U.S. FDA approval a bonus, but China still key for A2 Milk - Morningstar

A2 Milk

03/11/2022 23:38

** Morningstar says China remains pivotal to the prospects
of a2 Milk  ATM.NZ , even as the New Zealand dairy producer gets
a chance to tap into the U.S. market
    ** A2 said on Thursday the U.S. FDA gave it temporary
approval to export infant milk formula (IMF) to the United
States  urn:newsml:reuters.com:*:nL4N31Y4UR
    ** Morningstar analyst Angus Hewitt says while a2 has been
handed its best shot yet to break into the U.S. IMF market, the
opportunity could prove a "short-term bonus" and that he was
less optimistic on its longer-term impact
    ** Brokerage retains its NZ$8.00 fair value estimate on a2
Milk, says shares continue to trade at a discount to the fair
value estimate on the opportunity in China alone
    ** "We anticipate increasing premiumisation to offset the
falling number of births in China, and expect a2 Milk can
capture share in a declining market, supported by the strength
of the a2 brand," Morningstar says
    ** In August, ATM was upbeat in its fiscal 2023 forecast
partly due to a recovery in demand from China  urn:newsml:reuters.com:*:nL1N3040CL
    ** Two of six brokerages rate the stock "buy", two "hold"
and two "sell"; median PT is NZ$6.20
    ** Up to Thursday's close, stock up 1% this year
 (Reporting by Shashwat Awasthi)
 ((Shashwat.Awasthi@tr.com))