Citi analysts attended a2 Milk’s Shanghai Investor Day with the take-away message that growth potential remains significant, but from here onwards the company will have to spend more to achieve it.
Citi analysts surmise events such as the Investor Day might lift investor confidence in management’s ability to execute on its plans. The analysts also conclude as management’s focus is more on improving sales rather than profitability, consensus forecasts are likely to prove optimistic.
Citi’s forecasts incorporate margin pressure, but the analysts maintain risks remain to the downside. Elsewhere, the analysts’ confidence in US expansion has increased. Neutral. Target price $15.15.
Sector: Food, Beverage & Tobacco.
Target price is $15.15.Current Price is $12.98.
Difference: $2.17 – (brackets indicate current price is over target). If A2M meets the Citi target it will return approximately 14% (excluding dividends, fees and charges – negative figures indicate an expected loss).