Bubs Australia [ASX:BUB] Shares Rise on ‘Material’ Guidance Upgrade

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On Friday, Bubs Australia [ASX:BUB] has released a ‘materially’ updated guidance for FY22.

BUB shares were up 9% in late afternoon trade.

That means that the infant formula stock is now up 75% in the last month alone:

ASX:BAB stock prices chart

Source: TradingView.com

Bubs FY22 guidance ‘materially’ upgraded

Yesterday, we covered BUB’s supply agreement with Walmart. There we noted:

In the recent slew of supply updates, Bubs is yet to divulge any hard numbers.

What is the expected sales boost from these supply deals? And is it reasonable to assume US consumers and retailers will take a bigger liking to BUB products than before?

What happens when the local American brands return to full production capacity? Who will American consumers be loyal to then?

Well, today, Bubs did give investors some hard numbers.

Bubs advised on Friday that there has been a ‘material upgrade’ to its FY22 revenue and earnings expectations.

Bubs now expects FY22 gross revenue to exceed $100 million.

BUB also expects a 100% increase on its 1H22 underlying EBITDA of $1.2 million.

The figures don’t include non-cash equity expenses, such as share payments and equity transactions.

In February, Bubs expected ‘modest Half on Half growth’ and was looking at $38.5 million in gross revenue.

BUB shares and the US baby formula horizon

The upgraded revenue outlook doesn’t only stem from the emergency US supply orders.

BUB also flagged ‘strong momentum in China’ as a source of boosted sales.

As Bubs CEO Kristy Carr commented:

Due to a strong momentum in China and the unanticipated volume of sales in the USA, complemented by Bubs’ demonstrated agility and speed to respond to the call for action with first mover advantage, Fourth Quarter turnover is likely to be higher than originally anticipated.

It has been an extraordinary journey for Bubs to have had over 12 months of in-market experience to provide the first response to USA’s infant formula shortage, which is likely to change the industry landscape in the USA. This has significantly accelerated our entry to one of the largest infant formula markets in the world, and we look forward to introducing more American families to Bubs’ full range of products.’

Now, in times of crisis, inflation, and rising interest rates, it can seem impossible to know what move to make next.

But Fat Tail’s veteran strategist Jim Rickards has been through many a time such as this.

Recently, Jim prepared an investment strategy for these troubled times.

To read more about his ideas for investing in these strange times, click here.


Kiryll Prakapenka,
For Money Morning


About Kiryll Prakapenka

Kiryll Prakapenka is a research analyst focusing on investigating the biggest trends in investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from the University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding…

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