A2 Milk Shares Soar With UBS Announcement

The share price of A2 Milk Company Ltd [ASX:A2M] rose 8% today, following an upgraded rating by UBS Wealth Management.

Today’s update details that the broker has increased A2 to a buy rating, with an increased price target of AU$16.68, which should please investors.

At time of writing, A2 shares are trading at $15.66.

What’s new with A2 Milk?

The infant formula and fresh milk company has been one of the best performers on the ASX over the last few years, with an increase of more than 300% over the last two years, and increase from 66 cents to $14.36 in just four years.

It’s become a fan favourite for investors with strong demand for their products both internationally and domestically. And if UBS is right, the stock could be set to gain further ground.

Analysts at UBS believe that A2 shares are well priced in correlation to their long-term growth potential. They expect the company’s earning’s to increase by a CAGR (Compound Annual Growth Rate) of 25% in the next two years.

And while the broker admitted they saw downside risks such as regulation and changes to e-commerce laws in China, demand for trustworthy milk products remains solid, and UBS expects this to stay the same for the foreseeable future.

What does this mean for investors?

With Chinese demand remaining strong and investors still very enamored with the stock, the outlook for A2 remains positive. Investors love a glowing broker note.

Meanwhile, other dairy producers, including Bubs Australia Ltd [ASX:BUB] and Bellamy’s Australia Ltd [ASX:BAL] have increased by 2% and 1.5% respectively.


Ryan Clarkson-Ledward,
For Money Morning

PS: Although A2 is impressive, sometimes the biggest winners are the smallest players. Check out this free report revealing our top three small-cap stocks trading on the ASX that could improve to your portfolio. Download your free report now.

Ryan Clarkson-Ledward is an Editor at Money Morning.

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