Stock price of a2 milk (ASX: A2M) fell 50% in 6 months: When to buy?

The· A2 Milk Company Limited (ASX: A2M) Stock prices in February were favorable.

Infant formula and milk company stocks have lost 16% of their value.This is compared to the 1% increase from the benchmark S & P / ASX200 Index (ASX: XJO).

This latest fall means that the stock price of a2 Milk has fallen by almost 50% in the last six months.

Why is the stock price of a2 milk falling?

The stock price of the a2 Milk has been under great pressure in recent months due to the sudden and shocking deterioration of its performance.

This has been primarily caused by the pressure of COVID-19, but there are concerns that structural issues can affect its performance.

As for COVID-19, the a2 milk has now seen demand fall off the cliff after first benefiting from inventory buildup during the pandemic heyday. This is especially true for the daigou channel.

Due to the lack of overseas travel, Chinese river sellers do not come to Australia and send their products back to the mainland for profit. This is a favorable channel for a2 milk and their absence is felt.

Management has not given any benefit to itself.Not just executives of all kinds Sell ​​off their holdings Before these effects were understood by the market, they failed twice to see exactly how long it would take for Daigo to recover.

Both have a significant impact on the stock price of a2 Milk.

Downgrade of downgraded guidance

a2 Milk released last month Results for half a year, Was forced to downgrade the provided (downgraded) guidance Just 2 months ago.. It commented:

“The pace of recovery in the Taiga / Reseller and CBEC channels is slower than previously expected, and we now expect revenue to be at the lower end of the previous guidance range.”

“Compared to what was expected in December, the EBITDA margin will be narrowed due to lower revenues, increased brand investment, extended support for taiga / resellers, foreign currency movements and worse channel composition. Is expected. “

The company’s new guidance suggests that the 2021 EBITDA range will be from NZ $ 336 million to NZ $ 364 million. This is a 34% to 39% decrease from NZ $ 549.7 million in 2020.

Next, where is the stock price of a2 milk?

Brokers seem to be largely divided on where the a2 Milk stock price is heading from here.

Citi analysts have a sell rating and expect it to fall another 19% to $ 7.15. Meanwhile, Morgans analysts have an additional rating, suggesting a 17% increase to $ 10.40.

Macquarie sits on the fence with a neutral rating and a price target of $ 9.75.

Where to invest $ 1,000 now

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* Returns as of February 15, 2021

Motley Fool Contributor James Mikulbolo There are no positions in any of the listed stocks. Motley Fool Australia owns and recommends a stake in A2 Milk. The Motley Fool Disclosure policy.. This article contains only general investment advice (based on AFSL 400691). Approved by Bruce Jackson.

Stock price of a2 milk (ASX: A2M) fell 50% in 6 months: When to buy?

Source link Stock price of a2 milk (ASX: A2M) fell 50% in 6 months: When to buy?

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