Outlook upgrade for NZ's a2 Milk 'immaterial' to valuation, Morningstar says

A2 Milk

20/11/2025 19:18

** Morningstar notes the forecast upgrade for a2 Milk ATM.NZ, but flags higher revenue to come with a rise in costs, as there is no change in margin assumption

** Investment research firm raises EBITDA guidance by 3% to NZ$312 million ($174.35 million) for FY26, paralleling co's forecast hike

** Dairy firm on Thursday said it expects low-double-digit revenue growth from cont ops in FY26 vs previous forecast of high-single-digit growth

** Morningstar says a2 can take more share in a declining Chinese infant formula market, its key market, as consumers are willing to pay up for the a2 brand

** Highlights the Chinese market is challenged, with births in China to remain depressed due to demographics; sees the number of births to resume declining from next year

** Morningstar says the hike in near-term earnings is immaterial to its fair value estimate, maintained at NZ$8; adds a2 shares screen "expensive"

** Stock up 69.8% so far this year, as of last close

($1 = 1.7895 New Zealand dollars)

(Reporting by Nikita Maria Jino in Bengaluru)

((Nikita.Jino@thomsonreuters.com))