The a2 Milk Company Ltd (Australia) (ASX: A2M) share price has built on yesterday’s solid gain and is up a further 5% to $7.84 in morning trade.
This means the dairy company’s shares are now up a whopping 280% since the turn of the year.
Can they go higher?
As far as one leading broker is concerned, a2 Milk’s shares still have quite a bit left in the tank.
A broker note out of Citi this morning reveals that its analysts have retained their buy rating on its shares following its annual general meeting.
Furthermore, the broker has upgraded its price target from $6.00 all the way up to $8.85. This price target implies potential upside of almost 13% for its shares over the next 12 months.
Citi appears to have liked what it saw yesterday and expects further market share gains by the company’s a2 Platinum formula in China. In light of this it has upgraded its earnings estimates through to FY 2020.
Should you buy its shares?
I have been very impressed with the way that a2 Milk has consistently outperformed the market’s lofty expectations and expect this to remain the case for some time to come.
Despite its incredible growth in China, the company still only has a relatively small slice of its massive infant formula market. I expect it has a chance of capturing more when regulations change in January.
In light of this I would have to agree with Citi that the company’s shares are a buy today and would suggest investors choose them ahead of rivals Bellamy’s Australia Ltd (ASX: BAL) and Bubs Australia Ltd (ASX: BUB).