One of the biggest movers on the market in the last five trading sessions has been the Bellamy's Australia Ltd (ASX: BAL) share price.
During this time its shares have risen a staggering 31% despite there being no news out of the organic food and infant formula company.
Well this strong run could be set to continue on Thursday after the company released a trading update which revealed that it has had a strong start to FY 2018.
According to the release, management is now targeting FY 2018 revenue growth of between 15% and 20% for its core business. This compares to its previous revenue growth target of between 5% and 10%.
Furthermore, Bellamy's has narrowed its EBITDA margin target from between 15% and 20% to 17% and 20%.
This guidance excludes the recently acquired Camperdown business which is still expected to generate an EBITDA loss of between $1 million and $2 million.
Management has once again reiterated its view that revenue will be notably stronger in the first-half of FY 2018 due to the impact of seasonality and a delay in its CFDA registration.
Should you invest?
Whilst there certainly is an appetite for Australian infant formula in the massive China market, I do feel that the shares of Bellamy's and a2 Milk Company Ltd (Australia) (ASX: A2M) are looking very pricey right now.
This could put them at risk of sharp declines if they fail to live up to the market's lofty expectations.
In light of this, I would suggest investors hold off an investment on both of them at this stage and focus on other areas of the market with more compelling risk/rewards.
