a2 Milk (ASX:A2M) share price rises on bullish broker note

This beaten down ASX share could be going higher…
The post a2 Milk (ASX:A2M) share price rises on bullish broker note appeared first on The Motley Fool Australia. –

The A2 Milk Company Ltd (ASX: A2M) share price is pushing higher on Tuesday.

In afternoon trade, the fresh milk and infant formula company’s shares are up 1% to $5.92.

Why is the a2 Milk share price rising today?

The rise in the a2 Milk share price today may have been driven by a broker note out of Bell Potter.

According to the note, the broker has retained its buy rating and $8.50 price target on the company’s shares.

Based on the latest a2 Milk share price, this implies potential upside of 45% over the next 12 months.

What did Bell Potter say?

Bell Potter has been looking at a number of monthly activity points that it uses to judge how the company could be performing.

One of those is Chinese infant milk formula (IMF) imports. While the broker notes that volumes are still down significantly year on year, it believes they have bottomed now.

It said: “The largest exporters of IMF to China are the EU, NZ and Australia. We view movements in volumes to China from these markets as indicative of overall market dynamics, with the R3M average removing monthly noise. While volumes continue to demonstrate double digit YOY declines (-23% YOY in May’21), sequentially volumes look to have formed a bottom in recent months, up +29% from Jan’21 lows.”

What should you look for with a2 Milk’s results?

With the company’s full year result just around the corner, Bell Potter also spoke a little about what could move the a2 Milk share price when it releases its numbers.

The broker explained: “The key focuses of the FY21e result will be the extent to which inventory impairments, volume swaps and sales delays have impacted headline EBITDA. In total we estimate NRI’s [non-recurring items] to be taken above the line total NZ$110-150m, with an additional NZ$30m impact from 4Q21 sales slowdown to reduce channel stocks. Incorporating MVM and recent currency movements would indicate FY22e baseline EBITDA closer to NZ$250- 340m, which compares to a FY22e consensus of NZ$264m. In our view consensus FY22e EBITDA expectations are on the low side.”

The a2 Milk share price is down 50% in 2021.

The post a2 Milk (ASX:A2M) share price rises on bullish broker note appeared first on The Motley Fool Australia.

Should you invest $1,000 in a2 Milk right now?

Before you consider a2 Milk, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and a2 Milk wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of May 24th 2021

More reading

Here’s why the A2 Milk (ASX:A2M) share price is down 18% in a month
These are the 10 most shorted ASX shares

Top brokers name 3 ASX shares to sell next week

Is it a good time to buy A2 Milk (ASX:A2M) shares in August 2021?
The A2 Milk share price is down 7% this last week. Here’s why

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 recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!