Via the Australian:
Barrenjoey says a2 Milk could apply to sell US infant formula
Broker Barrenjoey says a2 Milk could apply to sell infant milk formula (IMF) in the US, which is suffering a severe IMF shortage.
a2 Milk has sold its a2-only-protein supermarket milk in the US for more than five years, but the segment is yet to turn a profit.
Despite a2 Milk’s infant formula focus being on the larger China market, Barrenjoey’s suggested a2 Milk does have spare capacity to push into the US.
“The US IMF industry is unique as the Federal government purchases more than half the IMF consumed via its WIC subsidy program. The government then resells product
to retailers at reduced prices to ensure affordability. Breaking into the WIC subsidy program has in the past been very difficult for outsiders, perhaps until now,” the broker said.
On Monday shares in Bubs Australia soared 40 per cent after US President Joe Biden tweeted that the US government had signed an import deal with the goat-based IMF business.
Barrenjoey hasn’t changed its neutral rating on a2 Milk and has a $6.20 share price target.
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