If you’re eyeing significant returns for your investment portfolio in 2026, Premier Investments Ltd (ASX: PMV) might be a stock to consider. Analysts at Bell Potter suggest that the current valuation of this ASX 200 stock presents a compelling opportunity for investors.
Premier Investments, the conglomerate behind well-known brands such as Smiggle and Peter Alexander, has faced recent challenges. The company’s latest guidance for the first half of FY 2026 fell short of expectations, primarily due to the underperformance of the Smiggle brand.
Challenges and Opportunities for Premier Investments
According to Bell Potter, Premier Investments provided a guidance of $120 million in Pre-AASB 16 EBIT for Premier Retail at the December AGM, indicating a nearly 10% miss compared to consensus estimates. The underperformance has been largely driven by Smiggle, particularly in the UK market, where growth has been weaker than anticipated. However, the Peter Alexander brand continues to perform well, contributing to consistent growth.
Premier Investments (PMV) provided 1H26 guidance of $120m in Pre-AASB 16 EBIT for Premier Retail at the Dec AGM, implying a ~10% miss to Consensus.
In response to these challenges, Premier Investments announced interim leadership appointments for Smiggle and an on-market buyback of up to $100 million over the next 12 months. These strategic moves aim to stabilize the brand and enhance shareholder value.
Smiggle’s Future and Strategic Adjustments
Despite the current hurdles, Bell Potter maintains a positive outlook on Premier Investments. The analysts acknowledge that Smiggle is likely to shrink further, especially in the UK, which accounts for 35-40% of the brand’s market. The Australian market is also facing pressures due to the rate cut cycle.
We see the Smiggle business (~30% of Retail) shrinking further especially in the largest region, UK (35-40% of the brand, as per BPe) and also seeing pressures with the rate cut cycle in the core region, Australia.
While these factors contribute to a downgrade in earnings estimates, Bell Potter believes that the current share price already reflects these challenges. The analysts suggest that any improvements from this lower base could present a favorable risk-reward scenario for investors.
Valuation and Investment Potential
Bell Potter’s sum-of-the-parts valuation estimates a $2 billion enterprise value for the Peter Alexander brand, based on a projected FY26 EBIT of $160 million at a 13x multiple. This includes $103 million EBIT for the first half of FY26.
Our sum of the part valuation sees a $2.0b EV for the PA brand (derived on FY26e $160m EBIT at 13x multiple, which includes $103m EBIT for 1H26e).
Despite the challenges surrounding Smiggle, Bell Potter recommends Premier Investments as a buy, albeit with a reduced price target of $20.00, down from $26.50. Given the current share price of $13.39, this suggests a potential upside of nearly 50% over the next 12 months.
Looking Ahead: Strategic Moves and Market Reactions
The announcement of interim leadership changes and the buyback plan are strategic efforts to address the current challenges and drive future growth. These initiatives are expected to stabilize the Smiggle brand and potentially unlock value for shareholders.
As Premier Investments navigates these challenges, the focus will likely remain on optimizing the performance of its diverse brand portfolio. Investors and analysts will be watching closely to see how these strategic adjustments impact the company’s financial performance and market position in the coming months.
Ultimately, while the road ahead may present challenges, the potential for significant returns makes Premier Investments a stock worth watching for investors seeking opportunities in the ASX 200.
