There could be a rebound incoming for ASX small-cap stock AMA Group Ltd (ASX: AMA).
For those unfamiliar with the company, AMA Group operates in the wholesale vehicle aftercare and accessories market in Australia and New Zealand. Its operations include smash repair shops, automotive and electrical components, vehicle protection equipment, and servicing workshops for brakes and transmissions.
AMA's Vehicle Collision Repairs segment is a major revenue driver for the company. It serves major insurance companies through more than 130 vehicle repair sites in all Australian states and the ACT.
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Shaking off the rust
It has been a tough year for the ASX industrials stock.
The ASX small-cap stock has fallen 42% year to date.
However a new report from the team at Bell Potter indicates that the back half of 2026 could see the company rebound.
The broker has retained a buy recommendation on the stock along with a target price indicating more than 117% upside.
Reaffirmed guidance
AMA reaffirmed its FY26 EBITDA guidance of $70-75 million in April, even though experts were concerned that high fuel prices could reduce driving and lead to fewer accident repairs.
Since then, traffic volumes across Australia have remained fairly normal despite high fuel costs.
Combined with normal rainfall levels, this suggests repair volumes have likely been close to expectations.
The company has not released any negative trading updates, which is generally a positive sign that performance remains on track. AMA also started its share buyback this week, which suggests management is comfortable with current trading conditions.
A positive outlook
Bell Potter believes that AMA is positioned for a strong fourth quarter, with trading expected to remain stable and repair volumes tracking close to expectations.
The fourth quarter is also typically the company's best quarter for cash generation.
Bell Potter expects operating cash flow of about $37.5 million, which would help keep net debt below $20 million and leave the balance sheet in a healthy position.
While there is some risk to management's EBITDA guidance, there are currently no signs that the business has materially deteriorated.
The broker noted:
Indeed, the lack of any trading update suggests the guidance is still on track and the commencement of the buy-back this week also suggests there is no need at this stage for the company to "cleanse" the market.
Our normalised FY26 EBITDA forecast of $68.4m is admittedly below the guidance range of $70-75m so we still see some downside risk to the guidance but we are also not changing our forecast and see it as reasonable if not slightly conservative.
Big upside in tact for this ASX small-cap
Based on this guidance, the team at Bell Potter has retained their buy recommendation on this ASX small-cap.
The broker currently has a $1.00 price tag on AMA shares.
From yesterday's closing price of 46 cents per share, this indicates an upside potential of 117%.
