So far, 2021 has not been kind to this online retailer with the Kogan.com Ltd (ASX: KGN) share price losing almost half its value year to date.  

Shares in Kogan started the year at around $19, before hitting a 2021 high of $21.67 in late January. Since then, the Kogan share price has tanked by more than 44% after dropping another 0.58% so far today.

At the time of writing, shares in Kogan are trading at $12.09.

Let’s take a look at what’s been happening for Kogan.

What’s with the Kogan share price?

Kogan emerged as a market darling during Australia’s COVID-19 lockdown last year. Cashed up consumers flocked to Australia’s largest online retailer as many people worked from home or avoided large public spaces. As a result, the Kogan share price bolted to all-time highs.

However, in 2021 many investors have lost interest in the online retailer.

The catalyst can be traced back to late January when the company released a business update for the first half of FY21.

Kogan reported a 96% increase in gross sales over the prior corresponding period. It also reported a 120% increase in gross profit and boasted a strong balance sheet with a cash balance of $78.9 million.

Investors were not impressed with the slower rate of growth, sending the Kogan share price 5% lower for the day. However, Kogan noted that the slower growth was mainly attributed to warehouse capacity issues which had been resolved in the short term.

How did Kogan perform for the first half of FY21?

The second catalyst that prompted investors to sell their Kogan shares was the company’s first-half report.

For the six months ended 31 December, the company reported a 97.4% increase in gross sales to $638.2 million and an 88.6% jump in revenue to $414 million. Despite record spending on marketing, Kogan also reported a 165% increase in net profit of $23.6 million.

The retailer also highlighted a 77% year-on-year increase in active customers to 3 million. In addition, it noted strong growth in its Kogan First loyalty program. It appears these numbers also failed to excite shareholders. 

What is the outlook for Kogan?

For the second half of FY21, Kogan plans to further expand its exclusive brands. In addition, the company continues to enhance and develop Kogan Marketplace and its active customer base.

The company did not provide earnings guidance for the full year, rather opting to provide regular business updates.

Kogan also faces a few headwinds in the short term with rising bond yields. As bond yields rise, investors will be looking to have greater exposure to traditional value companies and sectors hit by the COVID-19 pandemic.

More reading

• 2 ASX tech shares to buy in April 2021
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• $10,000 invested in the Kogan (ASX:KGN) IPO is worth how much today?
• Got money to invest? Here are 2 ASX shares to buy

Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Wiluna Mining Corporation Ltd (ASX: WMX) share price is lifting today after the company discovered more high-grade gold and sulphur drilling zones near its existing mine works.

At the time of writing, the Wiluna share price is up 1.52%, trading at $1.00 per share.

Wiluna is a Perth-based gold mining company that controls more than 1,600 square kilometres of the Yilgarn Craton in the Northern Goldfields of WA. It owns 100% of the Wiluna mine, which is the 7th-largest gold district in Australia under single ownership.

Yesterday, Wiluna revealed its stage 1, 750 kilotonne-per-annum flotation plant construction and mine development, in addition to a series of other projects, were all on schedule. 

High-grade results

The company’s Wiluna mine has four mining zones named Starlight, Essex, Golden Age, and the Calvert and East Lode. The Golden Age zone is proving a winner, revealing “exceptional” high-grade extensions.

These results were discovered from an additional 30 holes and 8,218m of drilling. The gold discoveries are expected to enhance head grade (the gold content) at the current operation as large open-pit stockpiles continue to contribute to the major portion of processing feed.  

But today’s announcement is focused on the discovery of additional high-grade drilling results at the mine’s Starlight and Essex zones, which were discovered close to existing mine workings in the Wiluna headframe. The headframe is the structure above the mine shaft, which allows the hoisting of equipment.

Wiluna’s current zone mine production

The Essex zone is currently producing 2.35m @ 61.05g/t including 0.37m @ 313g/t (visible gold logged). The Essex zone is one of the shallow, high-grade sulphide ore bodies that Wiluna is focused on during its early mining stages and is delivering “visible gold intersections at numerous holes”.

The Starlight zone is producing 5.04m @ 6.09g/t; and 2.17m @ 9.45g/t. Another shallow depth mine, Starlight is showing high-grade sulphur intersections. This zone is located only 200m away from the existing underground mine development, which Wiluna says could be rapidly brought into production at low capital cost.

Meanwhile, the Golden Age zone is producing 6.58m @ 2.44g/t including 0.50m @ 15.50g/t as is providing the bedrock for the current Wiluna share price recovery.

Wiluna share price snapshot

The Wiluna share price has fallen steadily from a high of $2.18 on 23 September 2020 to its current level.

Despite today’s gains, Wiluna share price is down 6.7% this week, 13% this month and 27% this year to date.

More reading

• Wiluna (ASX:WMX) share price at a standstill despite ‘outstanding progress’

Motley Fool contributor Lucas Radbourne-Pugh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Wesfarmers Ltd (ASX: WES) share price is having a top day today. At the time of writing, Wesfarmers shares are up 1.61% to $53.07 a share. That looks especially impressive when you consider the broader S&P/ASX 200 Index (ASX: XJO) is up 1.56%.

Today’s move caps off what has been a pretty good month for Wesfarmers shares. Since 1 March, the Wesfarmers share price is up 5%. Saying that, this conglomerate is still more than 5% below the all-time high of $56.40 a share that we saw back in February.

This ASX blue chip has done exceptionally well over the past year, which of course includes the pandemic and all of the economic woes that came along with it.

Over the past 12 months, Wesfarmers shares are up a staggering 55.5%. They are also up more than 16% from the pre-COVID high that Wesfarmers hit (just over $46), which was an all-time high at the time. 

So why have Wesfarmers shares been in demand of late in particular?

The stars align for Wesfarmers shares

Everything has been going the way of Wesfarmers over the past year. Its flagship retail chains – Bunnings Warehouse and Officeworks – benefitted enormously from lockdowns. It seems when people in lockdown have nothing to do but renovate their houses and build home offices, Bunning and Officeworks do well.

But here’s what might be the one real gamechanger for Wesfarmers shares of late: lithium.

Wesfarmers became a player in the lithium space when it acquired lithium miner Kidman Resources back in 2019. Today, the company has expansive plans to build a lithium mine, concentrator and refinery at its Mt Holland lithium project in Western Australia that it inherited from Kidman. Lithium production is expected to commence in the second half of 2024.

Lithium miners and producers have been enjoying a surge in investor sentiment over the past few months, which may have spilled over into the Wesfarmers share price. Just take an ASX lithium miner like Pilbara Minerals Ltd (ASX: PLS). Its share price is up 150% over the past 6 months. Another lithium miner in Galaxy Resources Limited (ASX: GXY) is up 125%.

It’s possible that investors have noticed the surging values of companies in this sector and have rewarded Wesfarmers accordingly.

And, after the year Wesfarmers has had, that’s just another feather in its cap, it seems.

More reading

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• Over 1 in 4 Australians are investing in the ASX: report
• 5 things to watch on the ASX 200 on Wednesday
• Why an AGL Energy (ASX:AGL) demerger might be a problem
• ASX 200 dips, AGL to split in two, NAB’s neobank acquisition approved

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Could the Coles Group Ltd (ASX: COL) share price decline mean that the supermarket business is now a good value ASX dividend share idea?

In just over two months the Coles share price has actually fallen by 13%. When a share price falls, it has the benefit not only being cheaper but it also increases the company’s trailing dividend yield.

What is the Coles dividend yield now?

Using the last twelve months of dividends, Coles currently has a grossed-up dividend yield of 5.4%.

The broker Morgans expects Coles to pay a FY21 dividend of $0.62 per share, which would equate to a grossed-up dividend yield of 5.5%, which would be a decent increase on the FY20 dividend.

In the FY21 half-year result, Coles’ board decided to implement a 10% increase to the interim dividend to $0.33 per share after a 14.5% improvement of the earnings per share (EPS) to $0.42.

The half-year dividend represented a dividend payout ratio of just under 80%, leaving a sizeable amount to re-invest back into the business.

Promising signs from the HY21 result

Whilst the big supermarkets continue to see strong levels of short-term growth – Coles comparable sales growth in supermarkets was 7.2% in HY21 – there are promising signs for longer-term success.

The supermarkets customer satisfaction increased by 3.9 percentage points to 89.8%, compared to the second half of FY20.

Coles has been investing in its online capabilities so that it can fulfil all of the orders. Its business to consumer sales grew 61% with strategic investments made in user experience and capacity leading to significant improvements in its perfect order rate and customer satisfaction.

The company has also been trying to improve its own brand offering – which often comes with higher margins. In the FY21 half-year result it generated own brand revenue growth of 10% with 11 own brand products winning product of the year awards.

Coles is also on track to deliver cost savings of more than $250 million in FY21, with optimised markdowns, better data and technology enhancements and a more efficient supply chain to improve shelf life for customers.

The company is also working on its new Ocado and Witron automation projects. Structural work at the Witron automated distribution centre in Queensland is continuing and approvals received on the NSW distribution centre.

There has been strong growth at its liquor business which includes Liquorland, that division experienced 15.1% sales growth and 36.8% growth of earnings before interest and tax (EBIT). However, it’s the supermarkets business that generates a large majority of the revenue and profit.

The Coles CEO Steven Cain said:

Whilst COVID-19 will continue to present challenges it will also continue to present opportunities for change. With a strong balance sheet and team, Coles is well placed to continue delivering on our vision of becoming the most trusted retailer in Australia and grow long-term shareholder value.

What is the Coles share price valuation?

According to Morgans, Coles shares are valued at 21x FY21’s estimated earnings. The broker rates Coles as a buy.

More reading

• Over 1 in 4 Australians are investing in the ASX: report
• Why an AGL Energy (ASX:AGL) demerger might be a problem
• ASX 200 Weekly Wrap: ASX 200 gets its mojo back
• Top broker names 2 ASX dividend shares to buy
• 3 ASX dividend shares with yields over 4% right now

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Although the NEXTDC Ltd (ASX: NXT) share price is pushing higher today, it won’t be anywhere near enough to cancel out its year to date decline.

Since the start of the year, the data centre operator’s shares are down 15% to $10.52.

This is despite the company smashing expectations in the first half of FY 2021 and upgrading its guidance for the full year.

Is the weakness in the NEXTDC share price a buying opportunity?

One broker that believes this share price weakness is a buying opportunity for investors is Goldman Sachs.

The broker currently has a buy rating and $13.50 price target on the company’s shares.

Based on the latest NEXTDC share price, this implies potential upside of 28% over the next 12 months.

Why does Goldman Sachs like NEXTDC?

Goldman Sachs appears to have been very pleased with the company’s performance during the first half.

It commented: “We view this as a solid 1H21 update with accelerating revenue and EBITDA growth. pricing that was in-line with expectations (A$4.31mn/MW vs. GSe prior A$4.32mn/MW), and pleasing updates for its S3 and M3 developments which we now expect to commence billing in FY23.”

And while the broker noted that NEXTDC’s contracted MW was lower than it was expecting, it notes that management spoke positively about its outlook.

Goldman said: “Although 1H21 contracted MW was lower than GSe, it was in-line with the c.2MW p.a. of Enterprise contracts we typically expect, and commentary (release & call) remained upbeat on the outlook. This was supported by a strong start to 2H21, with NXT having signed a c.2-3MW Hyperscale contract in Jan-Feb.”

What about the future?

The broker believes there is strong growth ahead, which could bode well for the NEXTDC share price.

It explained: “Stay Buy on NextDC, which we believe is continuing to successfully execute in a high-growth industry. As a scenario to demonstrate this growth, we highlight that as NXT converts its contracted (but not yet billing) MW and previously disclosed options into revenue, this would drive a +22% 5Y revenue CAGR, and an EV/Sales of 9.6X.”

It is important to note that this doesn’t include its potential expansion into Asia after recently opening offices in Singapore and Tokyo.

Overall, this could make it worth taking a closer look at NEXTDC after its recent share price weakness.

More reading

• 2 rapidly growing ASX shares that could be strong buys in April
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• 3 stellar ASX tech shares to buy for the long term

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Gascoyne Resources Ltd (ASX: GCY) share price has risen 1% to 51 cents today after the company voluntarily repaid 45% of its bank debt due to ongoing free cash flow generation.

The Dalgaranga Project gold miner from Western Australia entered into a $40 million loan facility with Investec in August 2020 as part of a recapitalisation process. It completed a repayment of $14.5 million today.

Gascoyne performance “strengthened balance sheet”

Commenting on the payment: Gascoyne Resources CEO Richard Hay said:

The voluntary prepayment of close to half of Gascoyne’s bank debt really highlights how far the business has come after more than 12 months of consistent performance of the Dalgaranga operation.

This prudent approach to capital management has further strengthened our balance sheet and is a credit to the support we have received from a range of stakeholders.

December quarter results

For the December quarter period, Gascoyne produced 20,381 ounces of gold, totalling 40,695 ounces for the first-half of the 2021 financial year.

In 2020, Dalgaranga produced in excess of 80,000 ounces of gold with targeted production over the next 4 years of between 70,000 and 80,000 ounces of gold per annum. All-in sustaining costs are expected to come between $1,200 to $1,300 per ounce.

Gascoyne had engaged gold hedges to finance its debt, but its voluntary prepayment removes the requirement for any further mandatory hedging at current spot prices, beyond its current position.

At the current spot gold price, Gascoyne’s existing hedge book has an in-the-money position of $15.7 million and will result in Gascoyne achieving an average realised price in excess of A$2,400/oz for the remainder of the 2021 calendar year.

About the Gascoyne share price

The Gascoyne share price has been one of the ASX’s biggest movers over the past two years, rising from 0.03 cents per share in May 2019 to 56 cents per share in October 2020. It has remained steady since then, never dropping below 43 cents throughout the coronavirus pandemic.

The Gascoyne share price is up 1,602% over the past 12 months and 17% this year to date, although it dropped more than 8% this week. It doesn’t pay a dividend and has current earnings per share (EPS) of 59 cents.

More reading

• Is the future vegan? The Pure Foods (ASX:PFT) share price might say so
• Qantas (ASX:QAN) share price takes off after latest COVID updates
• Afterpay (ASX:APT) also signs deal with JB Hi-Fi & The Good Guys
• The A2 Milk (ASX:A2M) share price was down almost every day in March
• Vanguard Australian Property ETF (ASX:VAP) announces dividend

Motley Fool contributor Lucas Radbourne-Pugh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Gascoygne (ASX:GCY) share price rises after huge debt clearance appeared first on The Motley Fool Australia.

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There aren’t many companies catering to vegans on the ASX, but Pure Foods Tasmania Ltd (ASX: PFT) may be giving it a go. Its share price is up today after it shared news it has acquired another plant-based food brand. The company announced its acquisition of Cashew Creamery, which follows its acquisition of Lauds Plant Based Foods last month. It also holds ownership of plant-based cheese brand New Pastures.

The company stated in this morning’s announcement its strategy is to grow into the plant-based market through acquisitions.

The Pure Foods share price is up after today’s news. At the time of writing, shares are trading for 83 cents, up 4.4% marking an intraday high.

Let’s look further into Pure Foods’ plant-based approach.

Growing through acquisitions

Pure Foods announced it has acquired Cashew Creamery this morning.

The latest acquisition is another step for the company’s growth into the plant-based food market, which it states is set to be worth $3.9 billion by 2024.

According to Pure Foods, the cashew-based ice cream brand has grown its year to date sales by more than 50% over the year ending on 8 March 2021.

The acquisition is estimated to cost Pure Foods around $420,000, with approximately 52% to be paid in cash and 48% in shares.

On 2 February, Pure Foods announced it had acquired Lauds Plant-Based Foods.

It stated that doing so would grow the brand significantly in the short term due to Pure Foods’ extensive distribution channels. Additionally, it also said that it hoped its ownership of Lauds gives it access to its niche market network.

Pure Foods’ CEO Michael Cooper commented on the company’s plant-based focus when announcing its acquisition of Lauds:

We believe we can build an amazing business that can bring more and more plant-based food and beverages to Australia and distributed to our core export customers, principally in Hong Kong and Singapore.

While it’s only early days for Pure Food’s vegan approach, its future may be interesting.

Pure Food’s share price snapshot  

The Pure Foods share price hasn’t necessarily shown the same optimism in the plant-based food sector as the company. It is currently down by 20% year to date. Though, it is up 220% over the last 12 months.

The company has a market capitalisation of around $38 million, with approximately 53 million shares outstanding.

More reading

• Gascoygne (ASX:GCY) share price rises after huge debt clearance
• Qantas (ASX:QAN) share price takes off after latest COVID updates
• Afterpay (ASX:APT) also signs deal with JB Hi-Fi & The Good Guys
• The A2 Milk (ASX:A2M) share price was down almost every day in March
• Vanguard Australian Property ETF (ASX:VAP) announces dividend

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Qantas Airways Limited (ASX: QAN) share price is flying high today. At the time of writing, shares in the national carrier are trading at $5.15 – up 3%.

And Qantas is not alone in its trip to the skies. Other ASX travel shares are all moving in the right direction today. Currently, Flight Centre Travel Group Ltd (ASX: FLT) shares are up 2.67% ($18.10), the Webjet Limited (ASX: WEB) share price is 2.75% higher ($5.61), Sydney Airport Holdings Pty Ltd (ASX: SYD) shares have jumped 4.19% ($6.21), and Helloworld Travel Ltd (ASX: HLO) is 2.37% higher ($2.16).

For comparative purposes, the S&P/ASX 200 Index (ASX: XJO) is up 1.59%. So, ASX travel shares, including Qantas shares, are booming. While the market in general is also having a rip-roaring day, each of these companies is rising over and above the index. One likely factor is the positive COVID-19 update out of Queensland this morning.

Let’s take a closer look at that announcement.

Qantas share price turbulence

On Tuesday, Queensland Premier Annastacia Palaszczuk announced that the Greater Brisbane Area would go into a 3-day lockdown from 5pm that day. This news sent ASX travel shares, including the Qantas share price, tumbling.

Speculation was rife overnight that the lockdown could be extended by length and regions included, according to 9 News. But at 9 am local time (10 am Sydney time, i.e. at market open) today, Premier Palaszczuk and Queensland Chief Health Officer Dr Jeannette Young announced only two new cases, both linked to existing clusters. 

No extended restrictions were announced during the press conference. In addition, Queensland Health advised it had conducted 33,000 tests over the previous 24 hours, which provides some reassurance that no new COVID cases have been missed.

Investors seemingly enjoyed the news. The Qantas share price enjoyed its single biggest gain since the federal government announced it would be subsidising airfares to certain domestic locations.

NSW puts COVID restrictions on Byron Bay region

In related news, a hen’s party attended by two positive coronavirus cases from the Brisbane cluster has led to a new outbreak on the New South Wales North Coast. While only one case has been identified in the region so far, it has sparked some concern from the NSW Government.

From 5 pm today, face masks will again be mandatory in certain settings in the Tweed Shire, Ballina Shire, Byron Shire, and Lismore City council areas. In addition, hospitality venues will revert back to the one person per four square metre rule.

PUBLIC HEALTH ALERT – please view media release for full details. pic.twitter.com/lD4BrcIupB

— NSW Health (@NSWHealth) March 31, 2021

https://platform.twitter.com/widgets.js

While the NSW Premier has not locked down the region, she is strongly recommending tourists postpone plans to travel there over the long weekend. The Byron Bay Bluesfest is due to start tomorrow.

If the situation in the region deteriorates, investors will be keeping a close eye on the Qantas share price and other ASX travel stocks.

More reading

• What’s driving the Sydney Airport (ASX:SYD) share price today?
• The Flight Centre (ASX:FLT) share price is a “top pick” in the travel sector
• ASX 200 dips lower, Webjet drops, REA bids for Mortgage Choice
• Flight Centre, Qantas, & Webjet shares fall on Brisbane COVID lockdown news
• These are the 10 most shorted shares on the ASX

Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Helloworld Limited. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Helloworld Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This morning Zip Co Ltd (ASX: Z1P) announced a partnership with JB Hi-Fi Limited (ASX: JBH) that will see it provide a fully integrated payments solution for both JB HI-FI and The Good Guys.

It notes that this will allow customers with the ability to shop, both in-store and online, and pay with Zip’s interest free buy now pay later (BNPL) payment solutions. The retailer has not previously offered BNPL options.

Zip’s Co-founder and Chief Operations Officer, Peter Gray, commented: “We are delighted to partner with the JB HI-FI Group. We look forward to providing customers with choice at checkout, empowering them to own the way they pay at JB HIFI and The Good Guys. This strategic partnership provides Zip customers with access to even more of Australia’s favourite brands, further delivering on Zip’s mission to be the first payment choice everywhere and every day.”

Is this good news for Zip?

Initially, this news went down well with the market, sending the Zip share price almost 3% higher. Since then, the BNPL provider’s shares have given back these gains and more.

This may be due to the fact that Zip isn’t the only BNPL solution that JB Hi-Fi is taking on board.

On Tuesday, rival Afterpay Ltd (ASX: APT) also announced a partnership with the retail giant for both JB HI-FI and The Good Guys brands.

It commented: “Customers will soon be able to shop in-store and online and spend up to $1,000 at all JB HIFI and Good Guys stores nationwide. By using Afterpay at checkout customers can spread their payment over four fortnightly instalments without ever incurring interest or fees if they pay on time.”

Afterpay’s EVP of Sales ANZ and Global Instore, Rachel Kelly, stated: “We are delighted to welcome the JB Hi-Fi group, with two of Australia’s most iconic retail brands, to Afterpay. Afterpay customers will be thrilled to be able to buy big ticket items such as electronics, whitegoods, appliances and home entertainment in a responsible manner, without incurring interest or fees.”

This appears to have taken the shine off Zip’s announcement. Furthermore, it highlights the fact that it remains unclear whether JB Hi-Fi has also taken on other BNPL providers such as Openpay Group Ltd (ASX: OPY) or Klarna.

More reading

• The A2 Milk (ASX:A2M) share price was down almost every day in March
• The Zip (ASX:Z1P) share price is seesawing today on partnership news
• ASX 200 jumps 1.35%: Zip inks deal with JB Hi-Fi, Suncorp’s flood update
• 4 ASX shares with director buys this month
• Airtasker and Zip were among the most traded ASX shares last week

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Investors might want to look away from the A2 Milk Company Ltd (ASX: A2M) share price. Shares in the dairy company have been red for almost every single day since March 4. At the time of writing, the A2 Milk share price is trading at $7.88, up 0.9%.  

How A2 Milk went sour 

After multiple earnings downgrades and rising geopolitical tensions between Australia and China, the A2 Milk share price looks like it has slumped to the point of no return. Its shares are down ~10.6% in March. Additionally, the share price is down ~32% year-to-date. 

Gone are the days where A2 Milk held an Afterpay Ltd (ASX: APT) or CSL Ltd (ASX: CSL) like status. 

Are brokers still positive on A2 Milk? 

Big brokers are still divided on the growth trajectory and recovery path for A2 Milk. There have been two broker notes in March with a diverging buy and sell rating. 

First came the UBS note on 4 March. This retained a buy rating and a NZ$16.00 target price for the dual-listed company. The broker expects a meaningful recovery in indirect infant formula sales in the next two years. In addition, the broker expects substantial market share gains for its China label infant nutrition. The note also highlighted that online brand strength remains strong in China with high WeChat engagement.

The A2 Milk share price is currently fetching NZ$8.61 on the NZX. This represents an upside of 85.8% from the broker’s target price. 

The Citi note on 23 March seems to be giving the optimistic UBS a run for its money. The broker retained a sell rating and a $7.15 target price.  

Citi has paid close attention to Feihe – the largest and most highly recognised Chinese infant milk formula company with a reported 17.20% market share in Q3 2020. The broker believes that competition is likely to intensify for foreign infant formula players like A2. It believes the expansion of the market share of Chinese brands is likely to drag A2’s growth. The A2 Milk share price would need to fall another 9.50% to reach Citi’s target price. 

Commonwealth Bank of Australia (ASX: CBA) reduces its stake 

While brokers might still be divided on where the A2 Milk share price will go next. CBA announced on 23 March that it had reduced its stake in A2 Milk from 46.9 million shares or 6.34% of the company to 39.5 million shares or 5.32%. Luckily for CBA, the A2 Milk share price has slumped another 6% since. 

 

More reading

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• Here’s why the Spirit (ASX: ST1) share price is up 5% this morning
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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post The A2 Milk (ASX:A2M) share price was down almost every day in March appeared first on The Motley Fool Australia.

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