A2 Milk Company Ltd (ASX: A2M) shares are ending the week strongly.
In morning trade, the infant formula companyâs shares are up over 6% to $7.12.
Why are A2 Milk shares rising?
Investors have been bidding A2 Milk shares higher today after the company released an update on its quest for regulatory approval in China.
According to the release, its dairy processor partner, Synlait Milk Ltd (ASX: SM1), has announced that Chinaâs Ministry for Primary Industries will commence an audit of Dunsandel facility on behalf of Chinaâs State Administration for Market Regulation (SAMR) next week.
If everything goes to plan, A2 Milkâs China label infant milk formula products will soon be given the thumbs up in relation to the new national standards registration process. This would ensure that the companyâs supply of China label products continues.
Should you invest before its results?
Investing before the release of a result can be a risky endeavour. As we have seen plenty of times this month, a poor result can send a share sinking lower. Conversely, a strong result can lead to a share hurtling higher.
And with A2 Milk shares trading within a fraction of their 52-week high and ahead of most broker valuations, it would seem that the risk is to the downside ahead of Monday’s results.
Though, it is worth noting that UBS has a price target well-ahead of the consensus at NZ$9.75 (A$8.87). This suggests that its shares could still rise 25% from current levels.
UBS believes that the company could more than double its FY 2022 net profit after tax by FY 2025 thanks to strong infant formula sales. It also highlights that China’s border reopening has led to share gains in the key market for A2 Milk and believes that there is currently no significant recovery priced into its shares.
Time will tell if the broker has made the right call.
The post Should I pour in and buy A2 Milk shares before the ASX 200 company reports on Monday? appeared first on The Motley Fool Australia.
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More reading
- The A2 Milk share price has lagged the ASX 200 in 2023. Time to pour in?
- Why this ASX 200 share has âgreat further upside potentialâ in 2023: fund manager
- A2 Milk shares are up 30% in a year, is this price sweet or sour?
- 3 ASX shares to cash in on China’s reopening to the world: Jun Bei Liu
- If I invest $1,000 in A2 Milk shares now, what could my return be this year?
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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