One of the best performers on the Australian share market on Wednesday has been the Bellamy's Australia Ltd (ASX: BAL) share price.
In afternoon trade the organic infant formula and baby food company's shares are up 9% to $8.32.
Why is the Bellamy's share price rocketing higher?
With no news out of the company, it appears that investors have been fighting to get hold of shares due to a positive broker note out of Morgan Stanley this morning.
According to the note, the broker has initiated coverage on Bellamy's with an overweight rating and $11.00 price target.
Even after today's stellar gain, this price target implies potential upside of over 32% for Bellamy's shares over the next 12 months.
Why is Morgan Stanley bullish on Bellamy's?
The broker believes that Bellamy's is close to turning around its business after developing a premium brand, and the recently launched product formulation could be the inflection point for its sales and profits.
So with its shares changing hands at 22x estimated FY 2019 earnings, the broker believes the market has yet to factor in its strong growth potential over the coming years.
What about its rivals?
Morgan Stanley may expect the Bellamy's share price to shoot higher, but it doesn't feel the same way about the A2 Milk Company Ltd (ASX: A2M) share price.
Its note reveals that it has initiated coverage on a2 Milk with an underweight rating and $9.60 price target.
The broker is bearish on a2 Milk because it feels the market is too optimistic on its future growth prospects and is sceptical that the company will grow its market share as much as the current share price implies over the next five years.
Incidentally, Blackmores Limited (ASX: BKL) shares were also given an underweight rating with a lowly $104.00 price target.
What now?
While I agree with Morgan Stanley on Bellamy's and believe it could be a great investment for patient investors, I feel investors will have to be very patient as the accreditation required to sell its products in China could take longer than expected.
This accreditation is likely to be the catalyst for its sales growth, but there are concerns it could be as late as FY 2021 before it is in place and the company is selling products on the China mainland.
