Top broker says Breville share price weakness is a buying opportunity

The Breville Group Ltd (ASX: BRG) share price started the week in the red.

The appliance manufacturer’s shares ended the day almost 2% lower at $19.45.

This means the Breville share price is now down 40% in 2022.

Is the Breville share price weakness a buying opportunity?

One leading broker that sees the weakness in the Breville share price this year as a buying opportunity is Goldman Sachs.

According to a note, the broker has just initiated coverage on the company’s shares with a buy rating and $23.40 price target.

This price target implies potential upside of over 20% for investors over the next 12 months.

What did the broker say?

Goldman notes that the Breville share price has fallen heavily this year and is thoroughly underperforming the market. It believes investors are “concerned that it was a key beneficiary during COVID in-home consumption and that reopening could result in weakness from consumption.”

However, Goldman doesn’t believe this will be the case and expects its solid growth to continue thanks to a three-pronged growth strategy.

It explained:

We believe that the portioned and R&G coffee market will experience more secular growth than the market has factored in with continued upgrading from soluble coffee and added penetration of out-of-home (e.g. hotels, workplace). We see BRG as having a three-pronged growth strategy: 1) building on secular growth of the portioned and roast & ground (R&G) coffee market and achieving market share gains; 2) new market entry; and 3) options – ecosystem revenue streams.

Overall, the broker believes that this will underpin “a FY22-24e 10.4% sales CAGR and 14.9% NPAT CAGR with ROIC in 2024 of 28.9%.”

In light of this, it sees plenty of value in the Breville share price following recent weakness.

The post Top broker says Breville share price weakness is a buying opportunity appeared first on The Motley Fool Australia.

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• Why APM, Block, Breville, and Superloop shares are charging higher
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• Is the Breville share price out of the bargain bin?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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