It has been a rough 12 months for Accent Group Ltd (ASX: AX1) shares.
During the period, the ASX 300 stock has lost 65% of its value.
Does this make it cheap? Let's see what Bell Potter is saying about the footwear retailer.
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What is the broker saying?
Bell Potter has revisited Accent Group's half-year results and adjusted its expectations to account for current trading conditions. This has ultimately seen the broker downgrade its earnings estimates by at least 13% each year through to FY 2028. It commented:
We factor in some conservatism to AX1's 2H26e guidance amidst current trading conditions and sit towards the bottom end of the range. We see market share investments offsetting some profitability to see increased pressure at EBIT and NPAT margins. While AX1 should see some easing from easier comps in Mar-Jun, we factor in an increased level of re-investment in the gross margin predominantly to support our 6% revenue growth rate in 2H26. Our NPAT forecasts -15%/-13%/-14% for FY26/27/28e.
Should you buy this ASX 300 stock?
According to the note, the broker has retained its hold rating and reduced its price target on the ASX 300 stock by around 40% to 68 cents (from $1.10).
Based on its current share price of 61.5 cents, this implies potential upside of 10.5% for investors over the next 12 months.
It is also forecasting fully franked dividend yields of 6.9% in FY 2026 and 9.7% in FY 2027, boosting the total potential return beyond 17%.
Commenting on its recommendation and significant valuation downgrade, the broker said:
Our PT decreases by ~40% to $0.68/share (prev. $1.10/share). Along with our earnings revisions, we also reduce our target P/E multiple to ~10x (prev. 13x) on FY26/27e to reflect the lower visibility in near-term earnings for AX1 vs our coverage. We see good longer-term catalysts around AX1's pivot into the more resilient Sports category via SD and The Athlete's Foot.
We anticipate the unlocking of a sizable store roll-out opportunity for the SD banner in Australia, while benefiting from higher relevance to leading brand partners such as Nike backed by FRAS. However, we see increased competition in lifestyle footwear where AX1 is ~60% exposed to, given pressures from interest rate hikes in Australia and global macroeconomic uncertainty. At our PT of $0.68 the total expected return is <15% so we maintain HOLD.
