Even though it has announced that it has settled its legal dispute with Lion Group, the a2 Milk Company Ltd (Australia) (ASX: A2M) share price has sunk lower on Thursday.
In afternoon trade the dairy company's shares are down 2.5% to $7.18.
Will its share price rebound higher?
As far as one leading broker is concerned, it will. In fact, the broker thinks its shares could be trading close to $9.00 over the next 12 months.
According to a note out of Citi, the broker has retained its buy rating and $8.85 price target on a2 Milk's shares following the end of the Lion Group legal dispute.
Analysts at the investment bank felt that a2 Milk had more to lose from the legal case, so the settlement removes a key risk that had been weighing over the company.
The two companies had been engaged in a legal dispute centred around the use of the term 'A2' on Lion Group milk products. The dairy company had accused Lion Group of misleading consumers by claiming its milk contained the A2 protein.
So with this out of the way, Citi thinks investors should be considering a2 Milk as a buy now.
And I agree. Whilst Citi's price target is one of the more bullish out there, if its strong sales growth continue I wouldn't be at all surprised to see its shares reach it.
Citi's price target implies potential upside of 23% from the current share price.
Overall, I think a2 Milk is the best option in the infant formula industry right now, ahead of the likes of Bellamy's Australia Ltd (ASX: BAL) and Bubs Australia Ltd (ASX: BUB).
