A2 Milk share price on watch amid FDA update

The A2 Milk Company Ltd (ASX: A2M) share price will be one to keep an eye out on Wednesday.

At yesterday’s market close, shares in the infant formula and fresh milk company finished at $5.11 apiece.

Let’s take a look at what was released to the market this morning.

A2 Milk suffers setback

In its statement, A2 Milk advised that the Food and Drug Administration (FDA) was deferring further consideration for an enforcement discretion to import infant milk formula (IMF) products into the United States.

The company also said it was informed by the International Dairy Foods Association that similar letters have been sent to all other pending enforcement discretion applicants.

It noted that the FDA was deferring any further review of all such applications at this time.

Earlier this month, A2 Milk shot down media speculation that suggested it was nearing approval from the FDA to sell IMF products into the US.

The news led the company’s shares to reach an intraday high of $5.08 on the day before closing at $4.90, up 7.93%.

In late May, A2 Milk rival, Bubs Australia Ltd (ASX: BUB) was granted FDA approval to ship 1.25 million tins of baby formula.

Other dairy companies have been lining up to get in on the action as the US relaxed its restrictions to import IMF products.

This comes after US consumers faced an infant formula shortage following potential contamination at one of its largest manufacturing plants.

A2 Milk share price snapshot

A2 Milk shares have gradually been sold off over the past 12 months on the back of weakened investor sentiment.

Its shares are down 13% for the period.

However, looking at year-to-date, A2 Milk shares have outperformed the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) – down 6% vs. down 17%, respectively.

A2 Milk commands a market capitalisation of roughly $3.80 billion.

The post A2 Milk share price on watch amid FDA update appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has positions in A2 Milk. 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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