In the business section of the AustralianIs Bubs the next target...

In the business section of the Australian

Is Bubs the next target after Bellamy’s?

Analysts at Citi say goat milk infant formula maker Bubs could follow path of larger peer Bellamy’s as a takeover target.

After the group yesterday reported a new supply contract with Coles and Baby Bunting, Citi’s Sam Teeger writes it “continues to be a promising brand with the right strategic partners, foundations for success, and positive catalysts on the horizon”.

“However, the company is still small, and will need to effectively execute on the opportunity set in front of it. We view Bubs as a likely takeover target for large players seeking exposure to the fast-growing goat IMF category,” Mr Teeger says.

Bellamy’s was bought by China Mengniu Dairy for $1.5bn last year, the first Chinese takeover of an infant milk formula group and biggest Chinese agri takeover in dairy since the Van Diemens Land dairy deal in 2016.

He rates the stock at a Buy with a price target of $1.10.

BUB last traded up 2.1pc to 97c.