These S&P/ASX 200 Index (ASX: XJO) shares have fallen to record lows. Ebos Group Ltd (ASX: EBO) and Premier Investments Ltd (ASX: PMV) have lost 38% and 36% respectively in value in the past 6 months.
Ebos Group has been hit by weak earnings and lost contracts, while Premier Investments has suffered from soft consumer spending and patchy retail conditions.
After multi-year lows, are both ASX 200 shares now in turnaround mode?
Image source: Getty Images
Ebos Group Ltd (ASX: EBO)
The ASX 200 share is a major supplier of healthcare, pharmaceutical and animal care products across Australia and New Zealand. The Ebos Group sits deep in the healthcare supply chain, servicing hospitals, pharmacies, aged-care facilities and veterinary clinics. The TerryWhite Chemmart chain is probably the most recognisable Ebos businesses.
The healthcare division has traditionally provided stability, but recent years have exposed vulnerabilities. Margin pressure in pharmacy distribution and the loss of a major customer have weighed heavily on earnings and sentiment of the ASX 200 share.
Still, Ebos retains important strengths. Its operations are diversified, and demand for healthcare products is structurally supported by ageing populations. The company is also investing heavily in new distribution infrastructure.
These upgrades are hurting short-term cash flow but are designed to improve efficiency and margins over time. The next couple of years are likely to be transitional. A serious recovery depends heavily on successful execution and a stabilisation in competitive pressures.
Brokers are cautiously optimistic that the board of the ASX 200 healthcare stock can turn things around. Most market-watchers rate Ebos a buy or even a strong buy.
The average 12-months price target is $29.53, almost 32% higher than the company's record low of $22.28 at the start of the week.
Premier Investments Ltd (ASX: PMV)
Premier Investments faces a very different challenge. The retail company owns well-known retail brands such as Peter Alexander, Smiggle and Just Jeans, making it far more exposed to discretionary spending.
With households cutting back, sales growth has slowed and earnings expectations have been revised lower. Smiggle, once a standout performer, has been a particular drag on results of this ASX 200 share.
Despite this, Premier is far from broken. The ASX 200 share has a strong balance sheet, valuable brands and the financial flexibility to return capital to shareholders. Peter Alexander continues to perform relatively well.
Management has also shown a willingness to support the share price through buybacks. A recovery, however, will likely depend on an improvement in consumer confidence and a turnaround in underperforming divisions.
Analysts are not all doom and gloom, despite the share exploring new depths at $13.05 this week.
The target price for the ASX 200 share ranges between $14 and $28.96, pointing to an upside between 6% and a whopping 119%. However, the average 12-month target price is $19.43, implying a potential gain of 47%.
