Regal Partners Ltd (ASX: RPL) shares have started the year strongly.
Since the turn of the year, the ASX 300 stock has risen by 12%.
But if you thought the gains were over, think again!
That's because analysts at Bell Potter believe this fund manager's shares could still be dirt cheap.
What is the broker saying about this ASX 300 stock?
Bell Potter was pleased with the company's trading update, highlighting that its performance fees and profit guidance were comfortably ahead of expectations. It said:
The company issued an upbeat statement, highlighting strong performance fees and an estimated NPAT for CY25 that was above market expectations. End 2025 FUM was approx. $20.8bn, compared to $20.1bn at the end of Q3 and was ahead of our previous forecast of $20.4bn. Performance fees are expected to be approx. $130m in H2 CY25 compared to $42.4m in H1 CY25 and $24.9m in H2 CY24.
This was above our last published forecast of $55.8m for H2. We note that at Q3 the company suggested that performance fees for H2 were tracking well above the top of the forecast range. Given these figures, CY25 is expected to produce a normalised NPAT of $145m vs $97.5m in CY 24 and ahead of our estimate of $121.9m (after NCI). This follows a record quarter in Q3, which showed strong inflows and investment returns.
Big potential returns
In light of the above, the broker has reaffirmed its buy rating on the ASX 300 stock with an improved price target of $4.70 (from $4.40).
Based on its current share price of $3.60, this implies potential upside of 30% for investors over the next 12 months.
In addition, the broker is forecasting a 20.6 cents per share fully franked dividend in FY 2026. This represents a 5.7% dividend yield, which boosts the total potential return beyond 35%.
Bell Potter doesn't believe the market is appreciating the improvement in its performance. Commenting on its buy recommendation, the broker said:
This was a positive announcement from RPL, ending a good year for the company with strong net flows and performance fees. Our DCF valuation increases to $4.69/sh and we round our price target to $4.70/sh (from $4.40) and maintain a Buy recommendation. While these results were strong and there has been some recovery in the share price, the shares have been de-rated and trade at a lower multiple than at the start of the year.
A year ago the shares were $3.71 and trading on 14.2x forward earnings or 8.5x EV/EVITDA. Currently the shares trade on 12.3x next year's earnings or 5.3x EV/EBITDA. We do not believe the improvement in operational performance is reflected in the current share price.
