Its been very quiet here of late. I thought I would post up this article as the reason for the 5% rise in the SP today. In a nutshell company is executing flawlessly, SP $28 in 12mths and at least $62 in a decade excluding dividends. Anyone who jumped in in recent times has done well and will continue to do well out of this exceptional investment.

Street Talk

Breville to capture $3b revenue opportunity in next decade: MS

Sarah Thompson, Anthony Macdonald and Tim Boyd

Jul 14, 2020 – 10.31am

Who would've thought the humble toasted sandwich could turn into part of a $10 billion global serviceable market?

Kitchen appliance maker Breville manufactures things like sandwich toasters.

But that's the opportunity in front of kitchen appliance developer Breville Group, according to analysts at Morgan Stanley who initiated coverage on the stock on Tuesday.

Morgan Stanley is backing Breville to have captured a third of that market opportunity – or $3.1 billion – by fiscal 2030, which implied 10 per cent compound annual returns over the next ten years.

Growth of that kind would see Breville's share price head to $62 in the long term, it closed at $22.97 on Monday. On a shorter term basis, the analysts had a $28 price target for the stock and an "overweight" rating.

Driving the investment bank's thesis was the global expansion opportunity in front of Breville that would support its structural growth.

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BRGBreville Group

$24.16 5.18%

"We estimate a global revenue opportunity of A$10bn, providing a long runway for organic growth relative to its current global product revenue base of A$770m."

Plus, Morgan Stanley thought Breville could strengthen its competitive advantage through out-innovating competitors by investing in research and development.

"As BRG scales, this will drive higher R&D and marketing spend, which in turn should drive accelerated revenue growth."

Morgan Stanley said Breville to be in a net cash position by fiscal 2021, which would give it $500 million of liquidity heading into its working capital peak in November.

"We view BRG as being well positioned to manage near-term uncertainty with scope for opportunistic M&A and/or expanding dividends."

The company raised $100 million in May this year, its first trip to equity capital markets since listing on the ASX.

Key risks for Morgan Stanley's valuation included a more competitive trading environment, distressed retail partners, poor innovation and margin headwinds from things like foreign exchange rates and tariffs.