While the S&P/ASX 200 Index (ASX: XJO) fell nearly 10% in April, some ASX 200 stocks were exposed to tariffs more than others.
Breville Group Ltd (ASX: BRG) was arguably one of the most heavily tariff-exposed stocks on the ASX.
During the first week of April, its share price fell nearly 20% when US President Trump first announced the details of his tariff plans.
With the company manufacturing 90% of its products (by value) in China and selling 45% of its products into the US, the tariff announcement was bad news for Breville shareholders.
Following the sell-off, experts flagged the sell-off as an opportunity to buy a high-quality global business on sale.
Since then, the ASX 200 stock has rebounded more than 20%.
Investors may be wondering whether Breville is still a compelling opportunity at the current share price. One leading expert recently suggested Breville had further to run, despite its recent rebound. Let's find out why.
Macquarie tips further gains for Breville shares
In a 12 September research note, Macquarie Group Ltd (ASX: MQG) provided an updated research note on Breville shares.
The broker affirmed its outperform rating on the ASX 200 stock and a price target of $39.20.
Given that shares closed at $30.89 yesterday, that suggests 27% upside from here over the next 12 months.
Based on its historical outperformance of the benchmark, Macquarie expects the company to grow revenue above 10% annually between FY25 and FY28.
Macquarie said, "The coffee segment, new market development and investment in new product development (NPD) continue to drive outperformance vs sector peers".
What about the tariffs?
In its research note, Macquarie also addressed the elephant in the room – the potential impact of Breville's tariff exposure.
Macquarie said the evolving US and China tariff landscape continues to cause significant volatility and uncertainty in the global economy.
Earlier this month, The Motley Fool's Bronwyn Allen noted that Breville is relocating a large portion of its manufacturing out of China and into nations with lower tariffs.
Breville management said:
This relocation will continue through FY26 with an initial target to move 90% of Americas production value, or ~40-45% of total BRG Group production value, to these new locations.
This relocation will continue through FY26, with an initial target of moving 90% of Americas production value, or ~40-45% of total BRG Group production value, to these new locations.
However, management still acknowledged it faced 'a material step up in input costs for US sales' in FY26 and beyond. Macquarie also said many of Breville's competitors, including De'LonghiSpA (BIT: DLG), had begun increasing prices in the US to mitigate this impact.
Foolish Takeaway
Most investments come with pros and cons. When making an investment decision, investors must weigh these factors in light of the company's valuation. As one of the most tariff-affected ASX 200 stocks, Breville shares face headwinds that could weigh on future earnings. However, in light of their growth outlook and undermining valuation, Macquarie believes Breville shares can rise nearly 27% higher over the next 12 months.
