2 battered ASX shares that look too cheap to ignore

These 2 ASX shares have slumped hard in the past 6 months.

Treasury Wine Estates Ltd (ASX: TWE) shares plunged 42% at the time of writing, while Zip Co. Ltd (ASX: ZIP) lost a whopping 55% in value over 6 months.

Let’s unpack what’s driving the sell-off and whether this is the moment for investors to pounce.

Treasury Wine Estates Ltd (ASX: TWE)

On paper, this S&P/ASX 200 Index (ASX: XJO) wine heavyweight still has plenty going for it. Its portfolio of premium and luxury labels such as Penfolds, 19 Crimes, and Lindeman’s carries global clout.

When conditions normalise, brand strength and margin leverage could quickly revive earnings. For contrarian investors who believe in the long-term appeal of premium wine, this slump might look like an entry point to buy this ASX share.

But the risks are hard to ignore.

For the first time in more than a decade, shareholders won’t receive two dividends. The decision to suspend payouts rattled the market. Add in suspended guidance and soft demand across key regions, and it’s clear this isn’t just a small bump in the road.

Management says the focus now is execution, cash flow, and fast-tracking Project Ascent. This cost-cut program is targeting $100 million in annual savings over two to three years. The board is also guiding to a stronger second half in FY26.

The market isn’t fully convinced.

Some brokers have stuck with cautious hold ratings and price targets well below prior highs. Morgans, for one, retained its hold call for the ASX shares after digesting the 1H FY26 result. And it wasn’t exactly glowing in its assessment.

Still, Morgans nudged its 12-month price target up from $5.25 to $5.30 a share, implying potential upside of roughly 17% from current levels.

Zip Co. Ltd (ASX: ZIP)

Over the past few weeks, Zip shares have been one of the more volatile ASX shares. They have been swinging from sharp sell-offs after disappointing full-year results and negative sentiment to periodic rallies that give the market some hope.

The buy now, pay later (BNPL) provider delivered solid results. Earnings jumped, guidance edged higher, and momentum looked healthy. But the market focused on the fine print.

Margins slipped to 7.9% as the faster-growing, but lower-margin US business drove more volume. Net bad debts nudged up to 1.73% of TTV, still inside board targets, but enough to keep investors alert.

Management also signalled second-half cash EBITDA will match the first. Translation? Profit growth may pause before it re-accelerates.

The bigger issue is trust. The buy now, pay later sector still faces regulatory change, tougher competition, and the risk of rising credit losses if consumers pull back. Those risks haven’t faded. And for a stock that’s already endured heavy selling, every wobble gets magnified.

So, what’s next?

Most brokers still see upside. The key will be turning new offerings into sticky, sustainable revenue streams.

UBS is bullish on the ASX share, sticking with a buy rating and a $4.50 target, pointing to potential gains of around 136% over the next year.

The post 2 battered ASX shares that look too cheap to ignore appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• Why Zip shares are bouncing back 5% today
• This ASX 200 premium stock crashes 58% – bargain or value trap?
• Here are the top 10 ASX 200 shares today
• 3 ASX All Ords shares at 52-week lows: Are they a buy?

Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Treasury Wine Estates. The Motley Fool Australia has positions in and has recommended Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.