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A2M A2 MILK COMPANY LIMITED

Dairy - Overnight Price: $5.87

Bell Potter rates ((A2M)) as Buy (1) -

Bell Potter considers the FDA approval for a2 Milk Co to sell its Stages 1 and 2 infant milk product until January 2023.

Management have indicated 1m tins in the 2H23, which is viewed as reasonable by the broker, while the company highlights margins will be lower than the average from higher costs to market and sell in the US.

Bell Potter adjusts earnings forecasts by 2% and 1% respectively for FY23 and FY24. The target is raised to $6.80 from $6.60 and the Buy rating is unchanged.

This report was published on November 4, 2022.

Target price is $6.80 Current Price is $5.87 Difference: $0.93
If A2M meets the Bell Potter target it will return approximately 16% (excluding dividends, fees and charges).
Current consensus price target is $5.00, suggesting downside of -14.8%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY23:

Bell Potter forecasts a full year FY23 dividend of 0.00cents and EPS of 17.14 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 34.25.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 18.1, implying annual growth of N/A.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is 32.4.

Forecast for FY24:

Bell Potter forecasts a full year FY24 dividend of 0.00cents and EPS of 19.61 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 29.93.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 23.3, implying annual growth of 28.7%.
Current consensus DPS estimate is 3.1, implying a prospective dividend yield of 0.5%.
Current consensus EPS estimate suggests the PER is 25.2.

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: -0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Jarden rates ((A2M)) as Neutral (3) -

a2 Milk Co reported the company received FDA approval to import its stages 1 and 2 infant formula into the US in the period up to January 2023. The stage 3 product doesn't need FDA approval, notes Jarden.

Although management envisages 1m cans into the US in FY23, the margins are likely be lower than average due to marketing and start-up costs.

Jarden places an 80% probability that a2 Milk Co will achieve 1m tins only in FY23, due to the challenging nature of the market.

Accordingly, earnings forecasts are revised up by 6% for FY23 and 4% for FY24 and the target is raised 5% to NZ$5.70.

A Neutral rating is maintained.

This report was published on November 4, 2022.

Current Price is $5.87. Target price not assessed.
Current consensus price target is $5.00, suggesting downside of -14.8%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY23:

Jarden forecasts a full year FY23 dividend of 0.00 cents and EPS of 17.96 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 32.68.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 18.1, implying annual growth of N/A.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is 32.4.

Forecast for FY24:

Jarden forecasts a full year FY24 dividend of 0.00 cents and EPS of 20.35 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 28.85.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 23.3, implying annual growth of 28.7%.
Current consensus DPS estimate is 3.1, implying a prospective dividend yield of 0.5%.
Current consensus EPS estimate suggests the PER is 25.2.

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: -0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources