Looking to buy A2 Milk shares? Here’s what to watch at next month’s AGM

A2 Milk Company Ltd (ASX: A2M) shares have been strong performers in recent months.

Since this time in July, the infant formula company’s shares have risen 19% to $5.34.

As a comparison, the ASX 200 index has lost 1.6% of its value during the same period.

In light of this, it appears that expectations are high for the company’s first half results and investors may be anticipating a solid trading update at next month’s annual general meeting.

What is expected at the A2 Milk AGM next month?

At the end of September, A2 Milk released a trading update which revealed that it had started FY 2023 positively. It advised:

The Company has made a positive start to the year, with 1Q23 sales expected to be marginally ahead of plan primarily reflecting the benefit of favourable foreign exchange driven by depreciation of the New Zealand Dollar (NZD). Due to the currency impact on cost of sales and cost of doing business, notwithstanding the benefit to sales, 1Q23 EBITDA is expected to be in line with plan.

Investors will no doubt be hoping that the company’s trading has remained the same or even improved since this update. The latter would likely given A2 Milk’s shares a real boost.

Though, it is worth noting that the continuation of its solid performance isn’t a given. Management has warned investors that its performance could be impacted positively and negatively from a range of factors. These include:

COVID-19 impacts on supply chain, SAMR registration process timing, volume impact of price increases, foreign exchange movements, cross border trade, changes in the regulatory environment, and commodity prices.

What else?

In addition, this week the company pledged to amend its remuneration process after investor backlash. It stated:

To further align to recent practices for New Zealand and Australian executive remuneration, the Board is reviewing the Company’s remuneration practices. While the review is still ongoing, the Board is already committed to making certain changes in FY23.

While these changes won’t be relevant to next month’s annual general meeting, the fact that it is taking action could stop shareholders voting down its remuneration report this year.

Are A2 Milk shares a buy?

There aren’t many brokers out there that are bullish on A2 Milk’s shares, but one that remains positive is Bell Potter.

A note from earlier this month reveals that its analysts have a buy rating and $6.60 price target.

This implies potential upside of almost 24% for investors over the next 12 months.

The post Looking to buy A2 Milk shares? Here’s what to watch at next month’s AGM appeared first on The Motley Fool Australia.

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More reading

• Is the A2 Milk share price a buy ahead of next month’s AGM?
• Top brokers name 3 ASX shares to buy today
• Broker tips A2 Milk share price to jump 20%
• What’s the outlook for A2 Milk shares in the second quarter?
• Why did the A2 Milk share price rocket 23% in the first quarter?

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 A2 Milk. 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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