Yesterday the a2 Milk Company Ltd (Australia) (ASX: A2M) share price was one of the best performing shares on the local share market.
It finished the day with a 3% gain to $3.77, leaving it within touching distance of its all-time high.
Why did it climb higher?
The fast-growing dairy company's shares were given a lift yesterday after a research note out of Deutsche Bank revealed that its analysts have upgraded it to a buy rating from hold.
Furthermore, the investment bank has increased its price target to NZ$5.00, which equates to $4.73 at today's exchange rate. Incredibly, this means potential upside of approximately 25% from the last close price.
According to the note, its analysts are bullish on the company's long-term prospects in the China market.
This is down to the company commanding high levels of brand interest from Chinese consumers and tailwinds including the relaxing of the one-child policy.
Should you invest?
I would have to agree with Deutsche Bank that the company is a buy today.
Despite the fact that its shares are changing hands at a reasonably lofty 35x annualised earnings, I believe a2 Milk is worth every cent due to its current growth profile.
However, as we have seen with Bellamy's Australia Ltd (ASX: BAL) this week, the China market is notoriously difficult to operate in and things can change in the blink of an eye.
So I would suggest investors don't go too overweight with its shares, but rather include them as part of a balanced portfolio.
