareholders, Bell Potter thinks that Christmas has come early for the rest of us.
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What is the broker saying about this ASX 200 stock?
Bell Potter highlights that the investment platform provider's most recent funds under administration (FUA) update pointed to strong net flows.
In light of this, the broker believes that its guidance for FY 2026 is de-risked, especially with its channel checks indicating good flow intention. It said:
NWL provided updated FUA of $123.8bn at 10'Nov; parameters were undisclosed but statements point to strong net flows. The company has indicated FY26 net flows are likely to land around FY25 and consensus reflects that. We think the run rate implied from the update is an improvement and de-risks the guidance, albeit on an early read, and take comfort from growing account additions and strong adviser growth in 2H25. Consensus net flow forecasts haven't really moved since Feb'25, and the last big revision was to the downside. Our channel checks indicate good flow intention.
Big potential returns
In response to the ASX 200 stock's decline since August, Bell Potter feels that a very attractive buying opportunity has opened up for investors.
In a note titled "Christmas comes early", the broker revealed that it has upgraded Netwealth's shares to a buy rating (from hold) with an improved price target of $31.50 (from $30.00).
Based on its current share price of $26.75, this implies potential upside of approximately 18% for investors over the next 12 months.
In addition, the broker expects a dividend yield of 1.7% in FY 2026, which lifts the total potential return to almost 20%.
Commenting on its upgrade, Bell Potter said:
Upgrade to Buy. First Guardian is an overhang, but if net flows are maintained then the company is on-track to beating guidance and maybe consensus. Against this backdrop there continues to be noise – KKR is looking to exit CFS and Macquarie has disrupted its flows – so we view FY26 as a good setup and upgrade based on valuation, where NWL has averaged an EV/EBITDA multiple of 33x. The last traded price implies 29x our blended FY26-27 estimates.
NWL has continued to build platform functionality with additional managed account options, a new individual HIN offering and expanded bond access through the trading desk. This should increase revenue share, and we can see a pathway to the usual +20% revenue growth story that historically has attracted value investors around these levels.
