China still key driver for a2 Milk despite U.S. setback - Morningstar

A2 Milk

10/08/2022 20:53

** Morningstar says dairy firm a2 Milk's  ATM.NZ  Chinese
business is the key valuation driver after the NZ firm's attempt
to make inroads into the U.S. were scuttled
    ** A2 on Wednesday said the U.S. FDA deferred its request to
sell infant milk formula products in the U.S., sending its
domestic shares down more than 12%  urn:newsml:reuters.com:*:nL4N2ZL474
    ** The sharp drop in shares "suggests the market had become
overly optimistic on the U.S. opportunity amid upbeat media
speculation in recent weeks," Morningstar equity analyst Angus
Hewitt says
    ** "We think shares are trading at an attractive valuation
based on the Chinese opportunity alone," Hewitt says, adding
that he expects ATM can capture more market share in the country
due to the strength of the a2 brand
    ** One of four brokerages rate the stock "buy", one "hold"
and two "sell"; median PT is NZ$4.95
    ** Up to Wednesday's close, stock down 12.1% this year

 (Reporting by Shashwat Awasthi)
 ((Shashwat.Awasthi@tr.com
mailto:Shashwat.Awasthi@thomsonreuters.com))