Despite a Solid Growth Outlook, Breville Remains Expensive

We raise our fair value estimate for narrow-moat Breville to AUD 17.00, from AUD 16.50, following the 2020 AGM and release of fiscal 2021 guidance. The increase is principally due to time value of money. Breville provided fiscal 2021 EBIT guidance in the range of AUD 128 million to AUD 132 million. We lift our fiscal 2021 EBIT forecast by 2% to AUD 129 million on higher sales volumes as elevated demand enjoyed in late fiscal 2020 appears to be persisting in most geographies. COVID-19 shutdowns and movement restrictions have been beneficial for many of Breville's small kitchen appliances such as coffee machines, sandwich presses, and blenders. In markets with more severe lockdowns, online shopping is the only option, and customers have gravitated to known and trusted brands, illustrating the strength of the Breville and Sage brands which underpin Breville's narrow economic moat.