The last few weeks have been a welcome change for the long-suffering shareholders of Bubs Australia Ltd (ASX: BUB). Since this time last month, the Bubs share price has risen a remarkable 51%.
Though, it is worth highlighting that the goat milk infant formula company’s shares are still down by approximately 50% from their June 2020 high.
Why is the Bubs share price up 51% in a month?
The catalyst for the rampant rise by the Bubs share price was the release of its first quarter update last month.
After many disappointing quarters, the company’s performance improved materially during the three months ended 30 September.
For example, Bubs reported a 96% year on year increase (and 45% quarter on quarter increase) in revenue to $18.5 million during the first quarter.
Management revealed that a key driver of this growth was its China business. Sales across the Chinese daigou, cross border ecommerce, and general trade channels increased by 156% over the prior corresponding period to $9.8 million. This accounts for over half of its revenue for the period.
In light of this strong form, investors appear optimistic that the worst is now behind the company and it will return to consistent growth again.
What else?
Also giving the Bubs share price a boost was the announcement of yet another product launch.
While Bubs’ previous launches of a vitamin range and dairy-based infant formula have yet to move the needle, this didn’t stop investors from getting excited about the launch of a range of cow’s milk powder products for the whole family.
The new range, Bubs Family Nutrition, will reportedly give Bubs access to a global US$15.7 billion market for whole milk powder. Though, it is worth remembering that Bubs is still only a very small player in a competitive market dominated by multinationals.
Are its shares good value?
The team at Citi are reasonably upbeat on the Bubs share price but see limited upside after its strong run.
The broker currently has a buy (high risk) rating and 58 cents price target on its shares. Based on the current Bubs share price of 55.5 cents, this implies potential upside of 4.5%.
The post Why the Bubs (ASX:BUB) share price has rocketed 51% in a month appeared first on The Motley Fool Australia.
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More reading
- 2 ASX growth shares that could be buys in November 2021
- Bubs (ASX:BUB) share price higher on new product launch
- The Bubs (ASX:BUB) share price is up 40% in 6 days. Here’s why
- A2 Milk (ASX:A2M) share price ticks higher as UBS increases holding
- ASX 200 (ASX:XJO) midday update: HUB24 & Netwealth impress, A2 Milk surges again
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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