Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved.

A2 Milk share price: why UBS sees further upside

We examine why analysts from UBS see further upside for the stock ahead of its full-year results.

A2M Source: Bloomberg

When will the company report its FY20 results?

Fresh milk and infant formula dairy company a2 Milk (A2M) is set to report its full-year (FY20) results next Wednesday, 19 August.

A2 Milk share price: analysts remain bullish

Heading into a2’s full-year results release, the sell-side remains bullish on the company’s prospects, with the stock commanding and Overweight rating, on average, according to the Wall Street Journal. Though analysts may currently favour the stock, its ultimately been a volatile year for the company – with the a2 Milk share price trading between $11.28 per share and $20.05 per share over the last 52 week period.

On a more granular level, A2M currently has 5 Buy ratings, 1 Overweight rating, 2 Hold ratings, 1 Underweight Rating and 2 Sell ratings, also according to the Wall Street Journal.

Analysts from Swiss investment bank UBS – which have remained bullish on A2M for some time now – recently reiterated their Buy rating and NZ$22.00 per share price target on the stock.

Overall the investment bank said it expected the company to beat expectations at the FY20. Here, UBS analysts said:

‘Pulling together the data mosaic across A2M's sale channels and operating costs points to a potential FY20 consensus EBITDA beat of ~4% driven by stronger margins.’

For reference, in April, A2M upgraded their full-year earnings (EBITDA) margin expectations to between 31-32% – a figure which factored in a planned marketing spend of approximately NZ$200 million. UBS however expects the company’s costs to come in lower than guided as a result of Mom and Baby Stores (MBS) closures – contributing to the above highlighted earnings beat.

Looking forward, the investment bank argued that the company remains well placed to capitalise on the Chinese infant formula market, saying:

‘Our analysis suggests A2M enters FY21 with a record CBEC market share in July and MBS sales ahead of pre-COVID-19 helped by a larger store footprint.’

Overall, UBS is currently forecasting that A2M will report FY20 revenues of NZ$1,741 million, against EBIT of NZ$556.7 million and net earnings of NZ$392.5 million

Other bits and pieces

Elsewhere, a2 Milk recently announced the appointment of its new Managing Director and Chief Executive Officer: Mr David Bortolussi. Mr Bortolussi has significant senior management experience, most recently working as Group President of International Innerwear at HanseBrands.

Mr Bortolussi is set to take the reigns during the early parts of CY21.

a2 Milk finished out Wednesday's session at $18.82 per share, down 0.21%.

Want to take a position in CSL, long or short?

Create an IG trading account or log in to your existing account to get started now.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

Act on share opportunities today

Go long or short on thousands of international stocks with CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.