Netwealth Group Ltd (ASX: NWL) shares have been having a difficult time in 2026.
Since the start of the year, the S&P/ASX 200 (ASX: XJO) share has lost 40% of its value.
While that is disappointing, Bell Potter thinks it has created an opportunity to buy a high-quality ASX 200 share at an attractive price.
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What is the broker saying about this ASX 200 share?
The broker highlights that Netwealth has started the financial year with a softer than expected first quarter, which has led to a guidance cut. It commented:
NWL delivered net inflows of $2.6bn over the first quarter, which missed our $3.2bn expectation and $3.5bn consensus. Adjusting for two institutional client outflows, the run rate slowed from $2.0bn in the first seven weeks to $1.2bn in the last six weeks, triggering a cut to guidance from $18-20bn to $17-19bn. On a straight-line basis, the result takes $1.3bn off the low end vs. a $1bn downgrade, suggesting management expects to catch-up, assuming 2Q-4Q holds at the old levels.
The MS transition has commenced, but the timing meant there were no contributions in 1Q. Tranches are expected to progress over time but this could still be lumpy vs. a gradual recovery. The run rate needs to lift from current levels unless MS is a $7bn prospect. We continue to position under company guidance, however our estimates are broadly unchanged, with EPS changes of -1%/-2%/-2%.
Big potential returns and a good yield
According to the note, the broker has retained its buy rating and $25.00 price target on the ASX 200 share.
Based on its current share price of $15.42, this implies potential upside of 62% for investors over the next 12 months.
In addition, Bell Potter is forecasting fully franked dividends of 52 cents per share in FY 2027 and then 60 cents in FY 2028. This represents dividend yields of 3.4% and 3.9%, respectively.
This means that a total return of over 65% is on the cards for investors between now and this time next year according to the broker.
Commenting on its recommendation, Bell Potter said:
We maintain our Buy. The exit run rate is running well below the guidance needs but six weeks is a short window, and anecdotally September was a difficult month. NWL reiterated its financial guidance on a pre-acquisition basis despite the slowdown. It continues to expect Paradino will contribute an EBITDA loss of -$3m in FY27. The caveat is that subscriber numbers stepped up in the one month post-acquisition.
We continue to view equities as challenged based on the required return over cash, and the final form and timing of government tax changes remains uncertain. We like the depressed valuation multiple, and strategic investments made, with early runs on the board. Trading on 28x earnings, the multiple stands at a 5-year low and has retraced back to its historical spread over the S&P/ASX 200.
