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The Atlas Arteria Group (ASX: ALX) share price is falling in morning trade today after the company released a business update regarding COVID-19 movement restrictions. At the time of writing, the Atlas Arteria share price is sinking 1.47% to $6.72. In comparison, the S&P/ASX 200 Index (ASX: XJO) is marginally down 0.2% to 6,546 points.

Let’s take a closer look at what is dragging the Atlas Arteria share price lower.

France

Recent lockdown measures taken by the French Government in late October resulted in softer traffic levels across the APRR network of roads. As COVID-19 cases continued to increase, the country entered a nation-wide lockdown in an attempt to halt community transmission of the virus. Essential businesses, such as factories, farms, construction sites, public administration offices, schools and childcare, remain open. People have been urged to work from home wherever possible and restrictions on movement is being enforced.

Despite the above, Atlas Arteria noted that traffic has been more resilient during the first two weeks of the second lockdown than when the pandemic first struck. In percentage terms, traffic is down roughly half of the reductions that were recorded in March and April. The company pointed out that November is seasonally one of the lowest traffic months for light vehicles on its roads.

Heavy vehicles using APRR’s toll road networks is tracking along very well, matching Q3 performance.

Germany

Similar to its neighbour, Germany entered a ‘lockdown light’ for a period of four weeks in early November. The measures taken involve the restriction of private gatherings and the closure of all entertainment venues. As a result, traffic levels have experienced weaker demand, around 20% to 25% lower than 2019.

Atlas Arteria noted that the current lockdown isn’t as strict as the earlier March-April lockdown in Germany.

United States

At the end of Q3, the company reported traffic at 44.8% below 2019 levels. However, in the past two weeks alone, traffic has been slowly improving to record at 40% below the same period last year.

Until recently, restrictions in Virginia had continued to relax from July 2020. Authorities have encouraged people to work from home, but schools and kindergartens have progressively opened.

Atlas Arteria share price summary

The Atlas Arteria share price has steadily been catching up to where it was in February, during which it reached an all-time high of $8.54. Currently trading at a discount of 21% to this high, Atlas Arteria has a market capitalisation of $6.4 billion.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The Regis Healthcare Limited (ASX: REG) has shot up 21% after the company officially rejected a buyout offer from Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

After the bell last night, Washington H. Soul Pattinson had tabled an offer of $1.85 per share to acquire the aged care company Regis.

The Regis share price is now up 21.36% to $1.79, while the Washington H. Soul Pattinson share price has dropped by almost 3% to $28.09 at the time of writing.

What was offered in the deal

Washington H. Soul Pattinson had proposed that Regis shareholders can either accept the offer in cash, or a scrip/share alternative in a new company, which will allow them to retain an exposure to Regis as a privately operated business.

The proposed offer price of $1.85 represented a 25% premium to the closing price on 19 November 2020. It’s also a 59% premium to the average share price over the past month.

Why Regis rejected the offer

Regis says that today’s offer of $1.85 follows another rejection by the Regis board of an earlier proposal from Washington H. Soul Pattinson and Skip Capital in September of $1.65 per share.

The company says both offers “materially undervalued the company having regard to its medium to long term prospects.”

In an announcement released to the market today, Regis says its decision to reject the offer was based on three underlying factors:

• the Aged Care Royal Commission is due to deliver its final report on 26 February 2021, with substantial policy and funding reform expected to be recommended to the Commonwealth Government
• the Commonwealth Government has committed publicly that it will respond to the recommendations of the Aged Care Royal Commission in the May 2021 Budget and has foreshadowed substantial additional funding for the aged care sector
• the easing of the impact of COVID-19 resulting in improving trends in the aged care sector performance.

Regis also advised its shareholders not to take any action in relation to the proposal.

How did the Regis share price perform in 2020

The company has been ripe as a takeover target as the Regis share price lost almost 30% this year in a difficult period faced by aged-care facilities due to the pandemic. In August, the company reported poor full year results with a drop in net profit after tax (NPAT) of 54%. With the current share price of $1.79, the company has a market cap of more than $444 million.

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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The City Chic Collective Ltd (ASX: CCX) share price has come under pressure on the day of its annual general meeting.

In morning trade the fashion retailer’s shares are down 1.5% to $2.70.

What did City Chic reveal at its annual general meeting?

At the meeting City Chic provided investors with a trading update for the first 20 weeks of FY 2021.

According to the release, the company’s comparable sales are up 18.7% financial year to date excluding its temporary Victorian store closures.

Including these temporary store closures, its comparable sales growth would have been 7.9%.

While these figures include its online business, which continues to grow strongly in the ANZ market, management notes that its stores (excluding Victoria) also delivered positive comparable sales during the 20 weeks.

Management also provided an update on its Avenue business. It advised that Avenue continues to trade well. It was included in its comparable sales from mid-October, with positive comps for the four weeks up to the annual general meeting.

One side of the business not performing so positively was its City Chic website in the United States. While its performance continues to improve, it is still down versus last year. Though, City Chic product sales on the Avenue website are delivering growth for the City Chic brand in the United States.

Another work in progress is its gross margin. Management notes that its gross margin has improved significantly since the peak of COVID disruption but is still slightly lower than the corresponding period last year.

Outlook.

No guidance was given for the remainder of the year, but City Chic’s CEO, Phil Ryan, appears cautiously optimistic on the future.

He commented: “As our customers have adopted a more casual style, we have been able to facilitate the expansion of these categories through our agile design process and supply chain. This expanded range has reduced our reliance on the dress business to drive growth, and as dress sales recover into FY22 and beyond, we expect this to provide incremental growth as we maintain the casual share of wallet we have captured.”

“We are just about to enter the critical trading period that includes Black Friday, Cyber Monday and Christmas and we feel comfortable with our stock position. Given the large trading months in this quarter for all our geographies, our earnings in the first half traditionally outweigh earnings in the second half of the financial year,” he concluded.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The Orica Ltd (ASX: ORI) share price has dropped by 4.7% to $16.16 at the time of writing.

This comes after revealing a 31% reduction in its statutory net profit after tax (NPAT) in its full year results released this morning.  

Main highlights of Orica’s FY20 results

Orica chief executive Alberto Calderon says that the company was operating in an extremely difficult market this year as COVID-19 severely impacted its customers in the emerging markets countries.

He also attributed the fall in earnings to the higher gas costs on the east coast of Australia, which directly increased the company’s expenses.

Nevertheless, Calderon is still optimistic, saying that the explosives maker will deliver a “significant” increase in earnings in the year ahead.

Some of the headline metrics announced by Orica today were:

• NPAT for the 12 months ended 30 September was $168 million, down 31% on the prior corresponding period
• Underlying EBIT of $605 million, down 9%
• Those numbers were on the back of a 5% drop in revenue to $5.61 billion
• Underlying earnings per share (EPS) decreased by 23% to 75.7 cents per share.
• An unfranked final dividend of 16.5 cents per share to be paid on 15 January 2021

Calderon stated:

While the COVID situation means the year ahead cannot be predicted with any great certainty, the impacts are temporary. With most of our customers operations returning to pre-COVID activity, we have cautious optimism about the year ahead. With continued momentum, we expect to deliver a significant increase in EBITDA and a return to EBIT growth in the year ahead.”

We will stay focused on what we can control – making our operations as efficient as possible, driving our growth engines, and working hard to minimise our impact on the environment and deliver climate-resilient economic growth.

Milestones achieved

There was a bright side to today’s downbeat results as Orica announced several milestones it says it has achieved during the year.

These include the successful acquisition of Exsa and the commencement of the production of ammonium nitrate in its Burrup plant.

Orica says that it has also rolled out its BlastIQ platform to 87 sites – which would enable the company to gain insights into and digitally manage the drill and blast information and processes.

The company says that it has reduced its greenhouse gas emission by 9% during the financial year, and has new reduction targets of at least 40% by 2030.

The Orica share price performance in 2020

The Orica share price has performed dismally in 2020, having lost 23% in a year headlined by the pandemic. The share price was at one point trading as low as $14.27 in March, before arriving at yesterday’s closing price of $16.97. At this price, Orica commands a market cap of $6.9 billion.       

Orica is one of the world’s largest suppliers in providing commercial blasting and tunneling solutions. It manufactures and distributes a wide variety of explosives and blasting chemicals and products to the mining, energy, and infrastructure sectors. It was founded in 1874 and is now a top 50 ASX company by market cap.

More reading

• Why the Atlas Arteria (ASX:ALX) share price is falling today
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• Could the Aristocrat (ASX:ALL) share price be a leading ASX 200 growth share?
• Mesoblast (ASX:MSB) share price rockets higher on major Novartis agreement

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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Aristocrat Leisure Limited (ASX: ALL) shares demonstrated significant strength after the company announced its full year results on Wednesday this week. The Aristocrat share price slumped 6% on open before making a sharp recovery to close 4% higher. From trough to peak, this represents a 10% move in share price in just one day. 

At face value, the company’s results appeared to be weak given the slump in earnings. However, big brokers reacted positively to the results, especially with the growth in Aristocrat’s digital business. All things considered, could the Aristocrat share price be a leading ASX 200 growth share to buy? 

Full year results recap 

Aristocrat’s group revenue decreased 5.9% to $4.1 billion, reflecting a 32% decrease in its gaming (land-based) revenue as a result of customer venue closures and social distancing restrictions. This was largely offset by a 29% growth in its digital revenues. 

Earnings before interest, tax, depreciation and amortisation (EBITDA) was 32% lower than the prior corresponding period at $1,089.4 million. Despite lower earnings, Aristocrat maintains a significant balance sheet with almost $2 billion of available liquidity at 30 September 2020. 

Management appears to be confident with the company’s financial position and authorised a final fully franked dividend of 10 cents per share.  

Brokers upgrade Aristocrat share price target 

Despite a fall in earnings and the Aristocrat share price trading at a price-to-earnings (P/E) ratio of more than 70, big brokers are bullish on its outlook. 

Citigroup Inc (NYSE: C) raised its Aristocrat share price target from $34.60 to $40.60 and retains a buy rating. This represents almost a 20% upside to Aristocrat’s current share price of $33.90 (at the time of writing). The broker believes Aristocrat’s FY20 results were conservative and leave the door open for positive surprises in the first half of FY21. Citi increased its expected earnings for Aristocrat for FY21 by 7% and for FY22 by 10%. 

Similarly, UBS Group (NYSE: UBS) raised its Aristocrat share price target from $34.25 to $38.80 and retains a buy rating. The broker was impressed by the company’s ability to capitalise on digital business.

Credit Suisse Group (NYSE: CS) was more conservative in its share price upgrade from $30.00 to $37.60 with an outperform rating. It notes that Aristocrat’s United States gaming operations were a highlight, but that the Australian contraction reinforced ongoing risks. 

Macquarie Group Ltd (ASX: MQG) largely maintained its Aristocrat share price target from $31.50 to $32.00 with a neutral rating. While it cites better than expected FY20 results, the broker was disappointed by Aristocrat’s progress on controlling costs. 

More reading

• Why the Aristocrat Leisure (ASX:ALL) share price can go higher from here
• ASX 200 rises again on Wednesday
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• ASX 200 up 0.35%: Aristocrat FY 2020 results, big four banks higher, a2 Milk update
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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The Mesoblast limited (ASX: MSB) share price is rocketing higher on Friday morning.

In early trade, the biotechnology company’s shares are up 20% to $3.95.

What did Mesoblast announce?

Mesoblast was busy with the announcements this morning, releasing its quarterly results and revealing a new collaboration with a major pharmaceutical company.

In respect to its quarterly results, Mesoblast reported a 92.3% decline in revenue to US$1.3 million for the first quarter. This was due largely to a US$15 million milestone payment received in the prior corresponding period.

Royalty revenue on sales of TEMCELL HS in Japan decreased US$0.6 million to US$1.3 million for the quarter. This was driven by a temporary shutdown in production by JCR Pharmaceutical as it expands its facility capacity to meet increasing demand.

Research and development costs increased 55.6% to US$19.3 million, manufacturing costs lifted 340% to US$11.9 million, and management and administration costs grew 40% to US$7.7 million.

This ultimately led to Mesoblast reporting a loss after tax of US$24.5 million for the quarter, compared to a loss of US$5.5 million a year earlier.

At the end of the period, Mesoblast had cash on hand of US$108.1 million. However, this has since been boosted to pro-forma cash on hand of US$158.1 million due to the collaboration revealed below.

Novartis collaboration.

Mesoblast has entered into an exclusive worldwide license and collaboration agreement with Novartis for the development, manufacture, and commercialisation of its mesenchymal stromal cell (MSC) product remestemcel-L.

The agreement will have an initial focus on the development of a treatment for acute respiratory distress syndrome (ARDS), including that associated with COVID-19.

As part of the transaction, Novartis will make a US$50 million upfront payment, including US$25 million in equity. It will also fully fund global clinical development for all-cause ARDS and potentially other respiratory indications.

Furthermore, management revealed that Mesoblast could receive a total of US$505 million pending achievement of pre-commercialisation milestones for ARDS indications and additional payments post-commercialisation of up to US$750 million. The latter is based on achieving certain sales milestones and tiered double-digit royalties on product sales.

Mesoblast’s Chief Executive, Dr Silviu Itescu, commented: “Our collaboration with Novartis will help ensure that remestemcel-L could become available to the many patients suffering from ARDS, the principal cause of mortality in COVID-19 infection. This agreement is in line with our corporate strategy to collaborate and partner with world-leading major pharma companies in order to maximize market access for our innovative cellular medicines.”

More reading

• Here are the 10 most shorted shares on the ASX
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The Kogan.com Ltd (ASX: KGN) share price is dropping lower on the day of its annual general meeting (AGM).

At the time of writing, the ecommerce company’s shares are down 1% to $18.12.

What happened at the Kogan AGM?

Arguably the hottest topic at the AGM was not its trading update but rather its controversial decision to award its CEO, Ruslan Kogan, and CFO, David Shafer, some very generous retention options.

For more background on this topic, I would suggest you read this article by my colleague Eddy Sunarto.

At the AGM, Kogan’s chairman Greg Ridder, remained defiant on the options and believes the two executives deserve them.

Speaking about recent meetings with shareholders, Mr Ridder said: “What became clear from the meetings I had was that we should have held an EGM in May when we announced the grant of Retention Options to Ruslan and David.”

“At the time, Shareholders could only have dreamed that the value created for Shareholders would be where it is today. With the benefit of hindsight, I think that, had the EGM been held shortly after announcement of the Retention Options, proxy advisers and media would not have been distracted by the recent gains in share price when considering the value of the executive awards at the time they were announced.”

Despite proxy advisors suggesting shareholders vote against the options, Mr Ridder appears to expect them to gain enough votes to be actioned.

However, the company’s remuneration report looks set to get a first strike, which the chairman admitted was “perplexing” given its strong performance and low executive pay.

The chairman commented: “…it was perplexing to see proxy advisers recommend a vote AGAINST the adoption of the Remuneration Report, and for many super funds to follow the proxy advisers’ recommendations. While the Remuneration Report is retrospective, it appears many of the votes received are prospective and we will receive a “strike”, albeit that – based on Proxies – it does seem that a majority of Shareholders are in favour of adopting the report.”

Trading update.

Today’s presentation reveals that the company’s strong form continued through to the end of October.

According to the release, gross sales for the first four months of FY 2021 are up 99.8% on the prior corresponding period. Gross profit is up 131.7% and earnings before interest, tax, depreciation and amortisation (EBITDA) has jumped 268.8%.

At the end of October the company had 2,682,000 active customers. This is up 9% since the end of August.

Management commented: “In the first four months of the financial year, we have seen strong performance from our Product Divisions and Kogan Marketplace. We are now entering the peak Christmas trading period. November and December are typically the most important months of the year for the Business, with strong trading performance in these months throughout prior years.”

“There has been an increase in variable and marketing costs as a result of the significant growth of the Business. While delivering a significant YoY increase in Adjusted EBITDA, we have also made a series of the largest ever monthly marketing investments into building the customer base and brand, which we expect will have long term benefits for the Company,” it concluded.

More reading

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• Why ASX tech shares should fly long after this crisis is over
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• Why the Openpay (ASX:OPY) share price is up and down today
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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 Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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On Thursday the Altium Limited (ASX: ALU) share price dropped 1% to $35.81.

This followed the release of the electronic software design platform provider’s annual general meeting presentation.

What happened at the meeting?

At the virtual meeting, management was very upbeat on its future, noting that its shift to the cloud with its Altium 365 platform will be a big positive for the company.

Altium’s CEO, Aram Mirkazemi, believes the shift will help the company in its quest to dominate the market and then transform it.

He commented: “While dominance and transformation are part of one journey, this strategy sets up two engines of growth for value creation. Our strong software business drives our dominance engine, and our new cloud platform Altium 365, is the basis of our transformation engine. From a business perspective, these two engines provide independent drive, and at the same time are complementary and reinforce each other,” he added.

He believes this shift will be supportive of its target of almost doubling its subscriber number to 100,000 by 2025.

So why did the Altium share price drop lower?

While the medium to long term looks very positive, the near term appears to be more challenging based on management’s comments. This could explain why the Altium share price underperformed yesterday.

Management advised that it is continuing to be impacted by COVID-19. And while the last two months have been more positive, its full year result will be reliant on a strong second half.

Based on a 45/55 revenue split between the halves, management expects to deliver revenue in the range of $US200 million to US$212 million in FY 2020. This will be a year on year increase of 6% to 12%.

In respect to earnings, Altium expects this to lead to earnings before interest, tax, depreciation and amortisation (EBITDA) of US$76 million to US$89 million. This represents a 0.1% decline to 16% increase from the US$76.63 million it recorded in FY 2020.

Mr Mirkazemi commented: “Traditionally, our first half EBITDA margin is always lower than our second half as a stronger second half revenue positively impacts our EBITDA. I expect this to be exaggerated this year by COVID but confident that full year EBITDA margin will remain well within the range.”

Is the Altium share price in the buy zone?

One broker that is sitting on the fence following this update is Goldman Sachs.

After looking through its update, the broker has retained its neutral rating and $36.35 price target on its shares.

More reading

• ASX 200 down 0.3%: Altium FY 2021 guidance, Crown drops, insurance shares sink
• Altium (ASX:ALU) share price pushes higher following AGM update
• 2 ASX growth shares predicting big growth this decade
• 5 things to watch on the ASX 200 on Thursday
• 2 ASX shares targeting huge growth during the 2020s

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 and recommends Altium. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The Commonwealth Bank of Australia (ASX: CBA) share price will be on watch today after the release of a positive update this morning.

What did CBA announce?

This morning Australia’s largest bank revealed that APRA has completed the review into the progress it has made against the Prudential Inquiry Remedial Action Plan and made a decision in relation to the bank’s operational risk capital as part of the Enforceable Undertaking.

According to the release, APRA’s validation review found that Commonwealth Bank has made significant progress in implementing its Remedial Action Plan.

As a result, the operational risk overlay imposed on the bank has now been reduced from $1 billion to $500 million with immediate effect.

Management notes that this reduction represents an increase in Common Equity Tier 1 capital of 17 basis points.

Commonwealth Bank’s Chief Executive Officer, Matt Comyn, said: “We welcome APRA’s acknowledgment of the progress we have made over the past two years. At the same time, we and APRA recognise there is still a substantial amount of work to do before our Remedial Action Plan is fully implemented and embedded across CBA.”

“We remain committed to achieving these outcomes and to ensuring the improvements to strengthen governance, accountability and risk culture frameworks, practices and outcomes are sustained,” he added.

What was the Remedial Action Plan?

In June 2018 the bank revealed its Remedial Action Plan which outlined the steps its board and senior leaders will take to respond to the Prudential Inquiry’s 35 recommendations.

This followed an inquiry which identified a number of shortcomings in the bank’s governance, culture, and accountability frameworks, particularly in dealing with non-financial risks. This includes a shortcoming related to Anti-Money Laundering and Counter-Terrorism Financing (AML-CTF) matters.

Commonwealth Bank intends to provide its next update on its progress in February 2021.

More reading

• Why ASX bank share dividends might be surging soon
• Here’s what you need to know from today’s banking summit
• Morgan Stanley updates its share price targets for the big 4 banks
• Afterpay (ASX:APT) share price under pressure by US BNPL giant
• ASX 200 up 0.35%: Aristocrat FY 2020 results, big four banks higher, a2 Milk update

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The A2 Milk Company Ltd (ASX: A2M) share price has been uncharacteristic of its usual market leading performance of late. The flow-on effect of pantry destocking and disruption to its reseller channels has seen A2 Milk shares slump more than 30% from their record all-time highs in August. Following the company’s annual meeting on Wednesday this week, two big brokers retained their A2 Milk share price targets, which represent significant upside compared to its current price. 

Annual meeting rundown 

A2 Milk provided FY21 commentary for its operational regions. 

It was a challenging first half for its ANZ segment as daigou/reseller channels were impacted by COVID-related issues. A2 Milk expects the current impact to moderate over the course of the year. 

The company’s China label range and Mother and Baby Store (MBS) has delivered a strong performance year to date. For the most recent 11/11 online sales event, which was highly competitive, it achieved a 24% English label volume growth as well as strong brand and product rankings.  

From an earnings perspective, China-based channels accounted for 48% of A2 Milk’s total infant nutrition sales in FY20. Its MBS currently holds a 2.2% market share in China, which remains a significant opportunity for further growth. 

Fresh milk in Australia continued to perform strongly with current 12-month market share of 11.6% in October, up from 11.3% at June year end. In FY20, liquid milk contributed to 12.8% of the group’s earnings. 

A2 Milk’s North American operations continue to scale, achieving broad distribution across the entirety of the United States. A2 Milk products can now be found in more than 20,300 stores in the US.  The impact of COVID on the US has made consumers more value conscious. A2 Milk has shifted its short-term investment from broadcast advertising to a greater emphasis on in-store activation, account specific pricing and promotional activity. The company expects net revenue to be broadly consistent with FY20 and also predicts an improved earnings before interest, taxes, depreciation and amortisation (EBITDA) result in FY21. 

The US continues to be a strategically important market for A2 Milk, given its position as the largest global milk market and growing premium segment. 

A2 reaffirmed its guidance, as advised in September, which included FY21 group revenue of $1.80 billion to $1.90 billion (4% to 9.8% growth on FY20 revenue). 

Brokers retain A2 Milk share price target 

Macquarie Group Ltd (ASX: MQG) retained its A2 Milk share price target of NZD$17.95 (as per New Zealand Stock Exchange listing) and outperform rating. There was no change to rating or target after reviewing the company’s reaffirmed profit guidance. Macquarie notes early signs of a recovery in daigou sales channels. 

UBS Group (NYSE: UBS) retained its A2 Milk share price target of $20.50 with a buy rating. It was pleased with the company’s reaffirmed profit guidance and signs of improvement in daigou channels. 

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk and Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Broker retains $20 price target on A2 Milk (ASX:A2M) share price appeared first on Motley Fool Australia.

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