Here's why the A2 Milk (ASX:A2M) share price is up 9% in a week

Shares in the infant formula company have been on fire this past week, surging more than 9% in the the last 7 days.

| More on:
Older man and young boy smiling while drinking milk with milk moustaches

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The A2 Milk Company Ltd (ASX: A2M) share price has been on fire this past week.

In the last 7 days, shares in the infant formula company have surged more than 9% and are currently trading at $5.87, up 2.62%.

Let's take a look at what's been fuelling the A2 Milk share price lately.  

Positive broker note

Unlike many other companies, the A2 Milk share price has bucked broader market volatility over the past week.

This euphoric price action can possibly be attributed to a recent note from leading broker Bell Potter.

According to the note, analysts see a lot of value in the embattled infant formula company. The broker retained its buy rating on A2 Milk with a revised share price target of $7.70.

Analysts said the market had underestimated the impact that inventory swaps and sales pullbacks had on A2 Milk. As a result, the broker expects top-line company growth to resume.

Looking ahead at FY22, the analysts predicted that A2 Milk would deliver a 10.3% increase in sales to NZ$1,332 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of NZ$212.8 million.

In FY23, they expect the company to deliver another 10.5% lift in sales to NZ$1,472 million and a 21.3% increase in EBITDA to NZ$258.2 million.

Despite the promising outlook, Bell Potter analysts noted that near-term trading would remain tough for A2 Milk.

How did A2 Milk perform in FY21?

Late last month, the A2 Milk share price continued its decline following a dour FY21 result.

For the full year, the company reported a 30% drop in revenue to NZ$1.21 billion.

In addition, the former market darling noted a 77.6% reduction in EBITDA to NZ$123 million.

Other key points from A2 Milk's report included;

  • Stock write-downs of NZ$109 million
  • Net profit after tax down 79.1% to NZ$80.7 million
  • Cash balance of NZ$875.2 million.

A2 Milk advised investors that the company would review its growth strategy, given the rapid changes to its market.

A2 Milk share price snapshot

Despite rallying in the past week, shares in A2 Milk remain more than 48% lower since the start of 2021.

The A2 Milk share price is also down 65.7% in the 12 months since this time last year.

Should you invest $1,000 in Allkem right now?

Before you buy Allkem shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Allkem wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Nikhil Gangaram owns shares of A2 Milk. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

A neon sign says 'Top Ten'.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a rough trading day for ASX stocks this Monday.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Share Gainers

Why 4DMedical, Gold Road, Syrah, and Tyro shares are racing higher today

These shares are starting the week strongly. But why?

Read more »

Rising gold share price represented by a green arrow on piles of gold block.
Gold

2 ASX gold stocks racing higher in Monday's sinking market

Investors are sending these ASX gold stocks flying higher on Monday. But why?

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords share just rocketed 19% on BIG news

Investors are sending this ASX All Ords share flying on Monday. But why?

Read more »

Person pretends to types on laptop drawn in sand.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a happy finish to the week for ASX shares this Friday.

Read more »

Five young people sit in a row having fun and interacting with their mobile phones.
Share Gainers

5 ASX All Ords stocks rocketing higher this week

Investors sent these five ASX All Ords stocks soaring this week. But why?

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Share Gainers

Why Boss Energy, Capstone, Dimerix, and Platinum shares are storming higher today

These shares are having a good finish to the week. Let's find out why.

Read more »

Fancy font saying top ten surrounded by gold leaf set against a dark background of glittering stars.
Share Gainers

Here are the top 10 ASX 200 shares today

It was the ASX's fourth day of gains for the week today.

Read more »