A2 Milk Company Ltd (ASX: A2M) shares have had a tough time over the last 12 months.
As you can see on the chart below, the infant formula company's shares have lost 18% of their value.
This means that if you had invested $2,000 into its shares, your investment would have unfortunately fallen in value to $1,640.
But that was the last 12 months. What might happen if you were to invest $2,000 into A2 Milk shares now?
Let's see what brokers are predicting for its shares between now and this time next year.
Investing $2,000 into A2 Milk shares
Firstly, if you were to spend $2,000 on A2 Milk shares, you would end up owning approximately 424 units.
What might they be worth in the future? Well, according to a note out of Morgans from earlier this month, its analysts see a decent upside ahead for the company's shares.
The broker responded to A2 Milk's FY 2023 results by upgrading them to an add rating with a $5.40 price target.
This means that your 424 units would have a market value of approximately $2,290. That's a return of $290 or 14.5% on your original investment. Not bad!
Morgans explained why it upgraded the company's shares. It said:
A2M's FY23 result was slightly better than expected. Under difficult market conditions, A2M's execution was strong particularly for its China label (CL) IF and English Label (EL) CBEC IF products, while EL Daigou IF sales were weak.
While near term earnings uncertainty exists, we believe that decent growth should resume in FY25 and FY26. Given A2M is trading on its lowest multiples in years, it has a strong brand, balance sheet and management team.
But what about in three years?
The average total return for ASX shares over the last 30 years has been 9.6% per annum.
While there's no guarantee that this trend will continue nor that the A2 Milk share price will rise, let's imagine for a second that both do.
With that in mind, starting at $2,290, our investment would grow to $2,510 by the end of year two and then $2,750 at the end of year three.
All in all, that's a $750 or 37.5% return on our original investment over the three years.
