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Investing.com - UBS downgraded a2 Milk Co (ATM:NZ) (OTC:ACOPF) from Buy to Neutral on Monday, while raising its price target to AUD10.55 from AUD9.95.
The rating change comes after a2 Milk shares have re-rated by 17% since the company’s fiscal year 2025 results and the Yashilli NZ acquisition announced in mid-August.
UBS believes the current share price now adequately reflects the firm’s growth potential, including an expected doubling of net profit after tax by fiscal year 2030.
The growth is expected to be driven by infant formula market share gains across both English-label products (a2 Genesis and a2 Gentle Gold) and China-label offerings, which will include two new products.
UBS also noted that margin expansion from internalized manufacturing and reduced losses in the U.S. market are factored into its revised estimates, with a2 Milk’s fiscal year 2027 price-to-earnings ratio (excluding cash) of 28x now broadly in line with its long-run average of 29x.
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