Broker retains $20 price target on A2 Milk (ASX:A2M) share price

Could the A2 Milk Company Ltd (ASX: A2M) share price make an epic comeback after slumping more than 30% this year? Broker UBS thinks so.
The post Broker retains $20 price target on A2 Milk (ASX:A2M) share price appeared first on Motley Fool Australia. –

asx share price rise signified by baby with wide eyes and mouth signifying surprise

The A2 Milk Company Ltd (ASX: A2M) share price has been uncharacteristic of its usual market leading performance of late. The flow-on effect of pantry destocking and disruption to its reseller channels has seen A2 Milk shares slump more than 30% from their record all-time highs in August. Following the company’s annual meeting on Wednesday this week, two big brokers retained their A2 Milk share price targets, which represent significant upside compared to its current price. 

Annual meeting rundown 

A2 Milk provided FY21 commentary for its operational regions. 

It was a challenging first half for its ANZ segment as daigou/reseller channels were impacted by COVID-related issues. A2 Milk expects the current impact to moderate over the course of the year. 

The company’s China label range and Mother and Baby Store (MBS) has delivered a strong performance year to date. For the most recent 11/11 online sales event, which was highly competitive, it achieved a 24% English label volume growth as well as strong brand and product rankings.  

From an earnings perspective, China-based channels accounted for 48% of A2 Milk’s total infant nutrition sales in FY20. Its MBS currently holds a 2.2% market share in China, which remains a significant opportunity for further growth. 

Fresh milk in Australia continued to perform strongly with current 12-month market share of 11.6% in October, up from 11.3% at June year end. In FY20, liquid milk contributed to 12.8% of the group’s earnings. 

A2 Milk’s North American operations continue to scale, achieving broad distribution across the entirety of the United States. A2 Milk products can now be found in more than 20,300 stores in the US.  The impact of COVID on the US has made consumers more value conscious. A2 Milk has shifted its short-term investment from broadcast advertising to a greater emphasis on in-store activation, account specific pricing and promotional activity. The company expects net revenue to be broadly consistent with FY20 and also predicts an improved earnings before interest, taxes, depreciation and amortisation (EBITDA) result in FY21. 

The US continues to be a strategically important market for A2 Milk, given its position as the largest global milk market and growing premium segment. 

A2 reaffirmed its guidance, as advised in September, which included FY21 group revenue of $1.80 billion to $1.90 billion (4% to 9.8% growth on FY20 revenue). 

Brokers retain A2 Milk share price target 

Macquarie Group Ltd (ASX: MQG) retained its A2 Milk share price target of NZD$17.95 (as per New Zealand Stock Exchange listing) and outperform rating. There was no change to rating or target after reviewing the company’s reaffirmed profit guidance. Macquarie notes early signs of a recovery in daigou sales channels. 

UBS Group (NYSE: UBS) retained its A2 Milk share price target of $20.50 with a buy rating. It was pleased with the company’s reaffirmed profit guidance and signs of improvement in daigou channels. 

Looking For Bargain Buys? These Cheap Stocks Could Be Just What You’re After (FREE REPORT)

Scott Phillips has released a FREE stock report revealing 5 stocks that he believes are WAY undervalued by the market at these current prices.

Scott thinks these 5 stocks are a ‘must consider’ for any savvy investor.

Don’t miss out! Simply click the link below to grab your free copy and discover Scott’s 5 bargain stocks now.

Click Here For Your Free Stock Report

More reading

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk and Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Broker retains $20 price target on A2 Milk (ASX:A2M) share price appeared first on Motley Fool Australia.

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!