If you’re eyeing substantial returns for your investment portfolio in 2026, Premier Investments Ltd (ASX: PMV) might be a stock to consider. Analysts at Bell Potter suggest that this ASX 200 stock is currently undervalued, presenting a potential opportunity for significant gains.
Premier Investments, the company behind well-known brands such as Smiggle and Peter Alexander, has recently caught the attention of investors. Despite recent challenges, Bell Potter maintains a positive outlook on the stock, projecting a potential 50% rise from its current levels.
Premier Investments: A Closer Look
Premier Investments is a conglomerate that not only owns popular retail brands like Smiggle and Peter Alexander but also holds investments in property and the appliance manufacturer Breville Group Ltd (ASX: BRG). The company’s diverse portfolio has historically provided a buffer against market volatility.
However, recent guidance for the first half of FY 2026 revealed that Premier Investments’ performance has not met expectations. The underperformance is largely attributed to the Smiggle brand, particularly in the UK market, where growth has been sluggish.
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.
Challenges and Strategic Moves
The Smiggle brand, which constitutes approximately 30% of Premier Retail, is expected to face further contraction, especially in the UK, which accounts for 35-40% of the brand’s market. Bell Potter has adjusted its earnings estimates accordingly but remains optimistic about the stock’s prospects.
Despite these challenges, the Peter Alexander brand continues to perform well, providing consistent growth and stability to the company’s overall portfolio. This strength is crucial as it offsets the weaknesses seen in Smiggle.
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).
Market Reaction and Future Prospects
In response to the current market conditions, Premier Investments has announced interim leadership changes within Smiggle and plans for an on-market buyback of up to $100 million over the next 12 months. These strategic moves are aimed at stabilizing the brand and enhancing shareholder value.
Bell Potter’s analysis suggests that the current share price of $13.39 does not fully reflect the potential for recovery and growth, particularly if Smiggle’s performance improves from its current low base. The firm has set a reduced price target of $20.00, indicating a potential upside of nearly 50% for investors over the next year.
Expert Opinions and Historical Context
Industry experts note that retail stocks often experience cyclical trends, with brands like Smiggle facing temporary setbacks due to market saturation and changing consumer preferences. However, historical data shows that well-managed brands can rebound, especially when supported by strong performing segments like Peter Alexander.
According to market analysts, Premier Investments’ ability to navigate these challenges will depend on its strategic initiatives and the broader economic environment. The company’s diversified portfolio and proactive management approach are seen as key factors that could drive future growth.
Looking Ahead
As Premier Investments navigates its current challenges, investors are closely watching for signs of recovery in the Smiggle brand and continued strength in Peter Alexander. The company’s strategic initiatives, including leadership changes and share buybacks, are expected to play a crucial role in shaping its future trajectory.
While the road ahead may be fraught with challenges, the potential for significant returns makes Premier Investments a compelling option for investors willing to take a calculated risk. As Bell Potter’s analysis suggests, the current market conditions present a unique opportunity for those looking to capitalize on the stock’s potential upside.
