An increasingly challenging outlook from the consumer perspective as well as negative industry feedback causes UBS to reduce estimates for earnings per share in FY23 by -10%, with a further -8% cut to FY24 and -6% to FY25.
The broker believes Breville Group can pull back on incremental discretionary cost investment amid a softer top line and now forecasts 7% sales growth in FY23, which includes 4% from the LELIT acquisition.
Sales are expected to accelerate from FY24 and the broker believes current macro headwinds will be short-term while the company’s medium-term strategy is intact. Target is reduced to $25 from $34 and the Buy rating is maintained.
Sector: Retailing.
Target price is $25.00.Current Price is $17.44. Difference: $7.56 – (brackets indicate current price is over target). If BRG meets the UBS target it will return approximately 30% (excluding dividends, fees and charges – negative figures indicate an expected loss).
