Bell Potter says Breville Group has been sold off too heavily following a 36.8 per cent fall in the company’s share price over the last month.
The broker upgraded its recommendation on the stock from ‘hold’ to ‘buy’ but reduced its price target slightly from $25.50 to $21.15, saying while the pullback was warranted, it had sold off too far.
Breville shares are currently trading at $16.04.
“The near-term outlook is no doubt challenging, and we have reduced our forecasts to account for this,” said analyst Sam Haddad.
The broker reduced its EPS estimates for the next three financial years by 3, 6 and 6 per cent respectively.
“That said, given the time factor ahead of peak season, strong inventory cover, a material online presence, flexibility on PR spend, low rent obligations, and conservative gearing, we believe Breville is well placed to navigate the business, with long-term growth prospects intact.”