Why has the A2 Milk share price rocketed 18% so far this month?

Young girl drinking milk showing off muscles.Young girl drinking milk showing off muscles.

The A2 Milk Company Ltd (ASX: A2M) share price has been on a roll in November.

The stock has gained a whopping 18.2% since the final close of October to trade at $6.22 today. For comparison, the S&P/ASX 200 Index (ASX: XJO) has lifted 5.2% in that time.

So, what’s been going so right for the A2 Milk share price lately? Let’s take a look.

What’s been boosting the ASX 200 stock higher?

There’s been a lot going on with A2 Milk over the last few weeks, and its share price has been reacting favourably.

The first announcement to drive the fresh milk and infant formula company’s stock was a major one. It revealed the United States Food and Drug Administration (FDA) has allowed the company’s infant formula productions to be sold in the North American nation.

Though, it likely won’t be smooth sailing in the US. A2 Milk noted the market is highly competitive and its gross margins will likely be lower than average amid the higher cost of goods.

It was only days later that the company announced the beginning of its NZ$150 million (around $139 million at today’s exchange rate) on-market share buyback.

The capital return activity was first flagged in August and could run for 12 months. Shares bought under the buyback will be cancelled – thereby lowering the number of shares on issue and increasing the value of those remaining.

Finally, the company held its annual general meeting (AGM) on Friday. There, it told investors its performance is tracking in line with its financial year 2023 guidance but warned volatility in currencies could impact its revenue.

It said that, if currencies remain at prevailing levels, revenue growth could end up in the low double-digits, rather than the previously forecasted high single-digits. Meanwhile, its entrance into the US market likely won’t impact its earnings this fiscal year.

A2 Milk share price snapshot

This month’s gain has added to the A2 Milk share price’s decent 2022 performance.

The stock has lifted 12% so far this year. Though, it’s still 1% lower than it was this time last year.

For comparison, the ASX 200 has fallen 5% year to date and 3% over the last 12 months.

The post Why has the A2 Milk share price rocketed 18% so far this month? appeared first on The Motley Fool Australia.

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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. 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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