The S&P/ASX 200 Index (ASX: XJO) share Breville Group Ltd (ASX: BRG) recently reported its result and investors were impressed by what they saw.
Breville reported that in the first six months of FY26, revenue grew by 10.1% to $1.1 billion, gross profit rose 6.3% to $389.5 million, operating profit (EBITDA) rose 2.9% to $182.8 million, earnings before interest and tax (EBIT) rose 0.7% to $145.8 million, net profit increased 0.7% to $98.2 million and the dividend per share was increased 5.6% to 19 cents.
The coffee machine and coffee bean business guided that it expects FY26 EBIT to see a “slight increase” compared to FY25, which is ahead of what the market was expecting, though it was in line with what broker UBS expected.
What did UBS think of the ASX 200 share’s result?
The broker said that global product revenue growth of 10.9% was “strong” and led by ‘direct’ countries and the coffee categories.
Direct countries grew revenue by double-digits, while the coffee segment also grew by double-digits.
UBS also noted that US tariffs have been a key concern for Breville, which the broker thinks have been “well managed”.
The gross profit margin compression (151 basis points (1.51%) in the global product segment) in HY26 is a “function of some China sourced products” sold in the first half of FY26 and no price rises in the core US range, but this was “well managed” in a few different ways.
First, the ASX 200 share has executed a production shift of 80% of 120v product from China to lower tariff markets such as Cambodia, Indonesia and Mexico at a pace that has been “well handled”.
Second, the distribution/retailer mix has been “optimised”.
Third, price rises for tail products has had a neutral gross profit outcome in dollar terms, assisted by competitor pricing and range decisions.
Looking ahead to FY27, the gross profit margin upside exists due to the shift to a full 12 months to lower US tariff countries, although uncertainty is “likely to continue”. In the longer-term, AI adoption by the company is expected to assist cost management and operating leverage tailwinds.
How much could the Breville share price rise?
After seeing the report, UBS said:
Retain Buy rating due to attractive double digit EBIT growth & ROIC expansion from FY27E (growing TAM [total addressable market] & share gains drive revenue, production efficiencies & execution drive margins & capital efficiency).
UBS has a price target of $39 on the ASX 200 share, suggesting the business could rise by around 20% over the next year.
The post Why experts think this ASX 200 share can rise 20% after its result appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison has positions in Breville Group. 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.