4 top ASX 200 turnaround candidates picked by 3 fundies

Turnaround stories are part of the DNA of the ASX.

Companies fall from grace, flirt with collapse, and then claw their way back to greatness. For investors, the opportunity is to be scavengers and load up at peak pessimism before the potential recovery takes hold.

Consider some of the legendary comeback stories of the past decade:

These stories show that with a clear catalyst, turnarounds can deliver extraordinary rewards. But beware: this strategy demands patience - and a strong stomach for false dawns.

In this article, we asked three fund managers to share their top ASX 200 turnaround candidates, the rationale behind their picks, and the key signals they’re watching.

Michael Wayne, Medallion Financial — Wisetech Global (ASX: WTC)

For me, Wisetech Global is the standout turnaround opportunity in the ASX 200 right now.

The stock has been under pressure for several reasons. The well-publicised revelations about the founder’s private life caused significant board upheaval and renewal. FY25 revenue came in below guidance, marking a meaningful deceleration from FY24. This was driven by new product delays, impacted by organisational changes and a governance review.

Guidance for the flagship CargoWise product disappointed, coming in at 14–21% growth versus consensus expectations of 25%. CargoWise revenue growth slowed below 20% in the second half and is not expected to ramp back above that level until 2H FY26.

Despite this, the fundamentals remain strong. EBITDA margins exceeded expectations thanks to the ongoing cost efficiency drive. Free cash flow conversion is impressive and continues to improve on FY24. At current levels, I see Wisetech as trading on a reasonably attractive valuation given its growth profile.

Looking ahead, there are several catalysts that could reignite growth:

1. The rollout of CargoWise Next is now complete, with new enhancements introduced to the Container Transport Optimisation (CTO) module. This could help drive revenue growth beyond expectations.
2. Management has also announced a transition to a bundled, transaction-based licensing model, moving away from the current Seat-plus-Transaction structure. Importantly, AI features will only be available to customers who adopt the new commercial model, creating a strong incentive to switch.

Both initiatives are expected to start contributing to revenue in 2H FY26 and scale through FY27 and beyond.

The key signals I’ll be watching are guidance announcements, Investor Day 2025, additional large global freight forwarder wins, and clarity on the timing of new product monetisation.

Michael Carmody, Centennial Funds Management — (ASX: AMP)

AMP has been written off by many investors since the Banking Royal Commission in 2019, but I believe the company is finally delivering a credible turnaround.

The findings of the Royal Commission caused significant reputational damage. The business lost clients, suffered outflows, and was forced to pay remediation. Investors deserted the stock.

But since 2021, under a new leadership team, AMP has been executing a focused turnaround strategy. The company has sold underperforming assets, returned capital to shareholders, and refocused on its core operations. 

The key drivers of revenue growth and profitability have turned and are set to improve further over the next 12–24 months. The most recent result showed accelerating inflow growth within the platform business. Costs are coming down as management executes a cost-out program, and underlying profitability is increasing.

The jewel in AMP’s crown is its North platform, which represents around 44% of group NPAT. I believe this division is undervalued by the market. It delivered +7.4% underlying growth in 1H FY25 versus 1H FY24, with a particularly strong June quarter underpinning momentum into the second half. 

With its differentiated retirement products, I expect the platform to win new advisers, take market share, and drive better-than-expected inflows over the next 12–18 months. As a result, the share price should re-rate.

Investors should monitor inflow momentum across the Platform and Superannuation & Investments divisions, as well as the company’s ability to deliver on guidance. 

At present, AMP trades on ~14.5x forward P/E, a 28% discount to the ASX 100. That discount won’t persist if the turnaround continues to gain traction.

Bruce Williams, Elston Partners — CSL & Worley

I’d highlight two names that I think are compelling turnaround opportunities: CSL and Worley.

CSL (ASX: CSL)

Large-cap defensive healthcare leader CSL has been derated due to margin compression, R&D missteps, and competitive fears. But there are clear cost-out and growth catalysts into FY26–27.

Why it was beaten down

• 2H slowdown in Behring/IG sales: Below market growth rate; 3-4% lost due to lower-margin tenders CSL chose not to pursue. Has the IG supply demand dynamics changed? Has the competitive dynamics changed? Has CSL's cost advantage gotten weaker? We considered these questions in our analysis.
• Gross margin pressures: Post-COVID plasma cost inflation, donor fees, and slower-than-expected margin recovery.
• R&D credibility: CSL112 failure, productivity questioned; pipeline seen as underdelivering.
• Macro overhangs: US Part D reform drag; tariff risk headlines.

Attractive fundamentals now

• Scale & oligopoly: Top 3 global plasma players control ~85% of volumes; CSL is the lowest-cost operator with around ~30% share.
• Margins stabilising: FY25 Behring EBITDA margin at 45.4% (+89 bps YoY); Vifor margin 51.2%.
• Cash generation: FY25 FCF US$3.6bn (+29% YoY); NPATA +14% CC.
• Valuation: FY1 P/E ~20x - at the low end of CSL’s 10y trading range despite high-single-digits to low-teen EPS growth outlook.
• Balance sheet: Net debt/EBITDA 1.5x → room for shareholder returns (A$750m buyback from FY26).

Turnaround catalysts

• Behring gross margin recovery: $500m cost savings program, Horizon 1 (yield uplift via Rika) and Horizon 2 (next-gen fractionation) drive lower cost/litre.
• Pipeline unlocks: Andembry (HAE), Garadacimab (HAE), multiple IG indication expansions, and nephrology (Filspár, Tavneos).
• Seqirus demerger: Planned FY26 → unlocks value, simplifies structure.
• Capital management: Buyback signals confidence in cash flow and balance sheet strength.

Signals to watch

• IG growth trajectory: Whether IG returns to mid–high single digit growth without margin sacrifice.
• Behring gross margin: Progress back toward ~57% pre-COVID benchmark.
• Tender outcomes in a rational market: Evidence CSL can hold pricing discipline while maintaining volume share.
• Pipeline readouts: Garadacimab Phase 3 uptake, Andembry early launch performance, nephrology adoption.
• Seqirus separation: Clarity on timing, margin trajectory post-demerger.
• Cost savings delivery: Evidence of $500m savings translating into P&L from FY27.

In summary, despite near-term noise, CSL’s cost leadership and rational market structure remain intact. Execution on Horizon 2 initiatives, R&D reset, cost savings, the Seqirus demerger should reinforce ~10% sustainable earnings growth, with valuation at ~19x FY1 P/E offering a solid entry point.

WORLEY (ASX: WOR)

Worley is another attractive turnaround candidate, given:

• Re-acceleration of revenue growth across energy (~3–7% CAGR), chemicals (~1.4% CAGR), and resources (energy transition minerals ~6% CAGR).
• Margin expansion is underway (EBITA ex-procurement margin 9.2% vs 7.9% prior year).
• Strong balance sheet (net debt/EBITDA 1.4x) and robust shareholder returns (buyback plus dividend).
• Stock trading at 14x NTM P/E, a 30% discount to ASX 200, despite historically trading at a 5% premium.

Why it was beaten down

• Uncertainty in pipeline growth: FY25 pipeline declined 2% YoY (ex-CP2), raising investor concerns about project flow.
• Energy market volatility: Lower sustainability spend and uncertainty around oil & gas CAPEX cycles.
• Chemicals weakness: Revenue down 14% on softer demand and lower procurement activity.
• Sentiment overhang: Discounted valuation reflects investor caution around earnings visibility and sector cyclicality.

Attractive fundamentals now

• Reduced competition: Several global EPC peers in distress, lowering competitive intensity and pricing pressure.
• Revenue: $12.1b (+4% YoY), growth led by Energy (+6%) and Resources (+23%). Diversified revenue growth underpinned by higher-quality, lower-risk projects.

• EBITA: EBITA margin ex-procurement sustaining 9–9.5%+ (FY26 guidance) and progress toward medium-term high SD to low DD %.
• Backlog: $16.9b (+22% YoY) including CP2 LNG; ~50% deliverable in next 12 months.

• Cash conversion: 94.9%, top of 85–95% target range.
• Balance sheet: Net debt/EBITDA 1.4x, well below 2.0x target.
• Shareholder returns: 13m shares repurchased ($168m) under $500m buyback.
• Valuation: WOR is trading on a NTM P/E of 14x or 30% discount to the ASX 200 against a 5% five-year average premium. 

Turnaround catalysts

• Backlog conversion & growth: $16.9b backlog (50% deliverable in 12 months), with strong LNG (CP2), DAC, and resources projects.
• Margin uplift: Scaling Global Integrated Delivery (14.7% → target 20%+), embedding AI/productivity, leaner cost base.
• Sector tailwinds: LNG demand CAGR ~3% to 2040, data centre electricity demand CAGR ~7% to 2040, and energy transition minerals CAGR ~6–7% to 2040.
• Capital management: Accelerated buyback and dividends add support while growth builds.

Signals to watch

• Pipeline & backlog momentum: Sequential growth in sustainable/transitional projects, not just CP2 LNG.
• Margins: EBITA margin ex-procurement sustaining 9–9.5%+ (FY26 guidance) and progress toward medium-term high SD to low DD %.
• Cash flow: Continued strong cash conversion and stable leverage (<2.0x).
• Execution: Delivery of mega-projects (CP2 LNG, DAC, lithium) without cost overruns or delays.
• Utilisation & GID scaling: Chargeable hours and progress toward 20%+ of hours through GID.

Worley is trading at a depressed valuation due to uncertainty in project pipeline and energy market volatility, but the combination of backlog visibility, margin expansion, balance sheet strength, and shareholder returns positions it as a compelling turnaround story.