It was a good month for A2 Milk shares….
The post How did the A2 Milk (ASX:A2M) share price perform in September? appeared first on The Motley Fool Australia. –
The A2 Milk Company Ltd (ASX: A2M) share price was on form at long last in September.
The embattled fresh milk and infant formula company’s shares stormed 7% higher. This compares favourably to the S&P/ASX 200 Index (ASX: XJO), which lost a disappointing 2.6% of its value during the month.
Though, it is worth noting that A2 Milk’s shares are still down 45% since the start of the year despite this gain.
Why did the A2 Milk share price surge higher in September?
There were a few catalysts for the strong performance by A2 Milk’s shares in September.
One of those was industry data which revealed that infant formula prices have been stabilising. This appears to have been driven by channel inventory heading in the right direction again.
Another catalyst for the rise in its share price was a broker note out of Citi. According to the note, its analysts have retained their buy rating and $7.20 price target on the company’s shares.
Based on the current A2 Milk share price of $6.38, this still implies potential upside of almost 13% even after last month’s gains.
What did the broker say?
Although Citi suspects that there could be more bad news on the horizon for the company, its analysts feel that any weakness in the A2 Milk share price could be greeted with a takeover approach.
Citi has touted a takeover approach of ~$7 per share, which is in line with comparable acquisition multiples.
While this would be positive news for investors that bought in at its recent lows, longer term shareholders will no doubt be hoping the company isn’t taken over at that price. After all, A2 Milk’s shares are down by almost 70% since July 2020.
Should you invest $1,000 in A2 Milk right now?
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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.