Premier Investments Ltd (ASX: PMV) shares have been under pressure over the past 12 months.
During this time, the ASX 200 share has lost almost 40% of its value.
While this is disappointing for shareholders, it could be a buying opportunity for the rest of us, according to Bell Potter.
Image source: Getty Images
What is the broker saying?
Bell Potter highlights that Premier Investments released its half-year results last week and delivered a result largely in line with expectations.
However, the main story from the result was the announcement of a strategy reset for the Smiggle brand. It explains:
Premier Investment's 1H26 result was largely in line the company guidance and market expectations at the Premier Retail EBIT (Pre-AASB 16 ex-Peter Alexander UK and other non-recurring items) level, however revenue a ~3% miss to Consensus/BPe. The FY26 guidance of $183m Retail EBIT was also in line with Consensus/BPe, but the interim dividend was a beat to Consensus/BPe while the trading update for the first 7 weeks of 1H26 commenced with the company noting a good momentum in the core brand, Peter Alexander (~70% of Premier Retail) ahead of the pcp.
The key announcement was the strategy reset undertaken in Smiggle to address the current poor performance in the brand with product repositioning into innovated new stock, speed to market and brand elevation planned in 2H26 (ongoing half), with the new and improved Smiggle division to return to positive growth (in decline since 1H24) by the end of 1H27. The cash and inventory position remained healthy coming ahead of BPe. The company also announced exploring of global wholesale partnerships for the Peter Alexander (PA) brand as the next leg of growth.
Big potential returns for this ASX 200 share
According to the note, the broker has retained its buy rating on this ASX 200 share with a trimmed price target of $18.00 (from $20.00).
Based on its current share price of $11.98, this implies potential upside of 50% for investors over the next 12 months.
But the returns don't stop there, according to Bell Potter. The broker is forecasting a very generous fully franked dividend yield of 7% over the period.
Commenting on its buy recommendation, the broker said:
Our PT is based on a SOTP with a 11x (prev. 13x) multiple for PA, 4x (prev. 5x) for Smiggle and a current market valuation for Breville Group (BRG). We view PMV as trading at a discount to our coverage, considering the Premier Retail division with two global roll-out worthy brands together with equity investments, land bank and cash position while retaining a strong balance sheet supportive of M&A. Our SOTP sees an attractive $1.8b EV for the key PA brand vs PMV's $1.9b market capitalization.
