Can A2 Milk shares keep climbing after a recent share price run?
The post Up 13% in 2 weeks: Has the A2 Milk (ASX:A2M) share price got further to climb? appeared first on The Motley Fool Australia. –
The A2 Milk Company Ltd (ASX: A2M) share price has had a pretty nice fortnight or more after a year most of its shareholders might like to forget. A2 shares have been one of the worst-performing shares on the S&P/ASX 200 Index (ASX: XJO) in 2021 so far.
The company last topped out at $20.05 a share back in August last year. Since that high, it has more or less been downhill for the company ever since. A series of earnings guidance downgrades and ongoing issues at A2 Milk have seen investors bail out of A2 shares. The company reached a new 52-week (and multi-year) low of $5.04 by the middle of last month – a fall of close to 80% from last year’s highs.
But perhaps the A2 share price has finally found a bottom. In the fortnight or so since finding those new lows, the A2 share price has rallied considerably. A2 shares are today going for $5.72 apiece, which is a good 13.5% higher than the $5.04 low that we saw in mid-May.
Why this sudden reversal of sentiment regarding A2 Milk? Well, as the Fool discussed on Monday, it might have something to do with the changing face of China’s birth control regulations. Once famous for the ‘one-child policy’, the Chinese government has now embraced the idea of a ‘3-child policy’, mostly as a measure to counter China’s rapidly ageing population.
More births in China means more mouths to feed – and A2 Milk infant products have historically been a favourite choice of Chinese parents. Well, at least that’s what the markets seem to be thinking on this matter, which might have substantially contributed to the shares’ revaluation from the market over the past fortnight.
After this ‘recovery rally’ of sorts, shareholders might be wondering today if the A2 share price has even further to climb from here.
Where to next for the A2 Milk share price?
Well, as my Fool colleague James Mickleboro reported last month, one broker that is optimistic about A2 shares is UBS. The broker retained its ‘buy’ rating on A2 Milk, with a 12-month price target of $12.50 a share. UBS reckons A2 is dealing with its inventory issues well and is placed to recover from here. Only time will tell if this does come to pass. No doubt shareholders have their fingers crossed.