a2 Milk provided solid revenue guidance and margin upgrades at its AGM, thanks to price increases, product launches and benefits from the Synlait Milk ((SM1)) contract renegotiation. Improved disclosure addressed a number of market concerns, Macquarie notes.
The broker has made only minor forecast adjustments but has lifted its target to $16.20 from $15.70. Outperform retained.
Sector: Food, Beverage & Tobacco.
Target price is $16.20.Current Price is $13.37. Difference: $2.83 – (brackets indicate current price is over target). If A2M meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges – negative figures indicate an expected loss).