It’s proving to be a good day for the A2 Milk Company Ltd (ASX: A2M) share price despite the company’s silence. However, there has been good news from one of its peers.
At the time of writing, the A2 Milk share price is $4.79, 10.88% higher than its previous close.
For context, the S&P/ASX 200 Index (ASX: XJO) is currently up 1%.
Let’s look at what might be driving the milk and infant formula company’s stock higher.
What’s going on with A2 Milk on Monday?
A2 Milk shares are surging on Monday. The gains come amid news the United States is addressing a major baby formula shortage.
That’s particularly good news for ASX-listed baby formula company Bubs Australia Ltd (ASX: BUB). It’s shaken on an agreement with the US Government that will see it providing 1.25 million tins of formula to the country.
It comes after a major US formula plant was shut down due to a bacterial infection.
While the news might have helped spur A2 Milk shares’ gains, it’s done wonders for the Bubs Australia share price.
Right now, the latter is 45% higher than it was at the end of Friday’s session.
A2 Milk’s revenue from infant nutrition products dropped 10.5% over the first half of financial year 2022. The dip was mostly due to fewer sales in China.
Thus, some market participants might be hopeful that a shortage in the US could bring higher demand for A2 Milk’s formula products.
A2 Milk share price snapshot
Sadly, today’s gains haven’t been enough to boost A2 Milk shares into the long-term green.
Right now, the company’s stock is 16% lower than it was at the start of 2022. It has also fallen 15% since this time last year.
At the current share price, the A2 Milk company presides a market capitalisation of more than $3.2 billion.
The post Why is the A2 Milk share price climbing 11% on Monday? appeared first on The Motley Fool Australia.
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More reading
- Bubs share price rockets 77% on US deal with Biden Administration
- Low on milk? Fear not, here’s why Citi is bullish on the A2 Milk share price
- These 3 ASX shares have plunged this year: Expert reveals what to do
- Why is the Bubs share price toddling higher on Monday?
- Can A2 Milk shares benefit from the US baby formula shortage?
Motley Fool contributor Brooke Cooper 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 A2 Milk and BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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